This Week In Your Wallet: Breaking Down Brexit
On Friday morning, many of us woke up to the news that the United Kingdom officially voted to leave the European Union — in popular lingo, “Brexit,” or the British exit of the E.U. The decision brought about the worst global sell-off in history (markets lost a combined $2.08 trillion that day), with additional losses in the U.S. Monday.
As I wrote for TODAY.com, the markets hate to be surprised, and this was a doozy. You can expect continued volatility as this shakes out in the coming months, but don’t allow it to derail the plans you’ve already put in place. It’s a good time to review your portfolio. Money earmarked for long-term uses (i.e. retirement, maybe college, etc.) should stay where it is. If you’d put short-term assets at risk that really didn’t belong in stocks, consider moving those you can’t afford to lose to safer havens. And remember, no move is often the best move.
Fidelity research tracked 401(k) investors who — in the fourth quarter of 2008 and first quarter of 2009 — moved their money out of stocks and into bonds or cash, and never went back. Over time, their accounts grew by 27 percent. But 401(k) investors who kept their stock investments throughout the 2008-2009 period saw their account balances grow by 157 percent. “Market volatility, with swings both up and down, is to be expected — the typical retirement saver will see multiple market swings in their career,” says Jeanne Thompson, vice president of thought leadership at Fidelity Investments. “If you want to take some sort of action during periods of volatility, this can be a good opportunity to make sure your asset allocation is on track and that you are contributing enough to take advantage of a company match.”
Saving Is Fun(d)
And while we’re talking savings — a new Bankrate.com report shows 66 million U.S. adults (28 percent) have zero dollars socked away for emergencies, and nearly half of Americans don’t have an emergency fund that could cover three months’ worth of expenses. Unexpected medical bills and car maintenance come up, and it’s usually not a question of if but when. Saving is a habit just like any other, and since humans aren’t exactly wired for long-term thinking, the best way to start is to automate savings so they flow from your paycheck into an account where you’re dedicated to keeping your hands off — if you don’t see it and you can’t touch it, you won’t spend it. Start saving with a goal of $2,000 in your emergency fund, and after that, try for three to six months’ worth of expenses. Your future self will thank you.
How To Manage Money When One Spouse Goes Self-Employed
Let’s say your spouse is planning to take the leap and go full-time with his or her side gig. You may be happy for them and/or thrilled they’re following their passion, but a little doubt likely flits across your mind: What about the money? Now that he or she likely has a less steady income for a period, Forbes has a few things you can do as a couple to manage the finances. First, build up an emergency fund (ahem, see above), ideally before he or she quits the day job. Use two checking accounts, one for fixed expenses and one for variable ones, so that a less profitable month just means reining in discretionary spending. Also, make sure to consider savings as a fixed expense like a bill so that neither of you falls behind on the future. For more tips on how to turn a passion into a business, check out episode two of my podcast, HerMoney with Jean Chatzky, where I speak to the co-creators of the hit podcast Criminal.
Privacy Pointer
In other news, a recent photo posted by Facebook founder and CEO Mark Zuckerberg has the Internet talking about security. One Twitter user spotted that in the background, there seemed to be tape over the camera and microphone jack of Zuckerberg’s laptop. This suggests he’s concerned about hackers using a process called “ratting” using remote-access trojans, a type of malware, to gain access to his computer’s camera or microphone. Zuckerberg is a prominent target, but The New York Times reports that people who aren’t billionaires or CEOs are also at risk, citing a report saying it’s a growing problem for consumers, with young women being targeted more often. So what can you do? Update your computer’s software, and use anti-malware and a firewall to protect your computer (PCMag has a list of some of the best anti-virus programs for 2016). And maybe stick some tape over your computer’s camera and mic jack when you’re not using them — just in case.
Productivity Hacks
Finally — maybe the week’s off to a less-than-productive start, or maybe you can feel the mid-week slump looming. TIME’s Motto has four techniques for beating procrastination, starting with picking a system — any system — and sticking to it. That could be carving out a certain amount of time each day to focus (and leaving your phone on silent in another room), working for thirty-minute periods or using your own to-do list of priorities. Another key? Since time is money, figure out where yours is going. Are you going down Internet rabbit holes or scrolling through your Twitter feed? Create a “time budget,” or track yourself for a day, and then create a productivity goal that works for you.
Have a great week,
Jean
