Building Confidence in Your Personal Finances During Turbulent Times
They say, “If you stay ready, you never have to get ready.” This quote holds true for many situations, and at the top of that list is with your personal finances. Amid these turbulent times, market volatility and economic uncertainty are at record highs and many are wondering if we are headed towards a recession. Regardless, if we are or are not, we have absolutely no control over the market. So, instead of focusing on the uncontrollable factors at play, we choose to focus on the things we can control: our personal finances. Here are a few tips to improve your finances during times of uncertainty:
1. Pay Down Debt: Pay down high-cost (high-interest) debt. This might help give you the peace of mind during this time.
2. Boost Emergency Savings: Prioritizing saving is important. Add more money to your emergency savings to ensure you can meet the basic spending needs in times of economic downturn.
3. Identify Ways to Cut Back: Review your monthly spending and identify which items are discretionary vs. necessary. Eliminate any discretionary spending.
4. Live within Your Means: Experts recommend spending no more than 30 percent of your net income on discretionary items. Make sure you are not over-spending.
5. Focus on the Long Haul: Do not let the fear of losing all of your investment earnings during a downturn prevent you from keeping the end goal in mind. Changing your investment strategy could be incredibly dangerous. Do not make changes that jeopardize your long-term financial security based on short-term economic events.
6. Identify Your Risk Tolerance: Have the conversation with one of our advisors about your risk profile. It is important that your risk tolerance aligns with how your portfolio is being invested and managed.