How Does Bad News Affect your Financial Plans

Overseas we see the European financial crisis continue to threaten the euro zone. Many European countries are in trouble which is hampering the U.S. recovery. Still most people are feeling the prolonged effects of the economic crisis.

With continual bad news some people become more pessimistic. This may cause you to shift your strategy to a more conservative path. Others have put off financial planning altogether. Fear has set in, causing a feeling of helplessness and desperation. 

When investors feel uncomfortable in the market many relocate their assets to a more safer more predictable asset class. If you have done your risk tolerance planning correctly you should be staying the course. But if you do feel uncomfortable you should talk to your investment planner, they should be able to talk you down or if you prefer adjust your investments to a less volatile portfolio. A good financial planner will help you remember that looking long term is the only way to attain your goals. 

Pessimism can lead you to stop planning and investing. Staying on track during negative times and returns is hard to do when your pessimistic. Fighting that feeling will help you stay on track. 

It’s important to keep in mind these facts:

• We have gone through the worst of the economic downturn.
• The U.S. is in a better position than most countries for recovery.
• Bad news always seems to get more attention than good news.
• Now is the time to be in position for upcoming economic growth.
• Now is the time to make sure your financial plan is in proper order.

While we are waiting for better times it is a good idea to make sure you have a good budget for all your spending. Keeping your spending in line will help your money go further. Also it’s time to find new sources of income to help get you through these days. You could take another job or start your own business. When your on the side lines its time to prepare for going back in the game.