From past recessions to the recent health crisis, there is a constant reminder that so many things are not really in your control. When there is uncertainty in the economy, many individuals may feel the need to make a change in their personal economy. Even in the best of times, it can be challenging to know what to do with your money as you can make a variety of financial decisions. However, making a knee-jerk decision with your finances doesn’t always play out the way you hope. Similarly, burying your head in the sand like an ostrich and doing nothing while ignoring your money isn’t always the answer.
It is relatively common to have some money sitting in your Venmo, PayPal, and Cash App accounts in this day and age. When you discover you have money sitting there, it can even have the same feeling as when you find a 20-dollar bill in your jeans pocket after not wearing them for several months. Unfortunately, while it can bring you a sense of joy when you find that cash, it isn’t likely the best use of your money. Below are a few reasons why:
The popularity of keeping money under your mattress dates back to the Great Depression-era bank runs. During this time, people lost faith in financial institutions, and widespread poverty meant safes were no longer affordable for most. As a result, Americans became distrustful of those who held their money and what they may do with it. As a result, literally sleeping on top of your savings became a favorite location to stash one’s savings.
Refraining from using financial institutions for your money is generally a poor idea. Here is why:
If you have more than $100 in cash at your home, you may have too much. Many people keep a little money on hand for those unique moments, like when you need cash after a neighborhood kid offers to mow your grass and sell you some candy for a school fundraiser. The smart money move is to keep minimal cash in your home. Here is why:
Whenever the economy or market is volatile, having a plan can help you navigate this time of uncertainty. In many cases, if you don’t have a financial plan, it is easy to jump from one financial or investment trend to another. Studies show that every change in the economy does not generally sway those with a solid financial plan in place.
A financial plan can help keep you focused on what you want out of life – your long-term goals. Therefore, making it less likely that any life change or short-term hiccup in the economy diverts your attention from your ultimate target. And, it is never too early or too late to start. Whether good or bad, the decisions you make today will affect your future.
If you are interested in learning more about comprehensive financial planning, our team at Spaugh Dameron Tenny can walk you through what it is and what it looks like for your specific situation. Then, schedule a complimentary discovery call with a financial advisor to learn how SDT can support you and your financial goals.
For over 50 years, Spaugh Dameron Tenny has provided comprehensive financial planning for physicians and dentists across the U.S. In addition to providing personalized advice, we walk our clients through their options to help maximize finances and maintain financial security.
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