The near- to medium-term economic outlook right now is … iffy. There’s a lot of uncertainty in the market and we’re seeing developments in international trade we haven’t seen in decades. What can you do to help protect yourself?
Financial “Advice”
A lot of financial advice, especially as it relates to the stock market, is suspect. Personal advice from a financial advisor tailored to your needs is probably valuable, but watching finance shows or following so-called market experts on social media is more likely to confuse you than pave your way to fabulous riches.
“Buy the dip!”
“Invest in futures!”
“Hold!” or, even more confusing, “HODL”.
What should you do?
Protecting Your Finances
Nothing can take the place of a financial professional giving advice based on your personal situation. However, there are some general rules that most people can follow to help shield their finances from the worst damage a stormy market can do.
Limit Your Discretionary Spending
One thing that can cause economic distress is that people don’t spend enough. And yet, that’s probably what you should do. (And, to be fair, people spending too much can also be a problem.)
You can’t control the global economy, but you can control how much you spend (to a degree). If necessities, such as groceries or rent, go up, then you just have to pay more. But maybe you can shorten or postpone a vacation this year. Perhaps you can use an expensive item, such as a vehicle, laptop or smartphone, for another year or 18 months instead of buying a new one. Even cutting back on eating out can add up to helpful savings.
And what to do with those savings? Two options:
- Pay off debt: If you have debt, such as a credit card balance or a mortgage, use the money you saved and pay those debts off as much as you can.
- Save it: Open or add those savings to a high-interest savings account and build a financial safety net.
Increase Your Income
Yes, there are few things more annoying than someone saying, “Have you considered simply making more money?”. But if you can right now, you should. Working a part-time job in addition to a full-time job is no fun, but many people have to do it. For others, it’s not that drastic. Can you work overtime or pick up extra shifts at work? It’s something to consider.
Monitor Your Credit
Keep an eye on your credit rating. You might need to borrow money in the future, or more money than you were planning. Paying off the debts you have now can help your credit score.
Diversify Your Investments
If you have investments, it makes sense to spread the risk. You may think one tech company’s stock will skyrocket any day, but it’s not worth investing a lot of money in right now. A mutual fund, such as an index fund, and government securities are examples of investments that are low risk (though there is always some risk with investing).
Want to learn more about your finances? Contact a Vectra Bank professional today and find out how we can help.
