Don’t get caught in the herd mentality. A simple question to ask yourself when uncertain what to do – “What is the herd doing?” And then do the exact opposite. Here are a few tips to prepare your Financial Future in a failing economy you may find useful:-
In A Failing Economy Here Are Some Things You shouldn’t Do
Bail out. Right now everyone is running around dumping stocks or equity mutual funds now. This is silly as the values are especially low and it is simply guaranteeing that you’ll turn paper losses into real ones. Even if there’s more downside to come, staying on course often pays off during times of economic uncertainty. You’ll only realise a loss if you sell. What happens after a recession? A Boom. What happens after the sun sets in the west? It rises in the east.
Stop saving. The strategy of dollar cost averaging your investments by making regular payments to your accounts, regardless of where the market is heading is still sound advice. Those regular contributions you’ve been making to your savings or retirement accounts are an important part of good financial discipline, so there is no benefit from stopping them now.
Speculate. Lower prices for investments create opportunities, however betting on the market will get you into trouble. Particularly with the wild swings we are witnessing right now. Smaller, investments are generally better than large, hasty ones which are intended to make a quick killing. So be especially wary of tips you get via e-mail, the Internet, or elsewhere for certain stocks, commodities, and other it will never fail opportunities.
Take on new debt. Sometimes it is necessary to take on new debt to make repairs on your home or put your child through college. Be aware that economic downturns most often affect job stability and investment income which makes it particularly difficult to determine the level of debt you can handle. If you must borrow, make sure you have examined all the avenues and risks. Especially when you plan on using the equity in your house.
Stop living. Don’t over react and stop spending altogether. For example don’t putt off doing that maintenance on your car and home. And do not under stop paying your insurance policies as this will have negative consequences if a claim should arise. It is okay to buy gifts on your annual family vacation. While it is prudent to take caution, there’s such a thing as over-reacting. It is better to watch what you are spending and adjust if necessary.
To create a stable financial future you need to do something different. Do you have a Plan B? I am not talking about working an extra job. Think smarter. I am encouraging you to not scared but to look at starting or ramping your Plan B. It has never been more critical than it is right now to really plan how you earn your income.