5 Smart Money Moves to Make in Uncertain Times

by Michael Vaughn, CFP®

Billionaire and founder of Patagonia, Yvon Chouinard, has said, “Fear of the unknown is the greatest fear of all.” And lately, it seems as though just about everything falls under the category of “unknown.” Between an ongoing pandemic, global unrest, and political instability, we have daily reminders of just how unpredictable life can be—which can be scary. When unpredictability gains steam, we start seeing shocks to the stock market and the economy, as evidenced by increasing inflation, unemployment woes, supply chain issues, and plenty of volatility in the market. 

Have these volatile times made you fearful, making it hard for you to make decisions or plan for the future? You’re not alone. As we traverse continually turbulent waters, here are 5 money moves you can make to feel a little more prepared for whatever the unknown future holds.

1. Strengthen Your Emergency Fund

As the old proverb says: “Prepare the umbrella before it rains.” Building an emergency fund is the same as preparing the umbrella—it’s the foundation of financial preparedness. Generally, you should have enough money to cover 3-6 months of basic living expenses (mortgage, utilities, groceries, etc.). This money should be held in a highly liquid account so it’s readily available should an emergency occur. Look for an account that offers a competitive interest rate. You worked hard for that money, now put it to work for you. 

2. Watch Your Spending

If the emergency fund is the umbrella, then budgeting and tracking expenses are the sturdy rain boots you wear when the storm clouds come rolling in. Tracking spending habits can be difficult, especially in trying times, but thankfully there are several apps that will do it for you. Once you have a good idea of where you currently spend money, you can begin to build a budget around where you want your money to go. This can be modified as needed as time goes by and life changes so that you are better prepared to withstand potential fluctuations in income.

3. Manage Risk

Risk management is a great way to safeguard what you’ve already built. Unmanaged risk can mean the difference between maintaining an ample emergency fund or not having enough when you need it the most. Be sure to review your insurance policies, taking care to bring them up to adequate coverage levels. This should include life, health, auto, and homeowners insurance at a minimum, but disability, umbrella liability, and long-term care coverage should be considered as well. These risks are often overlooked and can be devastating to a financial plan. Making sure you are adequately covered now will save you time, money, and energy in the future.

4. Evaluate Your Investment Allocation

Investment allocation and risk tolerance are important factors to consider when assessing financial preparedness. If your investment allocation does not align with your risk tolerance, it can lead to unwise investment decisions. It’s common for people to feel worried when they see their investment values fall during a financial crisis, but a properly diversified investment allocation specifically tailored to your level of risk tolerance can alleviate quite a bit of the stress surrounding market volatility. This helps to keep you invested through the downturns so you can benefit from the potential growth when the market eventually recovers. In this case, “stay the course” is tried-and-true advice, especially if you have a long time frame before retirement and a sufficient emergency fund to get you through difficult times. 

5. Partner With a Financial Advisor!

Facing the unknowns in life is always easier with a partner by your side on the journey. Especially when it comes to finances, enlisting the help of a professional (whom you trust to provide objective advice) is arguably the wisest move you could make! Making smart financial decisions doesn’t have to be difficult or overwhelming, and we at Pinnacle Family Advisors are here to help you along the way. In fact, we specialize in helping our clients’ wealth work for them and not the other way around.

If you’re ready to take the next step in your financial journey, we’re here to help you navigate the unexpected. Schedule your complimentary introductory meeting by emailing me at [email protected], calling (417) 351-2942, or using my online calendar. Let’s get to know each other and see if we’re a good fit.

About Michael

Michael Vaughn is a CERTIFIED FINANCIAL PLANNER™ professional and Vice President at Pinnacle Family Advisors (PFA) with 21 years of industry experience. Before joining the PFA family, he served clients with investment management and retirement planning at The Mutual Fund Store for 14 years. Michael graduated from Missouri State University with a bachelor’s degree in business administration and management and earned his CFP® certification in 2004. He also served 20 years in the Missouri National Guard, retiring in 2007 as a Major. He currently volunteers on the board of directors for Good Dads and Fellowship of Christian Athletes. Michael is married to Lori and they have two daughters. To learn more about Michael, connect with him on LinkedIn.