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This Week In Your Wallet: You, In Control

Jean Chatzky  |  February 1, 2022

Plus, what’s really going on with the market swings.

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This Week In Your Wallet: You, In Control

What does it mean to be in control?

I’ve been thinking a lot about that question recently. In fact, I can pinpoint when it started running on a loop in my mind. I was in a car, headed to a birthday party for my cousin Ilene. I wasn’t driving, but I was in the front seat with my cousin, Marcy (who was behind the wheel, bless her), and then my mom and her sister, my Aunt Rosa, were in the back. I’d put the address into Waze, because I’m pretty new to Philly, but also because traffic can be bad and we were running a little late. And as soon as Waze started spouting directions, my Aunt Rosa – who has lived here her whole life, as she pointed out more than once – started disagreeing. “No, that’s not the right way to get on the expressway,” she said. “No, you’re better off going through the park. No. No. No.” Or something to that effect. It wasn’t very long before all of us were arguing – with Waze right in the middle.

After we got home (without incident, Aunt Rosa agreed with Waze this time around), I focused on what happened. My Aunt Rosa is in her mid-80s, and, like many people her age, there are a lot of things going on in her life over which she no longer has control. Her vision isn’t what it used to be. Her arthritis makes moving around painful. And the pandemic, of course, with its limitations on where you can eat, and what you can do, and who you can see, has made it all worse. So she is trying to control the things that she actually can. Like dictating the best way to get from Center City to the suburbs.

I don’t blame her one bit. I also think there’s an important financial lesson in here for all of us. 

No matter how old – or young – you are, there are only so many things you can control when it comes to your money. We can’t control the markets, or interest rates, or inflation, or whether new tax credits come online, or whether the Fed stops buying bonds. (In fact, when we do try to control these things it’s when we end up making money mistakes.) But there are many, many other areas of our financial lives where we should be able to drive the bus. We should be able to control how much we save, how we choose to spend, how we allocate the money that we invest, whether or not we protect ourselves with the right insurance policies, whether or not we’ve put a will in place, and so on. And the more control we exert over those controllable areas, research tells us, the better we feel. In writing my book, The 10 Commandments of Financial Happiness, I studied 10 measures of control. Things like saving 5% of your income, setting some goals, and paying your bills as they come in. And the closer a person got to checking those 10 elements off their list, the more their happiness went up.

So…why don’t we do these things? Because we’re human, and humans are impulsive.  Humans also don’t always do the things we know to be in our own best interests (see: exercise more, drink less, avoid fried anything). But there are some things you can do to put a little more control back in your life. I get into two of them (courtesy of two of my favorite Jasons) in the sections that follow – one involves better control of your time, the other puts the recent market volatility in perspective.

If it’s a desire to spend less, save more and feel like you’ve got control over your cash flows, join me for the next session of FinanceFixx, an 8-week coaching program that I developed after decades spent helping people with this exact issue. You’ll work with a small group of people dedicated to making the same changes that you are right now. You’ll have access to an amazing coach (and me!) and go through a step-by-step process. Not only will you feel like you’re driving, you’ll also feel that you’re fully in control of the keys. We’ll be running classes throughout the year, but there are a couple of seats left for the group that starts Monday. I hope to see you there! 

Early To Rise

The Wall Street Journal’s Jason Gay often makes me laugh – and he did again this weekend with his story of discovering the joys of waking up at 4 a.m. to start the day. Oh, I know. When I was in middle school, my mother went back to school to get her master’s. With three kids in the house, there wasn’t much time to study, so she set the alarm for 5 a.m. and put in two hours before anyone else woke up. I borrowed that strategy to write my books. The early morning hours have the benefit of being largely email free. No one is texting you. All you need is coffee and a comfy place to get to work. 

Rising early. It’s something that four of the five female CEOs HerMoney’s Javacia Harris Bowser profiled this week credited with helping them build their successful morning routines. (And the outlier who now gets up at 6:45 says she aspires to start setting the clock earlier.)  But there are other helpful tips if you’re looking to jumpstart your day. As one of the women she interviewed points out: “The start of my day is also something by and large that I control with little exception which makes this time my most cherished and intentional.” Right!  

Market Swings

Finally, let’s spend a minute on those market swings. The ones we experienced last week were anxiety-provoking — a week ago Monday, the Dow experienced a 1,000-point swing not once but twice. The S&P 500 ended the week down 9% on the year, the NASDAQ down 14%. And yet, these sorts of ups and downs aren’t all that rare. CNBC’s Patti Domm explains they feel that way because we haven’t experienced them so much recently, particularly last year when the trend was up, up, up. Knowledge of the markets’ historical patterns is helpful to keep in your back pocket. Even better, though, Jason Zweig, who I find myself turning to often in these times, is a good grip on who you are as an investor today…and down the road.

“If you have decades more investing ahead of you, then your future self is likely to be annoyed—or could even be materially impaired—by rash moves made now,” he writes.  “If you’re retired or about to retire, your future self may be glad you scaled back risk if stocks later decline.”  This reminder is particularly helpful: “Investors should care about levels of wealth: how much money they have. Instead, they care about changes in wealth: how much they’ve just made or lost.”  In other words…it isn’t all relative. At least, it shouldn’t be.

Have a great week,

Jean

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