Like many of you, I've been disturbed by the economic news swirling around us. It's made me think about the difficult times that my grandparents and my parents went through, and I've found myself saying, "Well, OK. I guess it's our turn." But if what we're going through now is in any way analogous to what the previous generations had to live through, I think there are some important lessons we can learn from their past experience. To me, those lessons have to do with keeping a cool head and appreciating the other things that are really important in our lives -- and what better time than at Thanksgiving.
In the past year, I've written a lot about asset allocation. About having goals and sticking to them. About the importance of a long-term view. I believe these principals remain incredibly important and are your best strategy, especially during rocky financial times. Keeping an eye on your long-term plan will help you resist the urge to react emotionally to market swings. Interestingly, I think these same principals can also apply to our personal lives, helping us weather the current economic storm and understand how riches can go far beyond our portfolios.
Asset allocation is all about balance. So think about your life balance. Imagine your values in a pie chart. What's most important? Family? Health? Meaningful work? Friends? Economic success? If you're comfortable with how all these pieces of the pie work together, you may find it's much easier to make adjustments to get through times when one or the other isn't working as well as you would like.
For instance, if you need to cut back on certain expenses such as entertainment, you may find you have more time to spend at home with your family. With a little planning, that night at home with the kids can be just as much fun (maybe more) as a night on the town.
Even times with your friends can be richer. For instance, just the other day I was talking to a colleague who said she and her friends had decided that, while they still wanted to get together, they no longer wanted to spend so much money on restaurants. Instead, they had a potluck dinner at home and felt as free and lighthearted as they did in their student days.
When I talk about saving, I often suggest writing down your goals. This might be a good time to write down other goals. Do you want to focus more on healthy living? Reach out to your neighbors? Contribute time to a community cause? If you're feeling down about the market, try to redirect your energy toward personal achievements that go beyond return on your investments -- achievements that can reward you in positive feelings, not just positive numbers.