Personal Finance Lessons We Should Learn From This Stock Market Crash
Learn to invest smarter the rest: Easier said the done, right? Actually, it doesn't have to be complicated as we think. We just have to take a more proactive role in learning to invest rather than just say "we are in it for the long term." We don't have to be in the stock market 100% of the time to be in it for the long term. We just need to know what to invest in, when to invest, when to stay out, what to look for, have a stop program to protest us and learn to the correct way to diversify. These posts and my guide give great insight in how to get started. There is no excuse for you not to do better!
Build an emergency savings account: Yeah, yeah, I heard that one before. I know it's hard and takes discipline, but we realize how important that becomes when things get rough. Having an emergency savings account offers several advantages:
You don't have to tap your 401(k)
You have to time to rearrange your finances to make things work
You have a financial and, more importantly, an emotional cushion that you can rely on
Developing the discipline to save is a handy, transferable skill that can be used to pay off other things, like credit cards
Pay off credit card debt: Now may not be the best time to pay off your credit card, but you should start to develop a plan of action to eventually pay off credit card debt. That extra $200 or more a month you pay in debt could've gone into your pocket or help pays bills. From now on, consider the savings from not having your monthly payment as a raise without asking your boss or as an extra savings advantage when times get tough in the future. Or, you could be putting it towards your retirement plan.
Frugal Living: Tightening your belt during tough times puts you into survival mode. Imagine if you are able to extend that through good times as well. Being able to live cheaply throughout your life provides you not only the economic cushion of savings for you to invest what you have, but cheap living also gives you the resourcefulness of being able to change your life in an instant. If you know how to cut back because it is a part of your normal routine, you can start to build that psychological freedom to reach your life goals. You will now have more economic freedom to move your life in the direction you want it to go. Start by living below your means.
Be willing to change your job or careers: I know it sounds obvious, but when it comes down to it, many don't want to change. They already know how to do their jobs. Tell that to all the mortgage brokers, real estate agents, construction workers and Wall Street investment bankers who lost their jobs in the last few years. It's in our best interest to be on the lookout for trends in our own industry, and to be flexible to move to another industry if need be. Focus your attention on the transferable skills you already have. If you need more education, approach your boss, or look to more cost effective educational solutions at the community college to provide alternative career paths.
Value what's important: Investing right and saving is not the only thing in life that matters. They are just tools so you can live the life your want to live. While they help provide the ability to make choices, it is up to you to examine what you want to do with you life, where you want to go and what you want to experience.
Tough times are a measuring stick for how we handle and adapt to difficult situations. But it also demonstrates how flexible and creative we can be as life changes. We can't always have an ascending line of wealth presented to us. It's is up to us to make the changes necessary to give us room during the more difficult times so we can get back on that path when times get better
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