How to Protect Your Finances Against 6 Common Problems

Your budget can feel the pinch from pesky late fees, stock market dips and even sneaky scammers. See what steps you can take now to safeguard your hard-earned money.

Woman working from home on laptop while son uses smartphone

by NEA Member Benefits

Mar 08, 2023

In today’s bustling world, it’s normal to feel like your finances are under siege.

  • Cyber crooks keep finding creative ways to try to separate you from your money.
  • High inflation takes a big bite out of your spending power on everyday needs.
  • A quick plunge in the stock market can wipe out months’ worth of gains in your retirement account.

And then there are self-inflicted money missteps, such as overextending yourself on loans or late bill payments that rack up interest or fees.

You need to protect your finances so you can afford what you need now and also be well-positioned to save for what you need down the road. You’ll be able to stretch your paycheck and plan for the future better when you know what you’re up against.

That’s why we’ve compiled 6 common threats to your finances–some of which are largely out of your control, and some that you can take steps to easily manage–as well as smart action plans to help you protect against each of them.

1. Fraud via email and text

Fraudsters’ goals are similar: to trick you into sending them money or into giving up your personal information so they can steal your identity, access your existing accounts, or open new ones.

These kinds of schemes vary and quickly adapt to whatever is making headlines in order to prey on people. Many scams involve “phishing,” in which scammers create legitimate-looking websites and emails so they can steal passwords and credit card numbers, or to install malicious software on your device when you click a bad link.

Cases of “smishing”—urgent text messages that steal personal or financial information by tricking you into clicking on a link—also are rising.

Action plan to combat fraud:

Keep current on the latest fraud warnings from the Federal Trade Commission and the Better Business Bureau.

Make sure the security software is up to date on your computer, smartphone and tablet devices. Set up two-factor authentication (2FA) for online logins, especially when accessing your bank or other financial accounts.

Don’t click on attachments or other links in emails you receive from unknown sources. Double check that messages are indeed from a trusted business or government agency instead of a scammer using a nearly identical email address. If you’re still unsure, look up the phone number of the company or agency, and call to verify that the message is authentic.

You can throw cold water on scammers’ plans by proactively setting up a freeze on your credit reports through the major credit reporting companies—Equifax, Experian and TransUnion. A freeze prevents new creditors from reviewing your reports when deciding whether to provide a loan or credit card to you. That can help stop new accounts from being opened by someone who’s impersonating you. You can temporarily lift the freeze whenever you need to shop for new credit.

Regularly monitor your credit report for any unusual activity. Equifax, Experian and TransUnion are offering free weekly reports through 2023 at

If a cyber crook conned you out of money, immediately report the fraud to the company you used to send the money—the bank, wire transfer service, or issuer of the gift card or credit card—and ask it to reverse the charge and restore your funds. You may not be able to recoup your lost money, but it’s worth checking to see what options may be available.

Identity theft can have serious repercussions on your finances and take months, or even years, to clear up. If you are a victim, go to for a step-by-step recovery plan tailored to your situation. Some creditors also might require you to file a police report.

2. Inflation

The spike in prices in everything from the grocery items to new vehicles appears to be receding slightly, but inflation is expected to remain high for months to come. Higher prices—without an equivalent increase in income—can make it challenging to afford necessities, much less “wants” such as vacations and new electronics.

Action plan to manage inflationary pressures:

For tips on how to save on everyday purchases, such as gas and groceries, check out 8 Money-Saving Strategies to Help Beat Inflation.

Take advantage of rising interest rates to shop for a new bank if you aren’t currently earning much on your deposits. According to a December 2022 analysis by DepositAccounts, the annual percentage yield (APY) on savings accounts ranged from 0.01% to 3.5%. That means a flat $5,000 account balance would accrue only $1 in interest at the lowest APY (0.01%) after one year, compared with $178 at the highest rate (3.5%).1

If you need extra income to cover higher living expenses while inflation remains high, consider a side gig. See our 5 Great Side Jobs for Teachers to Earn Extra Money All Year Long for tips from other educators.

3. Bear markets and volatility

The stock market historically has risen over the long haul, but it’s not a smooth upward progression. In some periods, the market barely budges; in others, stocks suffer steep declines.

For example, in the past 10 years, investors have experienced two bear markets, which is defined as a 20% or more decline in the stock market from its most recent high. Yet at the start of 2023, the widely watched Dow Jones Industrial Average (DJIA) sat around 33,100, which is an increase of nearly 20,000 points over where it was 10 years ago.2

Action plan to deal with a choppy stock market:

Because the market can suddenly plunge, consider investing money you might need within the next couple of years in financial vehicles other than stocks. For example, you could park that short-term money in a savings account or money market account that protects your principal by being federally insured (FDIC) and pays interest to boot.

Choose an asset allocation—the mix of stocks, bonds and cash in your portfolio—based on your risk tolerance and how far in the future you anticipate you’ll need the money. One popular guideline is to subtract your age from 120 to figure how much of your overall portfolio to invest in stocks. For instance, stocks would make up 90% of a 30-year-old’s portfolio (120-30=90) and 65% of a 55-year-old’s (120-55=65).

