10 Ways to Stress-Check Your Money When the Economy Goes Bad

Editor’s Note: This story originally appeared on Boldin.

With the stock market jumping up and down, global oil prices under pressure, and headlines warning of economic uncertainty, it’s understandable to feel uneasy about your financial future.

Market downturns can cause real emotions: fear, urgency, and the temptation to act quickly. While that reaction is natural, quick financial decisions are rarely the most productive.

Economic Uncertainty Requires You to Ask the Right Questions

Times of uncertainty can actually be some of the most important times to revisit your financial plan, assuming you’re asking the right questions.

Instead of worrying about “What should I do right now?” — remember that a stable financial system is not designed for perfect markets. It is designed to help you make informed decisions when conditions are uncertain.

1. Has Something Changed About My Long Term Plan? Is It Necessary?

When markets fall, the first question you should ask is “What should I do about the market?” Say “Has anything changed about my plan?” and “Does my plan need to change?”

Your financial plan is built around your life goals: when you want to retire, how much you want to spend, and what resources you have. Short-term market declines do not change those fundamentals.

Market volatility is common. In fact, a well-constructed financial system assumes that markets will go through down times along the way.

As Bruce Lorenz, CFP, with Boldin Advisors, often reminds clients: “Market volatility is short-term. Your financial goals are long-term.”

That said, if your plan hasn’t been exposed to market fluctuations — or if your portfolio has changed significantly — it can be helpful to reevaluate your thinking and see how the downturn affects your outlook.

2. Is My Investment Plan Designed to Handle Recessions?

One of the most effective ways to manage market volatility is to separate short-term spending needs from long-term investments.

Money that you expect to spend in the near term should generally be kept in assets that are less exposed to market fluctuations. Investments intended to fund spending many years from now can always be invested for long-term growth, when there is more time to pay back a downturn.

Ask yourself:

• Do I have six to 12 months of living expenses in cash or emergency savings?
• Is the money I will need in the next three to five years protected from market volatility?
• Is my long-term investment set to grow over 10, 20, or 30 years?

Having enough funds means you won’t be forced to sell your investment at a bad time when the markets go down. It provides both financial flexibility and peace of mind in uncertain times.

As Mike Pappis, CFP specialist and head of support at Boldin, explains:

“Building enough cash to put money away is often one of the first areas financial advisors tackle, whether a market downturn is imminent or not. Having this cushion allows investors to ride out volatility without disrupting their long-term plan.”

Lorenz adds, “A well-constructed investment plan anticipates market downturns. Markets move in cycles, and periods of volatility are rare. The goal of an investment strategy is not to avoid all downturns. You want to build a diversified portfolio that can withstand those periods while keeping you on track toward your long-term financial goals.”

3. Will a Market Downturn Affect My Retirement Plan?

For people nearing or in retirement, a market downturn can raise questions about withdrawals.

If part of your income comes from your investment portfolio, a negative return early in retirement can have a greater impact than a decline later. This concept is known as the risk of sequence of returns.

Questions to consider include:

• How much money do I spend depending on portfolio withdrawals?
• Can I temporarily reduce withdrawals if the markets go down?
• Do I have other sources of income available, such as Social Security, a pension, or part-time work?

Understanding how withdrawals interact with market performance can help make your retirement plan stronger.

4. What Happens to My Plan If Markets Remain Weak for Years?

Instead of trying to predict what the markets will do next, it can be more useful to test how your plan holds up under difficult market conditions.

For example:

• What happens if markets take several years to recover?
• What if negative benefits occur before retirement?
• What if inflation stays high?

Test situations like these can reveal potential risks to your financial system and give you an opportunity to make changes before they are needed.

5. Has My Portfolio Deviated From My Target Allocation?

Market declines can cause your portfolio to deviate from its target allocation.

For example, if stocks fall sharply, your portfolio may now have a greater percentage of bonds or cash than originally intended. Rebalancing can help restore your target risk level and may involve buying stocks at lower prices. This is not market timing, but rather revisiting your target investment risk level.

Maintaining a systematic asset allocation helps ensure that your portfolio stays consistent with your long-term goals and risk tolerance.

