Inflation. Tumbling market values. Supply chain catastrophe. Wars and rumors of wars. Pandemics.
These words have been plastered all over the news and social media feeds for the last two years. And there’s no sign of it stopping.
As individuals and as businesses, we can’t control the economy.
But what we can control is how we respond to it.
The key is to stay focused on your long-term goals, and make sure your actions align with them.
Here are a few tips on how to navigate economic volatility…
1. Check your emotions. Fear is the natural response to economic volatility. What will happen to your job? What will happen to your business? What will happen to your retirement savings?
Know this—one of the worst mistakes you can potentially make is acting rashly on those fears. Volatility creates opportunity. Don’t lose out on potential because of headlines you read. Instead, assess your situation, what you stand to lose, and opportunities you might have.
2. Stay focused on your goals. It’s easy to get caught up in the day-to-day noise of the news. But if you want to help your sanity—and make sound financial decisions—it’s important to keep things in perspective.
How far are you from retirement? What kind of lifestyle do you want in retirement? What’s your strategy for protecting against long-term losses?
If your goals are in line with your current reality, take a deep breath and ride out the storm. If not, it’s time to reevaluate where things stand and make adjustments as necessary.
3. Review your budget and financial strategy. Once you’ve gotten past the initial emotional reaction, it’s time to take a clear-eyed look at your budget and finances.
There are two critical components to examine here—your emergency fund and your debt.
If you have an adequate emergency fund in place, keep it intact. Resist the temptation to tap into your savings to cover short-term losses. You’ll need your emergency fund for different expenses, like emergencies.
As for debt, make sure you’re not overextending yourself with credit cards and loans that only might make sense when the economy is booming. If you lose your job in a downturn, the last thing you want is high-interest debt hanging over you.
4. Meet with your financial professional. It’s simple—a licensed and qualified financial professional can help stop rash financial decision making in its tracks.
A financial professional can help you see the big picture, keep things in perspective, and develop a strategy that can help you stay on track—no matter what the economy throws your way.
While economic volatility can feel frightening, it’s important to stay focused on your long-term goals. Having the right mindset and guidance can help you navigate a crisis with confidence.