Asset allocations often drift over time. For example, if stocks do well, your 70% stocks/30% bonds allocation might grow to a riskier mix of 80% stocks/20% bonds. Review your allocation annually to see if it has veered off course, say, by 5 percentage points or more. If so, rebalance your portfolio—in this example, you might sell some stocks and buy bonds—to get back to your original desired asset allocation.

Learn more about the basics of what it means to invest in the stock market with our beginner’s guide.

4. Lack of investment diversification

Not even professional stock market strategists can accurately predict each year which investments will result in above-average returns. That’s why diversifying your investments—rather than investing your money in only stocks, or in stocks in a single sector—can protect you. If one or two of your investments lose money in a given year, then any gains among the others may help offset those losses.

Ideally, a portfolio would have a range of asset classes— stocks, bonds, cash, commodities and real estate—and each of those would be diversified, too. For example, you might own stock in small, medium and large U.S. and foreign companies within a range of sectors, such as energy, consumer staples and health care.

Action plan to help reduce investment risk:

First, review your investments to see if your portfolio is well-diversified. Investigate your holdings to see if you have a wide-enough range of investment types to help insulate your portfolio against any isolated declines.

If your portfolio isn’t well-diversified, one easy way to get started is by investing in a handful of different types of mutual funds or exchange-traded funds. These types of funds can own stocks or bonds of hundreds of U.S. and foreign companies. Just make sure your funds aren’t so alike that they invest in similar securities, such as many of the same Fortune 500 companies, or a lot of sector-specific businesses.

Another option is a single target-date fund. You choose a target-date fund based on the year you anticipate retiring. A professional manager does the rest, making sure the fund is diversified and gradually investing more conservatively as you approach retirement age, to help protect your earnings. Find out more about target-date funds here.

5. Too much debt

Prices have been rising faster than wages, and as a result, Americans piled up more debt in 2022. The amount owed by the average household last year rose nearly 8%, to $169,242. That includes mortgages, auto loans, credit cards, student loans and personal loans, according to an analysis by NerdWallet.3

Of course, some debt is considered “good debt” because it helps you buy a home that may increase in value or afford a college education that can lead to a higher income. But sometimes too much of even good debt can be bad if it puts your other financial goals at risk.

Action plan for keeping debt manageable:

Before taking on a major expense, run the numbers to make sure you will have no trouble keeping up with payments.

For example, if you’re in the market for a house and want to avoid getting overextended, try following the 28/36 rule that lenders often use for qualifying buyers for the most common type of mortgage. With this, no more than 28% of your gross monthly pay should go toward housing expenses, while no more than 36% of total monthly income should go to housing and other debt.

Also check out our What to Know about Teacher Home Buying Programs that can make a home purchase more affordable.

Similarly, don’t borrow more for education than you’ll be able to comfortably repay on your salary. People who already have federal student loans have had their payments on pause since 2020. These payments could restart later this year, depending on any legal rulings related to the White House’s proposal to forgive some of that debt, so begin planning now for how you’ll budget for them.

Our NEA Student Debt Navigator tool can also help you find money-saving programs to manage this debt.

As the Federal Reserve continues to raise a key interest rate to rein in inflation, that indirectly affects other rates on consumer borrowing. Explore financial products that can lower your borrowing costs. You could transfer higher-rate credit card balances to a new credit card with a lower rate.

Also, gradually build an emergency fund that you can tap to cover unexpected expenses, such as medical bills, rather than take out a payday loan or use some other high-cost borrowing. It can take time, but aim to save enough to cover three- to six months’ worth of living expenses.

6. Not paying bills on time

When life gets hectic, sometimes things inadvertently fall through the cracks. Unfortunately, late payments end up being quite costly. Some credit card issuers, for instance, charge as much as $40 for a late payment. They might also bump up your interest rate to nearly 30%. And that penalty rate may stay in effect until you make at least 6 on-time payments, or even indefinitely.

Being a few days late on bills won’t show up on your credit report. But falling behind by 30 days or more likely will appear on your record and damage your credit score. Lenders use credit scores to decide whether to extend credit to you and at what interest rate.

If your credit score already has been negatively affected, use these tips to help increase your score.

Action plan to help avoid making late payments:

Set up reminders on your calendar when bills are due. Or request that your credit card issuer or other service providers send you alerts in advance of your payment due dates.

To make it even easier on yourself, consider setting up automatic payments so bills are paid each month directly from your bank account or charged to your credit card. In fact, some wireless carriers and student loan servicers offer a discount for using auto pay. Just make sure your bank balance is high enough to cover your autopayments when they’re due, or else your bank will charge you a fee for insufficient funds.



2 Historical Data of Dow Jones Industrial Average, Yahoo Finance.

3 2022 American Household Credit Card Study, NerdWallet, Jan. 10, 2023


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