Personal Finance Predictions for 2009


Sure, 2009 has the potential to be one of the worst economic years in recent memory. But knowing that this is a possibility gives you the opportunity to anticipate some of the events you may face in the coming year.

Taking the time to understand what is likely to happen will go a long way to helping you avoid the money pitfalls that could trip you up if you don't consider and prepare for them. Here are some personal finance-related predictions to keep in mind when mapping out your 2009 financial goals.

You'll know someone who's suffering financially. The current economic strife is going to become something personal rather than a story about someone else on the news. Whether it is you personally, a family member or a friend, you are going to know someone (and likely a number of people) that are directly affected by the weak economy and who find themselves in a financial position they never imagined they would be in. You should not be surprised if at some point in 2009 you are asked by someone for financial help.

Your best option is to already have a plan specifically spelled out on what you are and aren't willing to do to help anyone who asks for financial support. Taking the time to put in place a strategy that you feel comfortable with will help ensure that you don't end up making a financial mistake when a friend or loved one approaches you with a request for money and a decision needs to made quickly. Having a well-defined money-lending policy will also help you avoid making decisions based on emotion in the heat of the moment, and that could save you financial trauma in the years ahead.

Credit will shrink. With banks and other lenders in financial trouble, they are looking to reduce their risk wherever they can. One area they will target in 2009 is with their exposure to credit cards.

Not only will it be more difficult to get credit, you can expect the limits on your current credit cards to be reduced as well. Such a reduction in credit limits can trigger a drop in your credit score if you carry a balance. When your available credit drops, your credit can suddenly look ominous.

For those who carry a balance on their credit cards and have been switching balances to get lower rates in the past, you may find this tactic much more difficult to maintain in the year ahead, especially if you do not have top-tier credit.

If you have relied on easy credit in years past, 2009 is likely the year when this changes and you are no longer able to get credit simply by asking. Understanding that credit will be much more difficult to secure can help you develop a budget strategy that assumes that credit will no longer be as easy to get as it has been.

Business perks will disappear. The economy is entering the new year in a recession, and businesses are already taking steps to reduce their costs wherever they can.

These cost-cutting measures will extend into 2009, and many of the benefits that you have enjoyed from your employer in the past may not be there come next December. Some can have a significant effect on your personal finances such as the elimination of the matching contribution for 401(k) contributions, a trend already beginning to take place.

Some other changes you are likely to see at work are the reduction of business travel, freezing of wage freezes and cancellation of bonuses. Business perks that you currently take for granted can have a significant impact on your budget if you don't take their possible elimination into account. Look at what perks you do take advantage of that your company offers and consider what changes you'll need to make to your own personal finances if these are eliminated in 2009.

Deals will abound for those with cash. For those without debt and with a healthy savings account, there should be plenty of great deals to choose from. With most people severely cutting back on their spending, businesses will be forced to offer great deals to get customers in the door.

If you have been thinking about making a major purchase, this could be the perfect year to do so. If you have been planning a dream vacation, chances are that you can schedule it for a fraction of the price you would have had to pay in years past. If you have been planning a home remodeling, you should be able to find top-quality contractors charging much less than what they were during the housing bubble.

It may be that 2009 will be a fantastic time to get great bargains on virtually anything that you have been saving up for and a time to start taking advantage of the savings that you have accumulated.

Bargaining will become easier. One of the greatest money-saving skills you can develop will become even more valuable in 2009. Being able to negotiate is no longer limited to car dealerships and flea markets. The ability to ask for and receive a better price than that marked on the item's price tag should be easier as more places should be willing to do so to get the sale.

Understanding that you can negotiate the price of most products and services, often times by much more than you think, will allow you to get even better deals on the things that you need in 2009.

Many of the small businesses you enjoy will disappear. Businesses of all types are going to have a terribly rough 2009 with none more so than the local establishments. That trendy little shop that you love to browse and the little café with the fantastic desserts have a good chance of becoming casualties of the economy in 2009. If you have a little extra money to splurge, consider frequenting these establishments as it may be one of the last times you can enjoy your favorite store.

It's important to set aside a little time to consider likely events that you believe will impact your finances. While it is impossible to predict everything that will happen in the future, making quality educated guesses will place you in a much stronger financial position to weather possible problems that occur.

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