Uncertainty. Fear. Confusion. Sacrifice. Acceptance. Anger. Excitement. There is a lot going on with the economy and lately. And, strong emotions about developments in Washington and across the world are piled on top of worry about our personal finances. However, it is possible to strengthen your financial well-being, even in of economic uncertainty.
While there is not much we can do about inflation, egg prices, the bouncing stock market, or even job security, there are things you can do to improve your own financial situation – even with all the new economic uncertainties.
What Do We Mean When We Talk About Economic Uncertainty?
Economic uncertainty refers to periods when the future of the economy is unclear due to factors like market volatility, inflation, job instability, or geopolitical events. It can impact everything from interest rates to personal finances, making it harder for individuals and businesses to plan ahead. Understanding economic uncertainty helps us make informed decisions about saving, investing, and protecting our financial well-being.
How is Economic Uncertainty Measured? And How Uncertain Are We Right Now?
According to Econofact, economic uncertainty can be measured in three key ways:
Financial Markets: Asset price volatility, such as fluctuations in stock markets, reflects investors’ expectations about future economic conditions.
Survey Data: Collecting qualitative responses from businesses and consumers regarding their perceptions of uncertainty offers direct insights into economic sentiment.
- It is probably too early to report on this, though the University of Michigan’s consumer sentiment index has been trending downward. And, on March 14, 2025 it posted a reading of 57.9, a 10.5% decline from February and below the Dow Jones consensus estimate for 63.2.
Textual Analysis of News Reports: Examining the frequency of terms related to uncertainty in news articles provides a measure of public and media sentiment about economic policy and conditions.
10 Ways to Protect Your Financial Well Being in Times of Economic Uncertainty
Here are 10 tips that you can use, no matter what is going on in the world to improve your financial well-being today and for the future.
1. Don’t Worry (Too Much) About Today’s Retirement Account Balances
Whatever your account balances say now, it doesn’t matter if you don’t have to withdraw the money.
The stock market goes up and down in the short term. Over the long haul, it has historically done nothing but go up. Even a worst case year-, two-year, five-year or longer contraction of the economy will eventually rebound assuming that history holds true.
There is no reason to sell if you don’t need the money. You will only be taking the losses. The losses are not a sure thing, not at all a reality, unless you sell.
IMPORTANT NOTES:
2. Assess Your Short Term Financial Health
When feeling anxious, it is a good idea to focus on what you can control now. Economic uncertainty can feel overwhelming. And, absolutely no one knows what is going to happen to our economy. But, you can assess how you are doing today.
How is your cash flow?
Spending more? Inflation is real. You definitely see it at the gas station, and probably the grocery store too. Now is a good time to really look at your spending and make some cuts if necessary.
Can you increase income? If you are still working, what can you do to safeguard your job or diversify your income?
Can you keep saving and investing? When times get tough, savings habits often fall by the wayside. However, when the stock market is down is the BEST time to save and invest.
Do you need access to cash or income now? Assess the best (and worst) sources of emergency money and income
Doing okay? Breathe.
Not doing okay? Breathe!
3. Keep Your Eye on the Long Term (Remember – Things Won’t Stay Bad)
The most recent bad economy was at the start of the pandemic. Those were unprecedented times when lives as well as livelihoods were at stake. However, we navigated our way back to prosperity.
The pace at which we live and innovate is unprecedentedly fast. Any financial losses may be quickly regained.
Is recent past performance an indicator of future success? Nope. Maybe? We don’t know. However, it is important to remember that over the long haul, the financial markets have always gone up.
Practice radical optimism
Radical optimism is the belief that humanity’s future, despite obstacles, is filled with possibility and progress. However, it is not blind positivity; instead, it is a philosophy that acknowledges that progress often emerges from uncertainty, failure, and gradual improvements. When these ideas are applied to personal finance, the framework offers fresh insights into building wealth. The focus of radical optimism is on the long term future. Learn more…
4. Understand and Take Advantage of the Evolutionary Purpose of Anxiety
Anxiety about economic uncertainty is a normal human response. From an evolutionary perspective, anxiety is a survival mechanism that helps us recognize potential threats and take action to protect ourselves.
- The good thing about anxiety: In financial matters, this instinct can be beneficial—prompting us to assess risks, prepare for downturns, and make thoughtful decisions about our money.
- The bad: Unchecked anxiety can also lead to impulsive reactions, such as panic-selling investments or avoiding important financial planning.
Instead of letting fear drive rash decisions, use it as a signal to take proactive steps: build an emergency fund, diversify investments, and stay informed. Recognizing anxiety as a useful tool—rather than something to be feared—can help you navigate financial uncertainty with greater confidence and control.
5. Plan for Worst Case Scenarios: Make a Plan A, B, C (Maybe Even D, E and F)
In the absence of being able to tell the future, it is important that you run worst case scenarios and create plans AND backup plans for your current and future finances. Facing the worst possible scenario is one proven way to overcome anxiety. In most cases, you’ll find that the worst case either isn’t that bad or it can be addressed.
Don’t just worry about what is going to happen to your finances, run scenarios and find out. No matter what, in all possible eventualities, you will probably find that you can make things be okay.
Here are a few worst case scenarios (and some opportunities) to try in the Boldin Retirement Planner.
What is the impact of a short-term reduction to your account balances?
It may sound scary, but facing fears is one of the best ways to deal with them. Run different scenarios with your savings:
- Enter your account balances as they stand today. Are your long term plans still solvent?
