A Message for Younger People

This piece is intended for anyone who is under 35 or so.

The country, the world, is currently in the throes of its latest crisis. This may be the first crisis you are experiencing as an independent adult. We are truly sorry to inform you it won’t be the last.

We are happy to inform you that the country and the world have survived every past crisis and we will survive this one!

We would like to share our experience with you as financial planners to help you survive times like these. Our focus will be on the financial aspects.

Reality

Let’s start with the most basic concept. Life is not easy. Life is also not fair. Bad things and bad times happen. How you prepare for them and how you handle them when they occur determines how well you come out of them on the other side.

Preparing for Bad Times: Personal Events

Preparing for bad times that occur in your life is very different than preparing for a national crisis. Examples of personal bad times that can impact your financially include losing a job, getting in a car accident, getting sick or hurt or a storm causes damage to your house.

Losing a job can happen for lots of reasons. Education is an important factor in reducing the chances of losing a job. Initial educations like trade schools and college have been shown to be highly important to stable employment. Continued learning is also crucial to staying employed. Make yourself employable.

The items we noted in the first paragraph are all helped by having good insurance. Note: good does not always mean cheap. Work with a qualified and experienced agent to help you find the coverages that are right for you. We both hope you never need to use any insurance. But if you ever need it, you want a quality product from a quality company. Quality is not defined by price.

Preparing for Bad Times: National Events

When there is a national crisis or recession, the impact can be is widely felt. There really are only two things you can do to reduce the negative impact of a recession or national crisis on your personal finances.

The first is to not build up massive debt levels and the second is…

Money in the Bank!!!!

The exclamation points mean this part is important!!! Having money in the bank is what allows you to weather bad times.

Money in the bank allows you to pay your mortgage, utility bills, car loan, etc.

Money in the bank gives you the emotional and financial ability to ride out a market downturn.

How much money should you have in the bank? Most economists suggest 3-6 months of income. The more unstable your paycheck is the more money you should have in the bank as a percentage of your income.

There is only one way to save: spend less than you earn. Dedicate a portion of your paycheck to build your money in the bank (emergency) savings) Put the money in a different bank so that you won’t touch it.

Most people will not heed this advice. Don’t be most people!

Experts, and Smart People

During recessions or national times of distress, self-proclaimed experts pop up everywhere.

Listen to the experts. Listen to the people who are much smarter than you.

Just because it is on the internet does not make it true. If some reporter or blogger is telling you what an economic report says, go read the report for yourself. Make sure that what the reporter or blogger said is the whole story, not just some cherry picked data to push a political viewpoint.

TV, Blogs, etc

Understand why these exist today. When we were your age or maybe younger, the news was intended to provide citizens with factual information.

Today, “news” is a profit center for massive media conglomerates.

In order to generate more profit, they must keep you tuned in through the commercials. Blogs have to grab your attention so more pop up ads will be displayed. Self proclaimed experts with their own TV shows have to entice you to buy their books or pay to subscribe to their newsletters.

In order to satisfy this profit first mentality, they must hype and sensationalize stories. Negativity sells. Also understand that much of the “reporting” today is skewed to fit into a specific political perspective.

Politics

Speaking of politics: put them aside during times of trouble. Understand that politicians are not much better than reporters. They are both looking out for their own interests, not yours.

Focus on the things you control, like your attitude, your outlook and supporting those who rely upon your positive outlook and hope for the future.

The Importance of Looking Forward

In the good times, you should do what you can to prepare for the bad times. During bad times, you should focus on a few things:

• Your health—physical and mental.
• Things you could have done differently to prepare for the bad time/event. Apply those lessons.
• Look through the bad time/event. Remember, the good times last longer than the bad times!!

Disclosures

The information contained is derived from sources believed to be accurate. However, we do not guarantee its accuracy. The information contained is for general use and it is not intended to cover all aspects of a particular matter. The views expressed are our own, and do not necessarily represent the views of The Investment Center, Inc. IC Advisory Services, Inc. or any other member of their staff. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Entities or persons distributing this information are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

Past performance does not guarantee future results. Investing involves risk, including risk of loss. Diversification does not ensure a profit or guarantee against a loss. All indices are unmanaged, and performance of the indices includes reinvestment of dividends and interest income and, unless otherwise noted, is not illustrative of any particular investment. An investment cannot be made in any index.