When you go see your doctor, he or she will typically give a general set of rules for you to follow to stay healthy. These rules are meant to be followed in all situations. Not just for the good or the bad days but everyday. Each patient is unique and has his or her own set of rules to follow, but there is a general set of Do’s and Don’ts that everyone should follow:

·        Do eat healthy

·        Do drink water

·        Do exercise

·        Don’t drink alcohol

·        Don’t overeat

·        Don’t smoke

The list can keep going, but you get the idea.

Consider this hypothetical: You are attending a party and there is unhealthy food, alcohol, tobacco products, and other temptations that your doctor told you to avoid. Everyone at the party is telling you have to try them all or you're going to regret it. The fear of missing out is weighing heavily on your soul.  Luckily, you remember what your doctor told you, so you follow the rules and still have a great time. Also you get to leave the party without having to find a ride home or feeling the gut guilt of munching on too many fatty foods.  That sense of accomplishment is a hard feeling to beat, especially when it means a healthy future.

Doctors are modern day heroes and I can’t hold a candle to their importance, but there is a correlation to the idea of guidelines for your physical health and your financial health. Just like the rules of staying healthy, there is also a long list of Do’s and Don’ts to stay financially fit.

Here are a few guidelines to follow during volatile market environments. While each client is unique, there are still a few simple and general guidelines to keep your financial goals healthy for the long term.

 

DO keep investing

While times of heightened uncertainty may seem like the best time to cash out and stuff it all under the mattress, this could end up being one of the biggest mistakes you could make. This is the most common mistake investors make with their accounts and is largely a reason I have a job. Take a step back and think about it. Most people are comfortable investing when the markets are going up and sometimes unknowingly during the peak of the market cycle. But when the markets drop and investors see their balances taking a hit, the natural reaction is to cash out. This basically saying that most people like to buy when stock prices are high and sell when stock prices are low. Realistically, investors should be trying to save more money to invest and buy low. Never stop investing at regular intervals and try to never cash out until it is time to fund your goal. In most cases it could help you find more investing success in the long run.

 

DO keep a budget

Household debt in the United States just topped $16 trillion this year. That is scary number. This kind of debt is comprised of things like houses, cars, and credit card debt. Younger generations have proven to be good savers because they have been told their whole lives they will never see a penny of social security. This is probably true, but the upside is that it is inspiring a good habit of budgeting and saving. There are a ton of reasons to keep a budget to increase savings, but oddly enough it becomes a fun activity after while. Stress is reduced by an enormous amount once there is less debt to worry about and when more security of a fully funded future is realized.

There are a ton of savings methods available to try so that you stick to a budget. My favorite is the pay yourself first method. Each paycheck you receive has a required amount that must be removed and put into savings that can never be touched unless it is for an emergency or to pay for a goal it is dedicated to. Currently my wife and I are saving for a house. Our method is that we only live on her paycheck and 100% of mine goes towards our house goal. We put it in an account right away and can’t touch it unless it is to pay for the house. This way we barely know that money exists and isn’t considered to pay for things such as bills, groceries, and most importantly, useless stuff.  Always keep a budget.

 

DO make goals

Saving without a goal makes saving lose its luster after a while. Saving money should have a purpose. Investors need to have motivation in order to stay committed to saving and investing. Your ability to save and not dip into the account is amplified when you have a specific reason for investing in the first place. Like I mentioned, my wife and I want to buy a house but we don’t stop there when identifying the goal. We get very specific about what we want in the house. A pool, a finished basement, a location near a good school for our kids, a decent sized yard, etc. The more specific we get about our goal the more we found we were saving to be able to afford all those nice things. A retiree should do the same. Don’t just save for retirement. Think about what retirement will look like. Do you want to travel? If so, where? Do you want to relocate? If so, where and what will you do when you get there? Do you want to stay close to your grandkids and provide them with education funding? Do you want to start another small business? There are a million questions you could ask yourself about what you want to do with a very large portion of your life. These questions will help you see what you want your future to look like and that visual will help you save more to get you what you want.

 

DON’T follow the herd

Ever wonder why the news is so depressing? It is because bad news has a much more significant impact on the brain. Did you know on average it takes 6 pieces of positive information to offset 1 piece of negative information to the average person’s psyche? Negative information sells much better for a reason. Humans are predisposed to focus on bad information because of the cost of now paying attention to it could create expensive consequences. This has been bred into our genetics since we were cave-people. It is the essential fight-or-flight trigger that we always have at the ready.   

During market volatility, all we see in the news is negativity. Day traders even track when CNBC uses the headline “Markets in Turmoil” as an economic indicator. This sends all of the individual investors heading for the exits. The result is that the markets fall, and guess who is there to catch it all? The institutional investors waiting to scoop up all of the shares being sold at a discount. This happens every time the markets sink, so why aren’t the individual investors doing what the institutions do? Herd mentality. It is a real thing. So the advice is that when others are running for the exits just hold tight and buy if you can. Never follow the herd or you will be just another part of the herd losing money to the institutions.

 

DON’T deviate from your plan

If you work with a financial planner then most likely you have created a plan for market volatility. Panicking and taking an unnecessary risk during volatile markets could hurt your progress towards your goals. Stick to your plan because it was made when you had a clear mind and had the right information to make that plan. Realize that you are probably under more stress now than you were then, and you most likely aren’t prepared to make rational decisions. Keep your cool and stick to the plan. You should  feel good knowing that this was expected and you were prepared.

 

DON’T do it alone

Hopefully you don’t turn to the internet to solve your health issues. You should take financial planning seriously as well and not just turn to YouTube for financial advice. This could end up costing you more money in the end because of the many pitfalls you will find in financial planning. The cost of a planner is well worth it for the peace of mind alone, but the amount of knowledge and technology you will have at your disposal will help you stay on track to handle any situation the market can throw your way. Don’t do this alone and find a qualified professional who can help you navigate these choppy waters.

 

Ryan Kaysen is a Certified Financial Planner at Integritas Financial who can help you create a plan and mindset to be prepared for times like these. Reach out today to get started!

Fiduciary Mission

At Integritas Financial, we are committed to providing fee-only, fiduciary financial planning services that are tailored to the unique needs of young professionals, particularly millennials. Our experienced planners work with you to develop customized financial plans that address key areas such as estate planning, trusts and wills, retirement, workplace benefits, education funding, student debt, and buying a house.

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Our goal is to help you achieve a stable and prosperous financial future by providing comprehensive financial planning services that are tailored to your individual needs. Whether you're just starting out in your career or you're already well-established, we can help you navigate the complexities of financial planning and create a roadmap for success.

Ryan@if-money.com