Financial Literacy Month’s Stock Market Woes
April is Financial Literacy Month, and boy are we getting a challenging daily lesson.
The U.S. stock market has dropped over 15 percent since Trump took office.
Canada’s stock market is down about 10, while China and Germany have lost almost 5 percent.
If you don’t need the money right now, every financial expert says to hold on because if you sell, you would be selling low and losing money.
Also, holding on has historically created even bigger balances than before the drop, if you have 10 to 20 years or more to allow stocks to bounce back.
So, what happens if you don’t have 10 to 20 years? What happens if you are forced to retire early or you have to take RMDs, or Required Minimum Distributions?
Well, first of all, make sure your “emergency” fund is fully funded.
If you work for yourself or your income is inconsistent or you’re living off of social security, I want you to take your necessary expenses (housing, utilities, groceries, health insurance, transportation costs) and multiply it by 6 to 12 months.
6 months are for those of you who are big risk takers. You’re OK with gambling, and it doesn’t make you that uncomfortable to ride this economic downturn.
12 months are for those of you who are not comfortable with this downslide, don’t feel secure or safe, and even if it’s not quite true, you’re panicked that you’re going to end up on the streets. Or you’re perhaps just more comfortable with a year’s worth of expenses saved up, like me.
For most of you, it may be in-between, so plan for 9 months.
Put that amount into a high yield savings account that earns between 4-5%.
Next, re-assess your values and priorities. For example, I want to take my mom to Paris. Adventure and travel are high on my core values list, but if I was getting close to retirement, I may want to hold off, for at least a few months, if not this entire year. I also want to check that everything I’m spending my money towards, aligns with my core values of:
Love
Humor/Levity/Laughter
Freedom / Independence
Proactive / Action-oriented / Take ownership of your own life
Loyalty/Trust/True community/relationships/friendships
Inner Peace/Growth/Spirituality/Hope/Faith
Intuition/Compassion/Empathy
Health/Vitality
Creativity
Passion/Excitement/Change/Adventurousness/Curiosity
So, if I took a look at my non-necessities, what doesn’t align?
All of the streaming services. I can keep some of them, but not have all of them!
Limit food delivery. Eating out is OK because it aligns with my core values of passion, excitement, change, adventurousness and curiosity. If I go out to eat with friends, it also goes along with relationships and friendships.
Limit all of the skincare products I buy. Instead of buying new stuff whenever there’s a discount, I would wait until I’ve used up what I have.
No clothes or accessory shopping for now. It does align with my creativity. I used to be a BIG fashion person. I didn’t like wearing shorts, sneakers, or sweats, unless I was working out or it’s just way too hot. However, now in my middle age, I don’t care. Actually, it has nothing to do with being middle aged and everything to do with covid. From 2020 until this year (2025), I never wore “hard pants.” I gained some weight during these years too, so my old jeans also did not fit me anymore.
If I cut all of the above out, I could save $2000-$3000 each month! That’s pretty significant actually. So, I can definitely live on less.
Next, I would look at my tax situation. The tax filing deadline in the U.S. is coming up on April 15th. Are you getting money back or not? If you’re a w-2 employee, and you’re getting more than $1000 back in tax refunds, I want you to go to the IRS’ tax withholding calculator to determine how you can lower the tax refund, so that you can get MORE money back in your paychecks each month. Any money you’re getting back is really a tax free loan you’re giving the government! However, I don’t want you to owe money because I know how most people are…owing $20 feels more painful than getting back money.
The money you get back in your paycheck can actually earn YOU more money in a high yield savings account, CD or perhaps government treasuries.
When it comes to taxes, make sure you’re deducting the maximum (Home office, business expenses, retirement contributions, etc.) and if you own a small business, consider getting a CPA who can really help you to find more ways to maximize your income and lower your taxes.
When it comes to your investments, if you’re about to head into retirement, you should’ve been already making your portfolio less stock heavy. So, if you haven’t already, start shifting any cash you have in those portfolios into bonds, treasuries, or low fee bond ETFs. If the market has you queasy, this will give you some peace of mind.
A few bond ETFs have actually gone up during all of this volatility, and the ones that haven’t gone up have a smaller loss than the over 15% that stocks have lost.
But after 20 years of investing through far worse times (hello, 2009), I’ve learned that staying the course is the best way to build wealth. I’ve seen markets crash, rebound, and soar to new highs. And every time, the investors who stayed patient—who didn’t let fear drive their decisions—came out ahead.
Here’s what Podcast Host, Financial Educator, and author of “A Healthy State of Panic,” Farnoosh Torabi, is doing during this time (some of it sounds familiar to what I wrote above):
So what am I doing with my money right now? The same things I always do:
Keeping Cash... To a Point. Having roughly 9 months of reserves (as a solopreneur, I'm more cautious. Others may only need 4-6 months, depending on their situation) in a high-yield savings account gives me financial security without sidelining too much money. Cash is great for emergencies, but keeping too much of it on the sidelines means losing out on long-term growth.
Investing Automatically and Consistently. I continue putting money into retirement accounts first—starting with those that offer tax advantages, like my SEP IRA (for others, their 401(k) or IRA). Dollar-cost averaging (investing regularly) removes the guesswork and emotional decision-making.
Watching My Spending. This doesn’t mean tightening the purse strings to the extreme. It means being mindful about where my money is going and cutting back where it makes sense—especially in times of uncertainty. Also, if anyone can tell me where I can stock up on eggs, I'd be grateful.
Investing in Long-Term Stability. Beyond the stock market, I’m also investing in things that provide lasting returns: my work, my health, my family, and my personal growth. These areas truly build wealth in every sense of the word.
Map out your worst-case scenarios
Ask yourself: What if I lost my job this month? What if my basic expenses rose 15%? What if my credit card APR spiked? Write down what you’d do in each case. This isn’t being negative—it’s being prepared. Fear hates a plan.
Prioritize cash
If you can, stockpile cash now. Delay non-essential big purchases, pad your emergency fund, and stay liquid. Aim for access to at least one month of expenses, more if you’re self-employed.Pay off high-interest debt
Credit card interest rates are still sky-high—and they could go higher if the Fed is forced to raise rates due to inflation. Focus on knocking down variable-rate debt before it gets more expensive.Reevaluate your investments
If you’re decades away from retirement, stay the course. If you’re nearing retirement—or just entered it—this may be the time to rebalance your portfolio and reduce your stock exposure. Protecting your gains is key when your investments are becoming your income.Protect your income
This is more important than inflation. If you're self-employed, start exploring backup income streams and new clients. If you're employed, ask your HR or manager what a layoff would look like (severance, unemployment, COBRA). Update your résumé, your network, and your side hustle plan. Getting laid off is hard. Getting caught off guard is harder. Information equals power.
I want you to remember: You’re not powerless. You have tools. You have instincts. You have options.
When the world feels unpredictable, creating a Plan B is one of the most powerful ways to stay steady.
That’s healthy panic.
Do you have any questions about the current economic situation? Comment below, or send me an email! You can also subscribe below to my Money Magic Mail for more financial wellness content.
With Love & Gratitude,