- Okay, be brave, and see what your long term plans look like if you model a large short term loss. (Find out how to assess the impact of a market correction on your money in the Boldin Planner.) What if your portfolio drops by 25%. Will you be okay?
- Try different rates of return. Remember, what is important is your overall lifetime returns, not what happens day to day, month to month or year to year. We will likely see wild swings in the markets, but that will net out to some average for your lifetime.
- Try bucketing your savings into what you need in the short term, mid term and long term and apply different rates of return for each bucket of money.
- Have access to cash? What happens if you invest it now? (Or, is it better to reserve that cash for the current situation since it will be of an unknown duration?)
- Can you keep pace with socking away retirement savings? What happens if you stop making these contributions?
What happens with high inflation?
Inflation has been a threat over the last two years. And, high inflation is particularly difficult for retirees who are relying on their assets for income. Inflation reduces the buying power of your savings.
Can you add an additional income source?
In inflationary times, you can cut expenses to stay afloat. You can also increase your income. Have you considered:
Debt
Keep an eye on interest rates and see if you are able to refinance into a lower rate. Think about your mortgage and other debt (credit cards, car loans, medical and any student loan obligations) you are carrying.
Spending
Use the Boldin Budgeter to:
- Set spending levels in over 70 different categories
- Apply must spend and nice to spend levels
- Alter individual costs over time
6. Review Your – or Take the Opportunity to Develop an – Investment Policy Statement
You probably know that you need a well diversified asset allocation plan. However, most people are not as familiar with the idea of an Investment Policy Statement (IPS).
An IPS is meant to define:
- Investment goals
- Strategies for achieving those objectives
- A framework for making intelligent changes to your plan
- Options for what to do if things don’t go as expected
A strong IPS can be an invaluable tool for helping you achieve your financial objectives and to stay the course when unpredictable things happen.
Did you know that Boldin offers flat fee advisory services? You can collaborate with a Certified Financial Planner who has taken a fiduciary oath and specializes in retirement. Your advisor will:
- Review your Boldin plan to quickly understand your circumstances and make sure it is set up properly.
- Help you establish goals and identify ways to strengthen your finances.
- Meet with you via phone or video call to discuss your goals and suggest ideas for how to do better.
- Provide ongoing support.
Set up a discovery call with Boldin Advisors.
7. Take Advantage of a Down Market
There are all kinds of ways to prosper when the markets go down. Explore 14 moves to consider in a stock market correction, crash, or bear market.
8. Keep Up Regular Savings Contributions. And, Consider Buying with Available Cash
If possible, keep up with your regular savings contributions. And, if you have cash available, consider buying. The time to buy into the markets is when they are down.
You don’t have to time the exact bottom. When the market is sliding, many people buy a little bit every day and keep buying every time the market dips.
The advantage of this strategy is that you are more likely to get in before things rocket back up.
You see, the reality is that stocks typically soar back upward well before the crisis that provoked the selloff has run its course. The market recovery from the 2008-09 financial crisis illustrates this vividly:
Despite assurances from the pundits that investors should not expect a v-shaped recovery, stocks did exactly that and recovered very quickly.
- From the market low in March 2009, the Dow Jones index gained 30% in the span of just three months.
- By the end of the year it was up more than 60% from its low point. All of this occurred despite fear continuing to grip the market and the widespread belief that stocks were experiencing a false recovery and would fall below their March lows in short order.
- Investors who were still waiting for the “all clear” signal to get back into stocks instead saw stocks leave them in the dust.
9. Be Very Cautious with Any Big Financial Moves
For the vast majority of investors, especially those who have a long term investment strategy, doing NOTHING when stock markets go down is the BEST policy.
The stock market goes up and down in the short term. Over the long haul, it has historically done nothing but go up. Even a worst case year- or two-year contraction of the economy will likely eventually rebound.
So, most of the time, it is important to remain calm, don’t let emotions or stress take over and just do nothing. Ignore it.
If you are considering any moves, you may want to consult with a Certified Financial Planner. Did you know that Boldin offers flat fee advisory services? You can collaborate with an advisor who has taken a fiduciary oath and specializes in retirement to:
- Evaluate your situation
- Help you upgrade your stock portfolio
- Develop an Investment Policy Statement, defining your investment goals and strategies for achieving those objectives
- Reassure you
Here are more tips for what to do when the stock market goes down.
10. Do What You Can to Control General Worry, Anxiety and Stress
Depending on your personality and the news of the day, controlling worry is a tall order. The following tips might not help with the financial anxiety that comes from economic uncertainty, but they are sure to make you feel better overall.
Limit media exposure
Being informed is critical. Curling up with your phone or laptop all day and endlessly scrolling is not healthy or useful. Experts suggest you set a limit for how much time you spend consuming information each day and stick to it.
Practice four count breathing
I used to think that breathing exercises were baloney until a doctor explained to me that you can trick your body into relaxing by mimicking the way a healthy body inhales and exhales when actually relaxed. A good basic breathing exercise is to
- Inhale for four seconds
- Hold breath for four seconds
- Then exhale for four seconds
- Repeat and feel your body relax
If using social media, engage
Research shows that people who use social media actively — by sending messages, leaving comments or talking in group chats, for example — report being happier than those who simply scroll through their feeds, absorbing news stories and viral videos.
Practice meditation
There are lots of online programs to help you learn.
Write
Spend a couple of minutes every day writing about what worries you. There is mounting evidence that keeping a journal provides a host of emotional and health benefits, including reducing anxiety.
Plan
Write down what worries you and a plan for addressing it. The Boldin Planner can help.