How Staying Calm Can Help Your Finances

Have you ever been through a stock market panic? Most people try to get out as quickly as possible but end up selling at much lower prices than they hoped. When the dust settles, they discover the prices eventually recovered, and they sold for no reason. In other words, they got caught up in the frenzy of the panic.

It’s not just the stock market that people panic with their money.

Sometimes, you may get conned into buying something that costs a lot of money and goes against your financial plan. For instance, if you have ever been face-to-face with a timeshare salesperson, you could get caught up with buying into one.

There have been many warnings about people taking advantage during these troubling times by offering fake cures for the Coronavirus, information about stimulus checks, and other scammers taking advantage of the pandemic.

In the past, you may have made some impulse buys with high price tags that made you feel buyer’s remorse after doing so. Impulse buying is common, but don’t beat yourself up. In this day of advertising bombardment, most ,people will fall into this trap on occasion. One trick is to freeze you credit card to limit overspending...as you wait for the card to thaw out you may lose interest in purchasing what's in your cart.

In many states, you have a certain amount of time to return something by law when the item or service is over a certain dollar amount. You will need to check your state or country’s laws. The point is to stay calm and consider all your options. If you are stuck with the purchase, you can try to sell it. You may have to take a little loss on the item. But, at least you should be able to recoup some of the loss.

The best advice is to come up with a financial plan. Measure any action you're going to take against that, and if it doesn’t fit, don’t take action. For instance, treat the stock market as a vehicle to buy companies. Most people treat stocks as a piece of paper that they believe will continue to go up in value. These people are prime candidates for panicking during extreme market conditions.

You, on the other hand, will stay calm because you measure the situation on how it fits with your long-term financial plan.

If you struggle with coming up with a plan, find a financial planner or advisor. It pays to be critical when choosing one. A bad planner will end up costing you more in fees and poor investment choices. If you can find others who you trust for recommendations, this is often a great way to choose a financial planner.

In all cases, remember that you have the ultimate decisions to make with your money. And often, it's not how much you make each month, but rather, how much you don't spend, so pay yourself first by investing in a savings vehicle such as a Roth IRA.

Until next time...

Lisa