With Uncertain Financial Times, What Can You Do To Protect Yourself?

Aaron Fransen, CFP®, CHS, MFA™ profile photo

Aaron Fransen, CFP®, CHS, MFA™

CERTIFIED FINANCIAL PLANNER® Professional
Fransen Financial Inc.
Office : 604-531-0022

A lot is going on in the world these days, creating a lot of uncertainty for people. People are scared about the impact of war, rising inflation, and higher interest rates, and looming recession.


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Sharon Epperson/CNBC

All this uncertainty creates financial stress. Sharon Epperson, the Senior Personal Finance Correspondent for CNBC, advises people to focus on what they can control in their finances. You never know what can happen, so a way to alleviate financial apprehension is to prepare for the unexpected.

Epperson recommends you focus your attention on what is within your control to help you mitigate any financial risks:

1. Knowing where you stand financially today

Assessing net worth is not just for rich people. You need to evaluate your net worth and know what that number is. Net worth equals all your assets, less all your liabilities. You need to understand if that number is positive or negative. Knowing that number will help you know where it is you need to go, whether it’s paying off debt or increasing your savings.

2. You need to plan your finances

Know how much money you have coming in each month and give direction to where that money can go. When you give yourself three to four goals to work towards, it helps you stay focused. Those goals may be to get out of debt, buy a car, save up for a down payment on a home, or any other financial goals that are important to you. Managing your personal finances is paramount for good financial health.

3. Where the money goes when it comes in

Knowing how much money you have coming in is just the first step. You must have a way to allocate your money into various bank accounts, not just one. This allows you to be more strategic about your pay and distribute to a few places to help you meet your financial goals. Types of bank accounts may include money for savings, emergency fund, and vacation fund.

4. Planning for something more than five years from now

When you have a plan for your money, you can invest that money for the long term. People tend to panic when investing in the markets and the market has a downturn. When you invest for the long term, you will see markets go down, but you will also see them come back up again. Having discipline and tolerating volatility is difficult so know your risk tolerance.

Allow a professional to help you invest in an array of stocks to stay in for ten years from now.

5. During all uncertainty another uncertain is you never know when something can happen

Epperson has her own experience of a medical emergency. In 2016 working at the height of her career, she suffered a brain aneurysm rupture. Half of those people who experience this die immediately, and two-thirds of those who survive have neurological deficits. Epperson was unable to work for a year, and in her recovery, she had to relearn everything from communication to balancing a checkbook.

Epperson didn’t know if she’d ever return to work. Fortunately, she had disability insurance through her company and had saved up an emergency fund. Those two precautions kept her finances healthy while she got back on track.

The bottom line is you never know what can happen in life, and by controlling what you can, you are offering a layer of financial protection for yourself and your family. Remember that it is good to talk with your support systems and networks about finances, as it makes us stronger as a community and helps make you stronger. Have those conversations, talk about the worry and insecurity you feel, and prepare your finances to endure hardships along the way.

By Melissa Houston, Contributor

© 2022 Forbes Media LLC. All Rights Reserved

This Forbes article was legally licensed through AdvisorStream.

Aaron Fransen, CFP®, CHS, MFA™ profile photo

Aaron Fransen, CFP®, CHS, MFA™

CERTIFIED FINANCIAL PLANNER® Professional
Fransen Financial Inc.
Office : 604-531-0022