Are you worried by the current economics news? The latest headlines of looming recession are troubling. But money expert Clark Howard says it’s more important to pay attention to the time horizon you have for your money.
Is a recession coming?
We’re in a unique situation where interest rates are at all-time record lows for 30-year federal Treasury bonds. Typically, that’s a strong signal of coming recession. Then couple that with the on again/off again trade war with China. It all adds up to a lot of fear.
Technically, recession is a decline in a country’s gross domestic product for two consecutive quarters. Of course, it is possible to have an economic slowdown without going into a recession.
But here’s the thing: The possibility of recession in the United States has increased significantly, according to Clark. And that’s why stock markets have been having a lot of down sessions and scary declines.
“My feeling is that you and I can’t control whether or not we go in a recession as a nation,” Clark says. “You can only control what goes on in the four walls of our own lives.”
If the economy does go into recession, workers will likely be impacted with less overtime, reduced hours, pay freezes and more. Would any of those circumstances throw your life into financial chaos? Then it’s time for a little pre-planning.
“Think through how you can be more careful with spending. Take the time to look through your bills, trim costs and build some breathing room into your life,” Clark says.
Here at Clark.com, we’ve got a lot of ways for you to save money in your life. We have advice on everything from simple budgeting to saving money on your streaming TV bill to lowering the costs of what you pay for insurance.
“This is a time that the economy is signalling for you to reduce debt and be careful with what you’re spending,” the consumer expert says. “Be prepared for what will not be an economic winter, but could be an economic fall.”
Special advice for investors
Meanwhile, if you have a retirement savings plan at work, you may be wondering what you should be doing right now.
The answer to that question depends on how long you have until retirement. The longer you have, the more the economic news of the day just becomes background noise. But if you’re planning to retire relatively soon, that is cause for concern.
“If there’s money you need that’s invested that you will need in next 24 months, it’s likely not a great idea to have that money invested in stocks,” Clark says.
If, however, you’re under age 45, the money expert’s advice is to keep doing what you’re doing. Continue to contribute to your 401(k) or Roth 401(k) at work each pay period — despite the downbeat economic news.
“A decline today typically makes you more money over the long haul than a market that’s rising,” Clark says.