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You can build back up following hard times. 

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It’s fair to say that 2022 was not an easy year for consumers and investors on a whole. For one thing, inflation surged from the start of the year to the end of it, forcing many people to raid their savings accounts to cover higher costs.

And then there was the stock market. To say it had a bad year in 2022 would probably be an understatement.

Many investors closed out the year with lower IRA account and brokerage account balances than they had at the start. And that includes people who continued to pump money into those accounts even as market conditions deteriorated.

It’s not very surprising, then, to learn that 67% of American investors feel their financial safety net was yanked away in 2022, according to data from annuities and insurance company F&G. But if you feel that way, you should know that all isn’t lost.

Rebuilding your emergency fund

You may not be able to get your IRA or brokerage account balance back to where it was at the start of 2022. We may need a broad market recovery for that to happen.

But one thing you can do to feel more financially secure is to replenish your emergency fund if it’s dwindled. And to that end, rethinking your spending is the first step.

Take a look at your current bills. Are there any expenses you can cut back on? Maybe you don’t need to pay for an extra streaming service. And maybe you don’t need to continue forking over $75 every month for a gym membership when you could instead work out for free by taking up running or simply going for a brisk walk. A series of smaller cutbacks could help you make great progress when it comes to putting your emergency fund back together.

Another option worth considering to rebuild your emergency fund is getting a side hustle. It’s going to mean sacrificing some downtime — there’s no getting around that. But if you boost your income nicely, you might manage to build your savings back up so you can sleep at night knowing you have a pile of cash to tap in a pinch.

Stay positive about the stock market

Rebuilding a depleted emergency fund is something that may be within your power to do this year. But you can’t control how the stock market performs, and that can be frustrating.

Still, do your best not to lose hope. The stock market has experienced its share of downturns, and it also has a long history of recovering. So while your portfolio balance may be down now, there’s a really good chance that in three, five, or 10 years from now, it will be back up and then some.

Remember, too, that you don’t actually lose money in a brokerage account or IRA unless you actively sell off investments at a loss. So if you pledge to leave your portfolio alone, you can ride out this period of market volatility — and put yourself in a position to regain the safety net you feel you’ve lost.

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