Monitoring what’s happening in the U.S. economy isn’t always easy. Seemingly small events that happen within our borders or overseas can sometimes have a huge impact on the markets and the economy. Adopting the right mindset and following a few common-sense rules may help you survive regardless of short-term events.
1. Focus on Long-Term Goals
Building assets for a financially secure retirement, saving to send family members to college, and buying a home are the types of goals that many families pursue regardless of current economic conditions. Remaining focused on longer-term financial goals may make it easier to adopt the perspective that short-term events could be a temporary setback.
2. Manage Your Budget Carefully
Saving more may not necessarily require extreme sacrifice. For instance, could you take a less expensive vacation every year or eliminate two restaurant meals per month and apply the savings to longer-term considerations? With year-end holidays coming up soon, could you purchase thoughtful but economical gifts? Your family may be able to make other trade-offs to free up savings.
3. Enhance Your Job Skills
If you haven’t learned new skills in a while, consider training at work or on your own. By learning something new, you may be in a position to do more than one type of job, be more productive, and potentially earn more in the future.
Paying attention to employability may be important regardless of your age. If you are in your 20s or 30s, possessing marketable skills at a relatively young age could impact your ability to invest for retirement, purchase a home, and pursue other financial goals. But if you are in your 50s and facing a nest egg that is smaller than it used to be because of the recent stock market downturn, many individuals in your situation are considering postponing retirement. Working longer than you had originally planned could be a more realistic objective if your skills are in demand.
4. Adopt a Value-Oriented Mindset
Consider whether economic changes of the past two years could create longer-term opportunities to create value. For example, if you can arrange financing, and real estate values have declined in your area, this situation could present a chance to purchase a first home or buy investment real estate. If a soft real estate market has deterred your plans to sell your home, consider whether you can remodel your residence, which could potentially enhance its longer-term value.
The U.S. economy will probably continue to experience ups and downs over time. A focus on your long-term financial picture may position you to get through short-term economic challenges and be a true economic survivor.
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© 2011 McGraw-Hill Financial Communications. All rights reserved.
March 2011 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by D3 Financial Counselors, a local member of FPA.