Hey Man, What’s the Plan?

Do you consider yourself a planner? Are you organized and take satisfaction from knowing everything has its place, its purpose, and inherent value? Usually these types of people tend to be the most successful. They take notes on their daily lives, organize their documents in an easy-to-access fashion, and create to-do lists before they start each day. These sorts of habits keep people steady in the face of adversity. They realize that even when things happen that are out of their control, they can always rely on their organization and good habits to keep them straight and steady. Their success rests in their ability to track their progress, and are comforted by the reminder that good habits over a long period of time produce good results. That is not to say people who do not adhere to this lifestyle can not become successful, but among successful people these traits are always present.

Make Good Habits with Your Money

If you actively make good habits within your life, chances are you have good habits with your money. You don’t overindulge, you invest before you spend, and you budget out your month, week, or day. In other words, you have a plan. A financial plan! It looks different for everyone, and will change over the course of your lifetime. A solid financial plan is the key to generating long-term wealth, but the hardest part of having a plan is, well, sticking to it.

With that in mind, it’s October! If you are familiar with the stock market, you probably know that October is historically known for losses and big swings (also known as volatility). In fact, on this first day of October, 2019, the Dow Jones Industrial Average Index fell -1.28%. If you don’t know much about the stock market, that’s a lot. For some people, that could be a lot of red numbers staring them in the face after today’s market performance.

Not a lot of people can handle that kind of volatility. Admittedly, it takes a strong gut to watch your account numbers fly around like that. Most people take on an emotional and mental toll seeing their hard-earned dollars sent through the spin cycle of an October stock market. And that’s okay! So many people feel that way about their money, they even coined a term for it – panic sellers. These people have their hard-earned money invested into the market, but as soon as they see those numbers go down they sell their investment. They can’t bear the idea (pun fully intended) of losing money, so they get out.

Stick to the Plan!

Did you know that if you let your emotions get the best of you, they’ll come back to bite you? Selling your investments is a taxable event. You may now owe the government some money! Moreover, if your money is in a tax-advantaged retirement account, such as a Roth IRA or 401(k), you might even be penalized. To add insult to injury, you might be charged a higher commission or sales charge depending on your asset allocation. In other words, it’s like kicking yourself while you are already down. You wouldn’t do it to yourself, don’t do it to your money.

Think back to the original question in the beginning of this article. Are you a planner? Are you organized? Are you comforted by your ability to stick to a plan when in the face of adversity? If that is true, then this is no different. Stick to your financial plan! A single day of losses in the stock market has no effect on your money if you have a long-term plan. Want to know why? It’s because you had the plan in the first place. The entire purpose for making a plan is to fight through adversity that occurs out of your control. You alone can not control the stock market, so don’t try to. Stick to your plan, because therein lies the comfort and steadiness you originally sought to achieve.

If You Can Control Your Emotions, You Can Control Your Money.

Ask yourself the BrightDimes all-time favorite question – “what is my money mindset?” Are you in control of your money, or is your money in control of you? Watching your account balance ride the waves of a stormy October can generate very strong feelings and urges to deviate from your financial plan. If acted upon, you succumb to your money’s control. In this case, your money dictated your emotions and actions, caused you to stray away from your plan, and probably hurt you more than you realize. There is no forgiveness in giving in to your own self doubts.

Conversely, someone in control of their money sees the bigger picture. A day of losses means very little when they know that they are on the right path to achieving long term goals. Their long term goals are defined by their consistent and disciplined good habits that, through thick and thin, will get them to their destination.

Staying organized, taking notes, and making to-do lists is a transferable skill that you can take to your bank account. Stay organized, take notes, reconcile your accounts, and keep pushing towards your financial goals through a solid financial plan.