Smart Financial Strategies for Weathering an Unstable Economy
As we face an unstable economy, it’s important to approach your finances with a proactive approach, rather than with a reactive one. Following are a few smart moves, and some common mistakes to avoid that can help weather the storm:
1) Prioritize Building and Protecting Cash Flow
Having a steady cash flow in unstable times is paramount. Make it a priority to have a strong emergency fund in place that can cover 6-12 months of your expenses providing with you a safety net to fall back on if you face any unforeseen challenge like a job loss or surprise medical expenses. Also, avoid cutting back on your savings. In fact, it’s better to automate your savings. That will help ensure that you are constantly putting aside something, irrespective of the market conditions.
2) Be Mindful of Spending Habits
Now is the time to reevaluate discretionary spending. While we all deserve some comfort, unnecessary luxuries and subscriptions can quickly add up. Instead of impulsively buying or spending, review your budget and focus on trimming the fat. A simple zero-based budget—where every dollar is allocated to a specific purpose—can help you keep your spending in check and save more for a rainy day.
3) Don’t React to Short-Term Market Fluctuations
Market downturns can be stressful, but it’s important to avoid decisions made out of fear. Avoid selling your investment when the market drops, this leads you to lock in losses which may become profits in the long run. One of the keys to success is to have a diversified portfolio designed for long term growth.
4) Diversify and Look for Income Streams Beyond Wages
If possible, explore income-generating assets—whether that’s dividend-paying investments, real estate, or side businesses. Relying solely on wages in an uncertain economy can put you at risk. By having a mix of passive income sources, you can create additional financial security.
5) Avoid Quick Fixes and Scams
During uncertain market conditions, people tend to be attracted by high risk “get-rich-quick” schemes, whether its high interest debt or unregulated investment promising high returns. Avoid falling for these traps, they can leave you financially exposed causing you more harm than benefit.
6) Stress-Test Your Financial Plan
Run different what if scenarios: what if inflation rises? What if interest rates increase? This proactive approach will help you stay prepared for any unexpected changes to the economy. Having flexibility in your financial plan allows you to adjust without losing sleep due to the fear of the unknown.
Harold Wenger, Jr.
Partner | Wealth Manager
Investment advisory services offered through Kingsview Wealth Management, LLC (“KWM”), an SEC Registered Investment Adviser. Insurance products and services are offered and sold through Kingsview Trust and Insurance Services (“KTI”), by individually licensed and appointed insurance agents. KWM and KTI are subsidiaries of Kingsview Partners. KWM is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed.
