Ugh…I have a disdain for personal finance experts who come across as preachy.
So, I endeavor not to ever be like one of “those” personal finance professionals. Because, here’s my theory: a) you’re grown, and b) even if you’re not the best at managing your choices around money, you manage other aspects of your life well – or, at least well-enough.
However, just for today, would you mind if I briefly donned a “preacher” hat? Meaning: I am waving my finger with one hand, and the other hand is on my hip (can you see me?), and I’m saying, “Now is not the time to have a passive approach with your money!” And for good measure, I’m shaking my head, too.
Of course, you know there’s never really a good time to be lazy (or should I say, less than proactive) – intentionally or otherwise – with your money. But, please, definitely not now!
Why would I say such a thing when the unemployment rate is the lowest it’s been since 2007, according to Friday’s jobs report from the Labor Department? And November continued the momentum of new jobs; it marked the 74th consecutive month of added jobs.
Why would I say that when housing prices in 2016 are at new highs, having returned to pre-2007/2008 crash levels? (And if you live in NYC, like I do, one could argue the same sentiment for rents – especially in newly desirable neighborhoods.)
Why would I say this when, according to the Commerce Department, the economy grew 3.2% the quarter ending September 30 – the best quarter in two years?
Why would I say this when corporate profits have soared and the stock market is at an all-time high? Heck, the stock market is up nearly 200% (that’s not a typo) since President Obama took office. We’re in a bull market with 7-1/2 years of gains behind it – the second longest bull market to date. (If you own stocks or stock mutual funds, you are probably quite happy.)
And just as Donald Trump’s election surprised all but a few. The same can be said for the stock market’s reaction to his victory: Instead of falling, as many had predicted (think Brexit), the market continues to rise.
With all this “good” news, why this appeal to you to not be passive? Why this appeal to stop putting your money on the back-burner — to make it a priority, not just in your head, but in your daily actions as well?
Because things are about to shift.
And not just because we have a new, incoming president; not just because we are “short” on the facts and “long” on the unknowns in terms of the policies his administration will get passed, to what degree, and with what impact; and, not just because we are about to experience an unprecedented intersection of politics, business and finance.
Things are about to shift because everything goes in waves – everything that goes up eventually comes down. Bull markets become bear markets that turn into another bull market…and so the cycle continues.
The issue is that no one has a crystal ball. So, no one can tell you and me precisely when the shift will happen. And often times, by the time you “feel” the shift and recognize what is happening, the time you could have used to shield yourself from the negative effects of it has passed because you missed the warning signs.
I am not tapping you on your shoulder to alarm you. I am doing it because I want you to engage with your money eyes-wide-open, so you can be as prepared as possible for whatever comes next.
Here are a few things to either pay attention to or do something about, starting now:
How liquid are you? How much short-term savings do you have; is it enough to withstand a potential downsizing or downturn in your business?
- Interest rates.
If you carry a credit card balance, when did you last check your APR? Has it gone up? If you’re planning to refinance or purchase a home, will you be ready to move forward in the next 3-6 months?
- Credit score.
If its not 720, what can you do to increase your score? If you already pay every bill on time, can you make reducing your outstanding balance a priority?
The best thing to do is nothing. Don’t try to make maneuvers now in anticipation of what you think will happen after the inauguration. That said, if you’ve been investing for a particular goal and that goal is coming due in 6-12 months, now is a good time to start dollar-cost-averaging out of the market to make sure the amount you need is liquid when you need it.
- Create your 2017 game-plan.
What is your game-plan for the coming year; what role does money play in making it happen? And if taking on the entire year is too much, just think about the next 90-days ahead. But don’t just think about what you want in the new year, also consider what are you going to do differently. If the approach you took in 2016 didn’t net the results you wanted, why would repeating that approach work in 2017?? (That’s, at least the question I asked myself recently.)
As with any election, lots of changes are afoot. What those changes will be and to what degree will they affect you and me, who knows.
But I do know this: your financial health and well-being is your responsibility. That isn’t something you can afford to abdicate. Not now as we continue to relish in the current bull market, and certainly not when the tide changes and the bear (as in bear market) comes out of hibernation.
To quote the financial author, David Bach regarding his take on Trump’s impact on personal finances, “…the masses are going to have to help themselves.”
Yeah, now is not the time to have a passive approach with your money. But, actually, this has always been true.
p.s. Thinking about making a financial decision, choice or move and want my actionable insight and feedback? Click here to tell me more about where you are and what you want, and to schedule a financial assessment session. Beginning in 2017, these sessions will no longer be free.