Financial Planning Bites - Moving Ahead with Confidence and Flexibility Despite Economic Uncertainty

As Americans face rising expenses, ever-changing tariff news, and fluctuating labor and financial markets, it’s easy to view current economic volatility as a crisis demanding immediate action. 

If you’re feeling your anxiety rising, you’re not alone. According to the Conference Board’s monthly Consumer Confidence survey, confidence has fallen to lows not seen since the onset of the COVID pandemic, and expectations for the future are at a 13-year low. 

Observers say the policy uncertainty is higher than it has been historically, leading even the most experienced investors to say that this level of ambiguity feels worse than past downturns.

Keep Your Long-Range Plans in the Forefront

It’s difficult to ignore the natural impulse to move fast, but it’s important to keep the long game in mind, say the financial experts at May Barnhard Investments (MBI). Sticking with the fundamentals can help you avoid making mistakes that can cost you in taxes and investment returns down the road.

Remember the basics: Save three to six months of expenses in an emergency fund, monitor expenses and debt load, and maintain a diversified investment portfolio despite drops in the market.

But that doesn’t mean you shouldn’t be proactive and examine your options now. 

Actions You Can Take Today

Manage your cash flow – The Conference Board reports that tariffs are a top concern among consumers, and auto dealers are among the first to see evidence of that – in the form of “panic buying” cars imported before the 25% tariff went into effect in April. Car costs are predicted to rise – potentially up to $10,000 based on the model ­– and tariffs on auto parts will make repairs more expensive. If you were planning to buy a vehicle anyway, it makes sense to act now. But ask yourself – are you just buying a car now because of the tariffs? If the tariffs were non-existent, would you still be making this purchase? It’s important to assess what your needs and priorities are when it comes to spending and saving. Every situation is unique. The increase in auto costs is just one example of rising prices across the board. It’s more important than ever to be cognizant of what your expenses are.

Examine your debts – If you’re paying high interest rates on credit cards, mortgages or other debt, now is a good time to see whether you can refinance to get a better deal or pay it off entirely, saving on interest costs. At the same time, inflation, combined with higher prices on tariffed goods, will make it more difficult for some consumers to pay their debts, which could impact retirement planning. If you’re worried about your cash flow now, MBI financial planners can help you make sense of it all.

Reconsider your tolerance for risk – Economic volatility, which is expected to continue through the rest of the year, tends to make investors more cautious, so it makes sense to give your portfolio another look. A common question is whether to move investments to more conservative vehicles. History shows that staying the course with a well-balanced portfolio is the best strategy for better long-term returns, but if you can’t stomach recent market declines and you have little runway before retirement, think about visiting your financial planner or wealth advisor for guidance. But remember that if you panic and move all your money to cash investments, you’re essentially locking in a loss because history shows the market will bounce back. Emotional investing usually leads to poor results.

Revisit your retirement plan – Some federal government employees are facing firings or unexpected early retirements, but they’re not the only ones affected. Massive reductions in federal grants are hitting government contractors, nonprofits, and public schools and universities, where programs and jobs are being cut. Workers are also voluntarily retiring early in the current environment. If your employment status has changed or if it’s just time for a financial check-up, you can benefit from another look at your retirement plan. Make sure to visit MBI experts, who can stress-test various scenarios, such as different ages to start collecting Social Security or retiring a few years early, to ensure you are still on track to meet your long-term goals without relying on large withdrawals from retirement savings.

Plan for a long life – Since Americans are living far longer in retirement, investors are looking at multiple possibilities for the future, including chronic illness, disability, or age-related needs, such as moving to an assisted living facility or nursing home. Long-term care insurance is one option, although it may be prohibitively expensive later in life, and may not be necessary if assets are available. These are emotional and difficult issues. MBI’s health scenario planning involves developing and testing strategic options you can employ down the road.

Prepare for major life events – Divorce, death, a health crisis, or even happy occasions like a wedding or a child entering college, can take a major toll on finances, no matter what the market is doing. The emotion surrounding these events can lead to rushed decisions, but if you’re prepared for the unexpected you can weather the blow. Again, an MBI advisor can help with guidance that is personal to your situation. 

Turning Insight into Action

In turbulent times, knee-jerk reactions can work against your best interests, even though it feels like you’re taking control of a volatile situation. On the other hand, some are frozen by indecision and fear and do nothing. Taking no action may be the right move in some cases, but it can’t hurt to review your financials - you may be in a better position than you think. MBI advisors can keep you on track, helping you re-examine your long-term goals to make thoughtful decisions, and giving you the confidence and flexibility to withstand whatever comes next.

As always, keep an eye out for our regular articles, updates, and webinars to stay informed and make confident, well-timed decisions. 

*Investment advisory services offered through May Barnhard Investments, a registered investment advisor. Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional. May Barnhard Investments are not affiliated with or endorsed by the Social Security Administration or any other government agency. The information published herein is provided for informational purposes only, and does not constitute an offer, solicitation or recommendation to sell or an offer to buy securities, investment products or investment advisory services.