We’re in the middle of an economic shock – and it feels eerily familiar. When the past three economic shocks were happening, we felt like we were at ground zero. In 2008, we were plunged into the Great Recession. In 2020, the world shut down, and the stock market went into free fall. In 2023, there was a bank run, and three of the largest banks in US history failed. Today, we’re faced with the potential for global retaliation and economic impact of tariffs. And as before, we have no idea what’s going to happen next. Cue dread and feeling overwhelmed.
So what do you do next? Do you pull all your investments out of the stock market? Hide money under the mattress? Move out of the country? My answer to all these questions: Don’t do anything.
Why? Let’s assume that, as far as we can tell, you have a stable job that won’t be affected by what’s happening in the economy or the government. You also have enough in cash savings, some investments, and the right types of insurance. Everything is pretty much in place, so to speak. If that’s the case, there’s really nothing you can – or should – do to adjust to the current situation. If your job isn’t as safe, you may need to play out the worst-case scenario to figure out what, if any, adjustments you need to make. Whatever your situation, having a playbook will help you tune out the noise and decide what you really need to do.
In this post, we discuss five “plays” you can use to stay focused and grounded as we move through another economic shock.
A playbook for economic shock
While a playbook for an economic shock is a “break glass in case of emergency” type of guide, it also contains best practices for facing any kind of uncertainty. Habits such as focusing on what we can control, examining how we spend our money, and playing out the worst-case scenario can help us see that an economic shock probably won’t have the huge impact we think it will. And even if our lives are disrupted, we can still roll with it.
Bring it back to what you can control
Amid any economic event, the first thing we need to do is focus on what we can control. Ask yourself: How does this situation affect my life and my financial plan? The first place your mind may go is your job: Is my job stable? What happens if I lose it? If you go into reactive mode, you may make decisions that don’t support your life. This is where you need to focus on what you can control. You can’t really control losing your job during an economic shock, but you can control how much you spend, how much money you draw from other resources, and, maybe most important, your mindset.
Tune out the noise
In many of my recent conversations with clients, I hear different takes on what will happen politically in the United States. But we’re not political scientists. Even if we were, we still wouldn’t know exactly what was going to happen! During an economic shock, it’s very easy to start trying to predict the future and image all sorts of destructive scenarios. As a result, we become overwhelmed and unable to separate our lives from the destructive scenarios in our head. In such cases, it’s important to tune out the noise and remember that you don’t know what’s going to happen any more than the next person.
Let’s say you’re getting close to retirement, but the market is down. Your immediate reaction might be to pull money from the market. Before you do that, take another look at your financial plan and play out worst-case scenarios. If the market stays down, how do you need to adjust? What other resources can you draw from? What small tweaks do you need to make to stay the course? With a playbook in hand, you’ll know how to face almost every situation and still be able to retire as you planned.
Stick to your plan
Speaking of plans, when things seem unpredictable, don’t change them! You’ve worked hard to create a financial plan aligned with your values and goals. Now is not the time to throw it out the window.
Remember when the market fell a couple of weeks ago (though it already feels like years ago)? Some people sold their investments and put everything into cash. Ultimately, you can do what you want with your money, but when do you go back in? Whenever I ask people this question, they can never answer because the market may either be getting worse, in which case they wouldn’t want to go back in; or things are getting better but they missed out, so why bother getting back in?
The fact is that we can’t time the market. And when you look at how people grow wealth and build investment returns, you see that money needs time in the market. So it’s about sticking to your plan and staying the course. Otherwise, if you miss those little windows when the market goes up, you may be destroying your wealth.
Honor your concerns
There are times when making a small move or adjustment to your financial plan could help you feel a little more at ease. Maybe that’s pausing your monthly investments and stacking up cash for a while. That’s not going to hurt anything. You’re not pulling out of the market – you’re just honoring how you feel.
Check in with yourself and make moves that align with how you actually feel. That’s how we keep going – without getting stuck in the what-ifs.
Look for opportunities
When things feel uncertain, it’s easy to go into reactive mode. But sometimes, an economic shock can reveal opportunities: space to pause, reassess, and plan more intentionally. That might not mean jumping into action right away. It might mean getting clear on where you really stand. For example, you may lose your job in an area where jobs are scarce. You might then have an opportunity to change careers and do something more fulfilling.
A shock can sometimes force change, but it can also open up space to reflect, recalibrate, and make your next move more intentional – not reactive.
Economic shocks are disorienting, but that doesn’t mean you need to change what you’re already doing. When you feel overwhelmed by uncertainty, use your playbook to keep you grounded. Once you assess how the current economic conditions affect you on an individual level, you can continue following your playbook, revisiting it and adjusting it as needed. Even when the future seems uncertain, we can count on a financial playbook to help us see a little bit of silver lining.
Jim is a financial advisor and owner of Thinking Big Financial, Inc. Thinking Big Financial is a fee-only registered investment advisor offering financial planning and investment management services. Specializing in working with the LGBTQ Community.
Please read my legal disclaimer here.