The global markets have been in disorder since the inauguration of Trump, with shares falling, then rising and then tumbling again after the latest rates news. Is it time to start panicking about the imminent financial apocalypse?
In short, no. But it may only be time to set up a plan so you are ready, if a recession happens.
This is the advice of Personal Finance influenceder Vivian Tu, better known as yourrichbff. Tu, a former Wall Street trader, is now at the head of her own financial education and advisory business – and recommends that we all breathe deeply.
‘The word’ recession ‘sounds almost like a curse word. It’s so scary, ‘she says The independent. ‘And it’s a normal feeling when things go bad. But firstly, we must remember that a recession is a normal part of an economic cycle. There is a boom, bust of periods, and then there is the dip, and then the recessier period. “
Although a recession may not be as scary and scary as feared, she says, there are immediate things that consumers should reflect on in the case of unforeseen and more challenges in the near term.
One thing is to make an emergency fund. In times of economic uncertainty, Tu encourages people (if they are capable of) to set aside a greater emergency fund than normal. She recommends that you set aside three to six months wages in a high yield savings account to cover supplies such as rent, basic groceries and other additions to end. Banks have the Federal Deposit Insurance Corporation Insurance, which means that if the bank collapses, your money (at least up to $ 250,000 of it) is protected by the government.
However, she does not recommend bumping it in cash.
“I certainly don’t store thousands of dollars in my house,” she says The independent. “One, because they are eaten by the cost of living and inflation, and two, they are not protected in the same way as in an entity. It’s good to have a little in your home, but don’t start filling money under your mattress like Grandma. ‘
Such periods of economic uncertainty can also be ideal times for self-audits, Tu says. It is not necessary to stop every purchase that brings you joy, but to pull the belt a little is good exercise.
Registration of receipts with grocery stores on cash-back apps, giving users the opportunity to make money back on purchases by scanning receipts, linking credit cards or buying their platforms can also be a useful tool, even if it saves only $ 5-10 per store.
“It adds up over time,” Tu says.
Another major output on personal finances is personal debt. “It is never great to have high interest rate debt, but it is especially not good during a period like this, because you will experience the weight of the debt payments more heavily on your wallet if there is just less money to go around and things cost more,” says Tu.
“I always say, if you have a high interest rate debt, make it a priority to pay it off. Anything above 7 percent really wants to pay off as soon as possible. ‘
Maybe it’s intuitive now, maybe the time for investments. The confidence that markets will inevitably bounce back means that meaningful penetration in a diversified portfolio, while prices are low, can eventually come up for consumers.
“The stock market is the only place where people are for sale,” says Tu. “Have you ever ran out of a sale in a department store? No. People like sales, except when it happens in the stock market. ‘
“If you have the funds to invest, now is one of the best times to do that.”
Above all, says Tu, now is the time for conversations and planning to do what to do if the worst happens – whether it loses a job, your savings drain or collapse your investments – avoid what she calls “paralysis through analysis”.
“My hope is that these conversations sit on a shelf and collect dust and cobwebs. But if something you have discussed in a few months, you won’t be so happy that you have at least a chalk link on what your plan can be? ‘ she says.
“You’re going to make better decisions from a place of security and comfort than you do the day that something bad is happening. So make a plan, keep the plan and hope you never have to use the plan. ‘
