ADAPERS PRESS by Adriana Morga
New York (AP) – Financial markets are volatile. Consumer trust is at the lowest level in five years. Economists say the risk of a recession is rising.
It all leads to economic uncertainty for many Americans. A recent poll by the Associated Press Center for Public Affairs found that around half of US adults say President Trump’s trade policy will rise “significantly.” And about half of Americans are “very” or “very” worried about the possibility that the US economy will fall into a recession in the coming months.
Matt Watson, CEO of financial planning app Origin, says it’s a period of uncertainty for everyone, including experts.
“No one has a crystal ball. Even people who have done this professionally and have been very successful over the years know what will happen,” he said.
If you’re worried about how economic uncertainty will affect you, here are expert recommendations.
Stock your finances
The first step to preparing for uncertain financial times is to know where you are starting, Watson said. Look at your budget or debit card expenses and make sure you understand how much you spend each month.
“We’ll take stock of places that are in line with different categories,” Watson said.
Looking at your savings and investment status, you can also provide ideas about your overall financial health.
Find a place where you can cut it
The more mandatory costs you can suspend, the more you save for emergencies.
“Your choice is really to cut it now or cut it later, so it’s easier to cut it now and have a cushion,” Watson said.
If you finding a place to cut it is difficult, Jim Weil, managing partner at Private Vista, a financial planning company, recommends splitting your expenses into three buckets, needs, desires and wishes. Wishes are large costs that can be postponed, such as vacations to Europe.
For the time being, cut costs from the desired section until you feel your finances are in a good place.
Take care of your mental health
You may feel anxious between the news about tariffs and unemployment. Courtney Alev, a consumer advocate at Credit Karma, says it’s important to protect your mental health while also caring about your finances. Sometimes reading too much news that can affect your finances can be overwhelming and create more stress than you need.
“It’s a good habit to provide information, but I don’t want the news cycle to consume you,” Aleph said.
When it comes to finances, if you are experiencing high levels of stress or anxiety, it is best to contact a professional who can help you, such as a financial therapist.
If you are looking for regular mental health services, most health insurance covers some type of mental health support. If you don’t have health insurance, you can search for slide scale therapists across the country, such as Findtreatment.gov and The Anciety and Depression Association of America Directory.
Focus on what you can control
Rather than worrying too much about the economy of the nation as a whole, Aleph recommends focusing on aspects of personal life that you can control to feel confident in the event of a recession.
“Identify the changes needed to put in more safety nets that could give you confidence,” Aleph said.
What you can control includes budgeting, creating emergency funds and reducing unnecessary costs.
Create an emergency fund
Whether you’re worried about job security or high prices for your products, it’s best to sit down and reassess your budget and create an emergency fund. Emergency funds can feel unattainable when finances are already difficult, but even a small amount of cash can make a difference, Aleph said.
Ideally, the emergency fund should reach a cost of 3-6 months.
Weil recommends starting to think about special commitments that could be next year or two, such as university tuition fees and moving. If you are planning a big financial commitment in the near future, Weil recommends planning to build a larger emergency fund.
Monthly financial check-in
Alev recommends adjusting your budget regularly to keep your financial goals on track. Monthly budget check-in helps you identify when you are spending too much or whether your needs are changing.
“Budgets are just as good as helping you make decisions, so don’t be afraid to update and adapt your budget as months go by,” Aleph said.
Which type of debt to work on first
Many Americans suffer from debt, whether they are credit card debt or student loan debt. However, if you want to create an emergency fund while you are working on debt, you will need to prioritize.
“We think about different types of debt,” Weil said, adding that we can put the debt on three buckets.
Weil recommends prioritizing repayment of high-profit obligations such as credit cards. You can make additional payments or pay the minimum payments so you can make more rapid payments. Long-term debt, such as student loan liabilities and mortgages, can be addressed with more modest payments, while focusing on creating an emergency fund.
If you have credit card debt and are unable to make much progress in paying it back, Alev recommends trying to eliminate or reduce the amount of credit you use.
Don’t panic about investing
There have been some bad days in the stock market, but it’s best not to respond to the market. It’s best not to hurry and make a decision, especially if you have investments in a retirement vehicle, such as the 401(k), Alev said.
“You really want to avoid panic. It can be anxious, but you probably have time to make up for it,” she added. If you’re close to retirement, Alev recommends considering a more conservative investment.
The Associated Press is supported by the Charles Schwab Foundation for education and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
