Since 2013, the Federal Reserve has conducted an annual survey of household economics to measure the economic well-being of U.S. households and identify potential risks to their finances. The most recent survey in October 2024 included 12,000 participants.
In that survey, released in May 2025, participants ranked prices and inflation as their top financial concerns. People reported adjusting their spending to manage their expenses. About 13% of participants sold items for additional income, and 9% completed short-term tasks such as giving rides or doing odd jobs.
Non-retired adults were slightly more likely than in 2023 to say their retirement savings were on track, continuing the upward trend from 2022.
Other financial risks included being unprepared for unexpected events, such as lacking homeowners insurance. Overall, 7 percent of homeowners lacked homeowners insurance, often because they could not afford it.
Given these widespread financial challenges and concerns, it’s important for individuals to take proactive steps to strengthen their financial stability — starting with the basics.
Budgeting
Budgeting is important because it helps you understand your income sources and where your money is going. A budget, when used effectively, empowers you to make smart financial decisions that can improve your financial well-being.
To start budgeting, track all income and expenses for at least 30 days—or, better yet, each month for an entire year. List your fixed monthly expenses first and then add your additional spending. As you track your expenses, consider the following:
—Can you reduce your spending or monthly expenses?
—What steps can you take to eliminate your debt?
—Are you saving enough to meet your short- and long-term goals?
—What strategies can you implement to reduce your income tax?
—How much do you need to save to maintain your standard of living in retirement?
Know your net worth
A statement of net worth serves as your personal balance sheet by combining your assets and liabilities as of a specific date. Calculating your net worth may sound complicated, but it’s relatively straightforward for most people. Start by listing your assets (what you own). Then, subtract the liabilities (what you owe) from the assets to determine your net worth.
As you gather the data to determine your net worth, review your mortgage, auto loans, and credit card statements. Understand the interest rates and terms of your loans. Which debts should you prioritize for repayment? Consider the cost of your debt and the benefits of early repayment.
As part of this process, review your investment statements to ensure they are diversified and actively managed. Does your allocation to equities (stocks) still align with your risk tolerance and financial goals?
Review your net worth statement annually to track changes. Understand why your assets or liabilities have increased or decreased. The goal is to increase your net worth over time, keeping you on track to meet your long-term financial objectives.
Prepare for the unexpected
Life can change quickly without warning. Are you prepared for job loss, illness, disability, natural disasters, or a lawsuit? Insurance and savings can help protect you against unforeseen events. Consider the following:
—Do you have an emergency fund with at least six months of expenses in a savings or money market account?
—Do you review your insurance policies annually to verify you are adequately insured for your risks?
—Do you have a disaster plan and supplies readily available in case of a natural disaster?
—Store important documents and passwords in a secure location—this may include both digital storage and a physical backup. A portable, secure, fireproof, and waterproof evacuation box can provide quick access to important documents—such as birth certificates, passports, estate plans, home improvement records, tax returns, and insurance policies—if you need to evacuate immediately.
Protect your estate
Without proper estate planning, the fate of your assets—and your minor children—may be decided in probate. Probate fees, taxes, and legal expenses can erode your estate and delay asset distribution when your heirs may need them the most.
An estate planning attorney can prepare a trust, will, power of attorney, and healthcare directive—helping you implement a comprehensive strategy to protect your legacy and ensure your estate is distributed according to your wishes.
If your estate planning documents are outdated or incomplete, now may be the time to meet with an attorney.
Beneficiary designations
Beneficiary designations are also crucial to review regularly. When you designate someone as a beneficiary of your retirement account, annuity, bank or brokerage account, or life insurance policy, those assets pass directly to that individual upon your death. Life changes—such as marriage, divorce, death, or a tainted relationship—can affect whom you want to receive your assets. Review your beneficiary designations regularly to confirm they align with your current intentions.
Properly titled assets
Asset titling refers to how your assets are legally owned, and it plays a key role in determining who inherits them when you die. Without careful consideration, the outcome could be different from what you planned. Recently, a client’s husband passed away, leaving behind assets titled solely in his name.
Because the assets are titled in the decedent’s name alone, they must pass through probate. Instead of the widow receiving all the assets, they will be split between her, the decedent’s children, and the decedent’s grandchildren. After a 35-year relationship, the widow never expected to share retirement assets with other family members.
To avoid probate, estate planning should include transferring the title of your home and other assets into your trust. Don’t assume that because you have a trust, everything is fine. Assets intended for your trust must be properly titled; otherwise, they may still pass through probate. In California, probate is lengthy, expensive, and a public process.
By regularly engaging with your finances, and reviewing the details, you play a crucial role in shaping your financial future. You may discover that actively managing your finances is surprisingly rewarding and empowering—and supports your long-term financial health and stability.
Teri Parker is a certified financial planner and vice president for the Riverside office of CAPTRUST Financial Advisors. She has practiced financial planning and investment management since 2000. Contact her via email at Teri.parker@captrust.com.