The debt ceiling is the legal limit on how much the federal government can borrow to pay its bills. The White House and House Republicans are currently in a showdown over the nation’s debt ceiling, which has led to concerns about the potential impact on personal finances and the stock market.
If the U.S. hits the debt ceiling, it could lead to default and unleash fiscal calamity. This is particularly concerning as inflation is still high and the Federal Reserve’s measures to fight it could push the economy into a recession.
The stock market is also a cause for concern as investors try to invest for retirement or build enough savings to sustain them during tough times. Stocks sank this week amid layoff announcements from companies such as Microsoft and Google, and signs the economy might be slowing.
Preparing for Economic Uncertainty
Given the current economic uncertainty, it makes sense to seek professional advice about your investment strategy. Here are eight tips for finding the right financial planner to help you navigate rough economic times:
- Ask friends and family for recommendations, but don’t bypass your own fact-checking. A planner who works well with a friend or a relative still might not be right for you.
- Look to financial planning organizations for referrals. The National Association of Personal Financial Advisors (napfa.org) can put you in touch with a fee-only planner. The Financial Planning Association is the membership organization for certified financial planner (CFP) professionals. Search for a CFP online at fpanet.org/plannersearch. You could also check the National Association of Insurance and Financial Advisors (naifa.org).
- Search planner networks. Try the Garrett Planning Network (garrettplanningnetwork.com) or XY Planning Network (xyplanningnetwork.com), fee-only financial advisers focused on working with Gen X and Gen Y or millennials.
- Check credentials. Planners with certain designations must meet specific educational and experience requirements. Look for planners with the CFP (Certified Financial Planner) designation, which is a rigorous and comprehensive program that covers financial planning, taxes, insurance, estate planning, and retirement planning.
- Look for a planner who is a fiduciary. This means that the planner is legally required to put your interests ahead of their own.
- Consider the planner’s fee structure. Some planners charge by the hour, some charge a flat fee, and some charge a percentage of assets under management. It is important to understand the planner’s fee structure and how it aligns with your financial goals.
- Schedule a meeting with the planner. Before committing to working with a planner, schedule a meeting to discuss your financial goals and to see if you are comfortable with the planner’s approach.
- Do your research. Look at the planner’s website, read customer reviews, and check for any disciplinary actions or complaints against the planner.
The key to successful investing during uncertain times is to know your risk tolerance and make a commitment to keep the assets that you don’t need for a long time invested in the stock market through thick and thin. By following these tips and working with a financial planner, you can better prepare for a potential debt ceiling crash and protect your personal finances.