Whether you are starting to build a nest egg, or are close to retirement, your investments have likely been impacted by negative market performance. As a result, you may be feeling confused, stressed, or afraid—and that's okay. We are humans, not machines, and humans react emotionally to circumstances beyond (and even within) our control.
The tricky thing with emotional responses is that they may result in ill-advised action—or worse, inaction. It's nearly impossible to make a sound decision when you are responding out of fear or anxiety. Once you've acknowledged your own emotions, however, you can take proactive action and take back control of your financial life.
The following suggestions will get you started.
Consider what's important to you and why
You know certain things are important to you, but you may not spend a lot of time thinking about why they are. For example, having money may be important. But the reason why it is important to you is likely different from why it's important to someone else. Reasons may include:
- Retiring early
- Buying a second home (or a first home)
- Sending a child to college
- Purchasing a new car
When you explore why things matter to you, what you're really doing is thinking in terms of concrete goals rather than broad concepts. This is a great way to start taking charge of your finances and what you want to accomplish.
Develop a financial plan
It's difficult to create a complex financial plan on your own, but you can take action by finding a professional to assist you. The goals that you have identified are too important to leave up to chance, emotional decisions, or inertia. Once you come to that realization, the decision to craft a plan using the services of a financial professional is easy.
Dispelling myths about financial planning
There are myriad myths surrounding financial planning—which may deter some individuals from seeking help. The following are probably the most common. Don't let them stop you from taking smart action.
- Myth #1: Financial planning is for the wealthy. Financial planning is for anyone who wants to take control of his or her financial goals. Consider instead that a lot of wealthy individuals may have become wealthy because they did financially intelligent things like create plans and act on them.
- Myth #2: I don't need insurance until I'm old. Or, I have enough insurance. Insurance can be a safeguard for your personal income, your standard of living, and your legacy. The amount of insurance you need is based on several factors, not just age. Additionally, we often purchase some form of insurance and then forget about it, thinking we've attained what we need. As life circumstances change, your need for insurance may change, too.
- Myth #3: I can't afford professional advice. It's true that many people have seen their assets decrease; some may even be suffering from other economic distress. The short-term cost of professional advice, however, may be minimal compared with the long-term cost of not attaining the assistance you need to take action and stay on track.
It's reasonable to assume that people who already had financial plans in place before the markets started to fall are feeling more comfortable during these tough times because they know that they've taken action. You can feel that same way. The choice is yours.
At a minimum, you may want to check out the following websites:
- www.mint.com - budgeting information
- www.dinkytown.com - financial calculators
- www.bankrate.com - bank lending rates
- www.annualcreditreport.com - credit reporting information
- www.AARP.com - consumer information
There is a wealth of professional guidance available to you. Counter the challenges ahead with solid planning and positive, proactive action.