Two Important Personal Qualities for Navigating Economic Downturns
Jean Chatzky, the financial editor for NBC’s TODAY, once conducted a large study, in partnership with Merrill Lynch and Harris Interactive, to identify what separated people who were successful—in a wide range of financial situations—from those who were not.
As you might have guessed, saving and having a financial plan was part of the answer. But so was being optimistic and resilient, Chatzky said in a recent conversation.
And, those are the skills we need now—and can cultivate now, she said.
“You can become a more optimistic person if you want to be. One way is to keep track of good things on a daily basis. Keep a gratitude journal or a happiness journey. You have to show yourself that good things do happen, even in bad times.”
As for resilience: “That boils down to control what you can and let go of the rest. You can’t control what others do. You can control what we do.” Likewise, you may not be able to entirely control your income but you can focus on controlling your expenses.
Keeping Perspective Also Helps
“If you have long-term time horizon and are not going to use your money [in the stock market] for the next five, 10, or more years, then take a deep breath and try not to obsess about the financial news,” said Chatzky who has been a financial writer since 1986 and witnessed at least four down-turns before.
“Continue to put money into your 401K and have confidence that based on history we will come back from this. American companies are good at what they do and will figure out how to come back.”
If you need money in the short term, think about where you can get it where it is going to cost you the least in terms of interest, taxes or penalties. That may mean tapping an emergency fund or home equity loan if those are options for you. Taking a hard look at your budget to eliminate unnecessary costs is also, of course, always a good move.
And, while it’s true that the markets don’t like uncertainty, and nobody knows how long this downturn will last, Chatzky sees another side to the story.
“The story I am telling myself is that when I watch Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, “I am confident he is a smart man and people like him will figure this out. Figuring it out in my mind means getting a handle on the health crisis.”
“We have to get a handle on the health crisis to get a handle on economic crisis. And, I believe that even though we don’t know a lot about what’s happening in terms of how long this is going to last and overall economic impact, we are seeing proposals coming from Washington and actions being taken. Day by day, it seems to me that we are moving in the right direction to get this under control.”
In short, Chatzky said: “If you are optimistic about the future of this country, and I am still optimistic, you have to tell yourself that we will eventually get to the right answers and get on back course.”
To learn more, visit Jean Chatzky’s Her Money, a new digital media company focused on improving the relationships women have with money.