6 Tips for Handling Economic Uncertainty

Economic uncertainty can feel overwhelming and scary. Whether you’re living paycheck-to-paycheck or you’re not sure how you’ll manage if you have an unexpected major expense on the horizon, it’s hard to feel comfortable when you’re unsure about the stability of your financial situation.

However, there are some things you can do to handle economic uncertainty and feel more comfortable and secure with your finances. Let’s cover a few tips you can put into practice to handle uncertain financial times.

1. Improve Your Financial Literacy

One of the best things you can do to feel more comfortable about your financial situation is to be more financially literate. That means educating yourself on the economy and what to expect. Study economic trends, look at market indicators, and consider working with an expert to make informed decisions. They can help you identify risks and rewards so you can feel more confident in where you put your money.

2. Build an Emergency Fund

You might not feel like you have a lot of extra cash to stow away right now, but adding a bit of money to an emergency fund each month can make a big difference in your financial security. An emergency fund can be useful in the event of a large unexpected expense, like an appliance breaking down or a car repair. Making small investments can go a long way.

3. Create a Better Budget

Take a look at your existing budget and consider where you might be overspending. For example, could you eat out less? Do you have subscription services you aren’t using? There are likely ways to reduce what's not essential. You can use those savings to add to your emergency funds or to grow your money in investment accounts.

4. Reduce Your Debt

Focus on paying down debts with a high interest rate; doing so will improve your financial stability, allowing you to look forward to being debt-free. If possible, this might also be a good time to talk to your bank or mortgage lender about possibly refinancing your home at a lower interest rate. Having any kind of debt lingering over your head makes it hard to feel financially sound, so do what you can to pay it off quickly.

5. Diversify Your Income

Bringing in money from different sources is a great way to be more financially sound while adding to your budget. You can also update your skills by taking continuing education courses so that you can remain a strong competitor in the job market or get a promotion in your current career.

6. Think With a Long-Term Perspective

When the economy feels unstable, it’s tempting to make impulsive decisions. You might want to pull your funds from a specific market based on fluctuations. Instead of jumping into these decisions, consider how your money will grow with a long-term perspective. Again, this is why it’s important to look at trends and work with a professional.

Fear and anxiety can exacerbate the temptation to make impulsive decisions. If you find that the state of the economy is taking its toll on your mental well-being, consider working with a mental health professional.

Therapy isn’t going to change the economy, and it’s not designed to improve money matters. However, it can help you stay calm and see things from a stable perspective as you’re trying to navigate economic uncertainty. If you need someone to talk to about your concerns, reach out to our office today to set up an appointment.