Every time you open your news or social media feeds, do you see headlines about economic instability? It’s either stories on how inflation is rising, markets are crashing or totally unpredictable, and words like recession pop up frequently too.
All these things get tossed around with alarming frequency making us feel like the world is doomed! It’s no wonder many of us can feel fear creeping in, what with all this economic uncertainty. We can’t help but wonder, what’s going to happen to us all?
This fear you have isn’t irrational! Economic downturns have very real consequences.
Now although economic uncertainty sounds like it is a global thing, or government thing, and doesn’t necessarily affect us directly, it actually does! It shows up everywhere.
You’ve probably complained about it when you have gone shopping for your groceries. Prices for basic goods and services have gone up making it harder to stretch your paycheck, so inflation and the rising cost of living is a killer!
So with all the uncertainty, most of us are becoming more hesitant in what we spend our money on. Plus, it’s not just us who are struggling and watching their pennies. For example, small businesses may hesitate to expand, and big companies are not lashing out with their dollars either.
All these hesitations, while completely understandable, can create a cycle of economic stagnation, reinforcing the uncertainty we’re all trying to escape!
How to Manage Your Economic Fears
Although it feels like there is nothing you can do when the economy seems unstable, there are ways to manage your fear and take back a sense of control. You simply can’t allow your fears to dictate your decisions. If you do you risk acting out of panic instead of calm strategic thinking.
Understand Why Things Happen The Way They Do
Everything comes in cycles, and economies are cyclical. Recessions happen, but they’re also temporary. Inflation rises and falls. There are always ups and downs, good and bad times. So while it’s important to stay informed, remind yourself that no downturn lasts forever. The economy has weathered countless crises in the past and they have also recovered each time.
Focus on What You Can Control
When the big picture feels overwhelming, stop looking at the big problems and start looking at your own. You have to focus on your personal finances, not the government’s debt. Ask yourself these questions:
- Do I have a budget and am I sticking to it? If not, I will start one!
- Do I have an emergency fund or a few savings to get out of trouble if a financial crisis occurs?
- Am I reducing my debt? If not, I will start paying $5 (or more) off extra per day or week to reduce it as fast as possible.
An important note to make here is that when the economy is in trouble, you should be reducing your debt as much as possible! Not taking holidays or spending frivolously.
Diversify Your Finances – Don’t Put Them All In One Basket
If global shifts have taught us anything, it’s the importance of not putting all your eggs in one basket! Diversifying your income streams, investments, and savings can provide you with more stability. This might mean seeking financial advice to spread your investments across different assets, but it also means you could explore new skills to expand your career options.
Educate Yourself About Money
Why weren’t we taught this important concept in school? Knowledge is power and the more you understand about personal finance the better! Do you know how the markets work, how to manage risk, and how to build wealth? Most of us don’t. Yet if and when you do, the less intimidating economic instability will feel to you. So take time to learn!
Avoid Emotional Decisions
Fear often pushes us into making impulsive choices, which can lead to costly mistakes. When emotions take over, it becomes harder to think clearly and make rational decisions. For example, many people have lost significant amounts of money by hastily selling off their stocks or shares during a market downturn. Perhaps you or someone you know has had this happen to them!
Without a clear plan in place, our emotional reactions can cloud our judgment and result in us making regretful decisions.
I just want to reassure you now, that it is completely normal to feel uneasy about the economy right now, especially when so much feels beyond your control. However, let me remind you that the state of the economy and your fear doesn’t have to hold you back! In fact, you could use it to your advantage!
It could be the push you need to take the right steps to a better future, whether that’s from fixing your budget, learning more about finances, or preparing for the unexpected.
So while the economy is doing its thing, you can be doing yours!
