In tough economic times, you may be tempted to overreact and make rash decisions, especially when the media is constantly bombarding us with doom and gloom. Instead of becoming a victim of all the bad news, it is better to remain calm, examine the facts so you gain some understanding of what is occurring, and take some smart measures to weather the storm.
It’s hard to understand how the country—and following that, the world—got into such rough economic shape. It’s very easy for your viewpoint to become a generalized “it's all bad out there.”
"A little study of the situation, searching the Internet or looking over financial publications will at least give you some specifics of what has happened, what's being done about it and, most importantly, where there are signs of recovery and where things are getting better," says David Lerner CEO of David Lerner Associates, a financial investment firm..
Practically, there are some prudent economic measures you can rely on during such times:
1. Wherever possible, stock up on emergency funds. Salt away some money that you can depend to get you through any lean times. Ideally, you'd want to be prepared to survive six months to a year, but any fund is better than none, and you'll take comfort knowing it's there.
2. Pay down your debts, and don't run up more. This is a good rule-of thumb in all circumstances, but especially during tough times. With any spare cash that might come across your plate, pay down that mortgage, pay off those credit cards and any loans. At the very least, don't take out another mortgage or incur further debt that will serve to come back on you when you can least afford it.
3. Adjust your investment portfolio. While advice along this line could run into pages and be subject to controversy, nearly everyone would agree that during an economic crunch it is better to adjust your portfolio to contain a majority of lower-risk instruments. Examine performance records carefully, and study prospectuses to discover those investments that fare better during recessions, and those that can hold up in different types of economic climates.
While the economic climate is unstable, do as much as you can to stabilize yourself, both financially and personally. The points above are a great way to start.