Lorenz reminds clients, “Market volatility doesn’t change the purpose of your portfolio. Rebalancing helps keep your plan on track.”

6. Where is my Plan Flexible?

One of the most overlooked strengths of the financial system is flexibility. A solid retirement plan rarely depends on one approach. Instead, it provides many instruments that you can adjust, especially in situations such as major market declines.

Even small changes can improve results. Examples of flexibility may include:

• Temporarily limiting discretionary spending, such as travel or entertainment
• Delaying Social Security to increase guaranteed income for life
• Skip the inflation adjustment to use the money for a year or two
• Pause or delay large one-time expenses, such as home renovations or major purchases

These changes don’t require major lifestyle changes, but they can significantly strengthen the long-term sustainability of your retirement plan. Understanding where volatility is in your plan can help you approach volatile markets with greater confidence and avoid feeling pressured into making sudden financial decisions.

7. Am I Focusing on What I Can’t Control?

Market movements, inflation, and economic topics cannot be changed by worry or wishful thinking. But many decisions that affect your long-term financial results are still within your control.

Things like your savings rate, spending habits, investment costs, and your ability to stay disciplined during market fluctuations are all decisions you can influence. When the markets feel uncertain, shifting your attention to these controllable factors can help restore a sense of direction and stability.

While no one can control the performance of the market, maintaining consistent financial habits and focusing on the decisions you control can have a powerful impact on your long-term financial results and peace of mind.

8. Do I Respond to Articles or Revise My Program?

Market volatility often brings many surprising headlines and predictions about what might happen next.

No one has a crystal ball.

But financial news is designed to attract attention, not to guide personal financial decisions. Before rushing into the latest market news, it can help to pause and review your own financial plan.

Ask yourself:

• Has anything changed in my system?
• Did I lose my job or take a pay cut?
• Are my long-term goals different today than before the downturn?
• What do the numbers in my plan suggest about the way forward?

Your personal financial plan is often more relevant than the daily news cycle.

9. What Decision Will I Be Happy About Five Years From Now?

Momentary fear often leads to decisions people regret later. Instead of focusing on today’s uncertainty, move your vision forward.

Take a moment and ask yourself: When I look back on this moment five years from now, what decision can I be confident about?

The answer often points to patience, discipline, and sticking to a thoughtful long-term strategy.

Pappis says, “The biggest risk during a market downturn isn’t the market itself; it doesn’t have a plan. If you have a plan, you can evaluate different scenarios, adjust your thinking, and make informed decisions instead of reacting emotionally.”

10. What Opportunities Could A Market Downturn Cause For Me?

Market declines are uncomfortable, but they can also create opportunities for long-term investors.

When stock prices fall, expected future returns generally improve because investments can be purchased at lower prices. For investors who are still saving or have cash to spare, periods of market weakness may allow them to buy stocks at a discount.

Other possibilities that may be considered include:

• Continuing or increasing regular contributions to retirement accounts while rates are low
• Rebalancing your portfolio, which may involve buying stocks that have fallen relative to bonds or cash
• Tax loss harvesting, where you sell an investment at a loss to reduce other capital gains for tax purposes
• Converting retirement savings into a Roth IRA during a downturn, which may allow you to pay taxes on a lower account balance.

Even small, specific steps taken during a market downturn can have a meaningful impact on long-term results.

Of course, the goal is not to try to time the market perfectly. Instead, the downturn may be a reminder that investing is a long-term process that includes both tough times and boom times.

By always thinking and directing, investors can sometimes turn uncertain times into opportunities that strengthen their financial future.

Stay Focused on Your Plan, Not the Topics

Market volatility is inevitable. But uncertainty doesn’t have to lead to bad decisions.

The real benefit comes from having a financial plan that allows you to evaluate trade-offs, evaluate different scenarios, and make informed decisions instead of reacting emotionally.

Tools like the Boldin Retirement Planner can help you model different market outcomes, review your assumptions and variables, and understand how changes in your spending, retirement timing, or withdrawals could affect your long-term financial future.

If the markets are making you uncomfortable, now might be a good time to revisit your plan.