Dear Friend in Finance,
There have been a lot of headlines in the past couple of weeks, and they have me feeling scared. I heard the stock market was dropping because of AI, then I heard about tariffs, and then I heard that the new administration might be sharing my private information. Should I freeze my credit reports? Take all of my money out of the bank? Sell all my stocks? I don't know what to do.
Frightfully yours,
Pained and Panicked
Dear Pained and Panicked
In the past, our parents and their grandparents would get hit with a headline once or twice a day, maybe even just once or twice a week if they didn't have a television. But today, in a world where social media makes us feel good for getting attention, each post we see can be spine chilling or fear inducing. News stations have long since learned the adage "If it bleeds it leads," and today's social media posts gain traction in the same exact way. The scariest get shared over, and over, and over, and over...
No wonder you're feeling the fear!
Here's my advice to you: slow down, and take a breath. As Frank Hebert wrote, "Fear is the mind-killer." We want to get as clear headed as possible before we take any action.
Above all, avoid the panic button.
In a time when there is so much uncertainty the most important steps for you to take are those that you have control over:
- Save at least 10% of your income: Make this a priority, above subscriptions, above going out, above everything except the bare essentials. Building this buffer will help protect you against inflation - if prices go up, you've got room to adapt!
- Beware subscriptions and credit cards: Both of these will have you spending beyond what you anticipated. Being mindful of these will have you more empowered towards what you want your money to go towards.
- Savings saves the day: If you don't have a savings account, now is the time to start building one! Don't save for a specific event: save for the sake of saving. Having a savings account is what will protect you in the future, though hopefully you never need to use it!
As you can see, all three of these steps are just generally good advice. If markets start to roil, you'll be in a good position. And if they don't... you'll be in a good position!
Let your pain and panic rest. Avoid the panic button. Focus on building your savings and good financial habits and you'll be ready for whatever headlines hit you next.