Let’s be honest – 2022 was hard. There was (still is??) financial uncertainty around healthcare, jobs, wages, tariffs, the stock market, and more. All this uncertainty can be unsettling and overwhelming. And overwhelm can cause people to panic or make poor choices. We have a loop of worst-case scenarios playing on repeat in our brains that makes us want to batten down the hatches and hide for the foreseeable future.
But that is actually the worst thing you can do when it comes to preparing your finances for the possibility of rough seas ahead. Instead of retreating or sticking your head in the sand (and your money under the mattress) during turbulent times, you can be proactive and make some good decisions now that will help you ride whatever waves are coming.
Shrink your overwhelm with clarity
The best thing you can do right now is to strive for clarity. Getting clear on both what you’re afraid of and what you can do about it will help reduce your overwhelm.
Start by asking yourself what you’re most afraid of. Are you worried you will lose your job? Your healthcare? Your nest egg? Identify your fears and then you can identify steps to protect against it. Ask yourself: “When I think about my money right now, where can I achieve more clarity?” You may be able to achieve that clarity on your own, or you may need to ask a professional for help.The best thing you can do is strive for clarity. Getting clear on what you’re afraid of and what you can do about it will help reduce stress. Click To Tweet
Check your cash reserves
The first question people ask me about emergency funds is how much they should save — but there’s no one answer to that question. Instead, ask yourself, “How much money would it take for me to feel stable and secure?” Consider what you would need to pay all your bills for a month and then multiply that by how many months you’d like to be protected for. Some of my clients feel good with three months of expenses in the bank; others want a year or more. It’s a personal preference.
Know your savings goals
Another part of getting clarity is knowing what you need to save so that you can reach your goals. For example, if you want to buy a house, how much do you need for a down payment? Want to take a vacation? What will that really cost? Or, in the emergency fund example, how much do you need to feel secure?
A similar suggestion is to increase your savings toward your long-term goals, like contributing to your 401k, a college savings fund, or similar. Especially if you’re well employed now, take the opportunity to contribute as much as you can and save for a rainy day. Rather than saving toward some ill-defined future, put a number to it. It will make you feel better about your progress — even if you’re still a long way off from your goal.
Review your investments
I see many people treat their investments as “set it and forget it,” which can be fine if you don’t need the money for a decade or more. But that’s rarely a good idea if you need the money sooner than that. Instead, plan to sit down with your investment advisor and work out if you’re properly allocated right now. Again, a lot of this is going to be very personal.
If you’re nearing retirement age, for example, you’re going to want to move some of your investments to lower-risk. If you’re younger, you probably can tolerate more risk — or you may be concerned about the current market and want to modify your portfolio a bit. Whatever the case, understanding where you are and where you want to go gives you more of that clarity that will decrease your overwhelm.
Make an appointment with your financial advisor (or get one!)
Most importantly, if you’re feeling uncertain about ANYTHING related to your money, it might be a good time to speak to a financial planner. Rather than continuing to worry and fret and feel overwhelmed, why not work with someone who can help you make sense of where you’re at and where you want to go?
We don’t have a crystal ball to know exactly what the next few years will bring. But we can give you new insights into your financial situation and how to protect against any risks you might be worried about. Don’t stick your head in the sand and hope it all works out for the best. Instead, take the time to get yourself in good financial shape now, so that if something does happen, you’ll be ready to roll with it. Click here to make an appointment for a free consult right now.