Being in a down market isn’t fun. But unfortunately, that’s where we are right now. It would be great if we could say that the market will be back in no time, but that’s not likely. Chances are we’ll have to deal with this bear market for at least a little longer.

So what does that mean for you? How is the market affecting you, and what should you do about it? 

Let’s start with what it means to be in a bear market. The term applies when there’s a drop in the stock market of 20% or more. And that drop means that investment values go down.

If you have a 401(k) or another type of investment-based retirement plan, its value is likely down right now. And it’s scary to watch your retirement funds vanish into thin air knowing that there’s not really anything you can do about it.

It’s normal to feel stressed and worried about a down market. But it’s important to remember that it’s not an unexpected occurrence. By nature, the stock market rises and falls. There’s even a predictable pattern – historically, the market is down for about one year and up for about three years at a time. 

So while the down times aren’t fun, they’re limited – the market will go back up. And while you wait for that to happen, there are several things you can do to protect your net worth and your retirement plans.

Focus on what you can control

One of the hardest things about being in a down market is the lack of control. You can’t improve the market or control what those big companies do.

But there are some things you can control. Start with your budget. You can decide how much you spend on things. Now, there are some outside factors that affect your spending. Inflation is a big deal right now, and it has a real impact on what your spending looks like.

But you can look at your budget and see what you’re spending and make changes if it’s too much. You’re probably spending more on groceries right now because prices are inflated. Can you counter those extra dollars by making some sacrifices somewhere else in your budget? Maybe you cut out a streaming service or two or wait a little while to update your wardrobe.  

It’s not fun to cut down on spending. But it can make a big difference in how much inflation and the down market affect your personal finances. 

Upgrade your earning potential

Another asset you have control over is one of the biggest: human capital. You can’t change the housing market or stop inflation, but you do have some control over your personal income and earning potential.

A down market is a great time to invest in yourself and your marketability. How can you expand your earning potential? Can you start networking in your industry or beef up your LinkedIn profile? Are there some credentials that you could earn to boost your hireability? Think about how to invest in your professional skills to open up new career opportunities.

If you’re a business owner, a down market offers some great motivation to innovate. What could you do to reach new clients right now? Are there services or products you could offer that would attract some new customers? A market downturn is tough, but it can also offer unique opportunities that don’t come along when the market is up.

Revisit your financial plan

A down market affects your investments, so you’re probably seeing a dip in your retirement fund. This is the perfect time to re-evaluate your financial plan, especially its risk tolerance.

Risk management is a fundamental part of investing wisely. Ideally, the level of risk in your investments should change over time. If you’re a young, single person, you can build a high-risk/high-reward strategy. As you grow older and need more financial stability, you can gradually lessen the level of risk in your investments. If you’re close to retirement, your portfolio should be very stable with minimal risk.

Risk tolerance isn’t the only part of your financial plan that’s worth reconsidering. Now is a great time to think about other parts of your finances: estate planning, life insurance, long-term care, and disability insurance.

Those aren’t necessarily fun things to think about, but they’re crucial. And again, these are things that you can control, even in a down market. So take the time to think ahead. Do you have an up-to-date will? A life insurance policy? Do you have a plan in place to care for your loved ones if the worst happens? If not, now is the time to take care of it.

Think about your goals for the next five years

It’s wise to think far ahead and make financial plans for retirement and beyond. But it’s also a good idea to spend some time thinking of the near future. 

What do you want the next couple of years to look like? Or the next five years? Are there changes that you want to make, or are you hoping things stay pretty much as they are now?

By clarifying what you want in the next few years, you can start to plan for it. Maybe you want to move into a larger home or start a family. Or maybe you’re thinking about downsizing and moving into semi-retirement. No matter what your goals are, you can solidify them and start taking steps right now to reach them. 

If possible, invest in the market now

Finally, think about how you want to interact with the stock market right now. It seems counterintuitive, but a down market is actually a great time to invest. If you have any extra cash, investing it in the market is a great option. You can get in at a lower cost and be ready to reap the rewards when the market inevitably rises.

A bear market doesn’t mean you’re powerless

The market is tough right now – there’s no other way to look at it. But it’s not going to be like this forever. The market will recover and your investments will gain value again. Instead of spending your days doomscrolling, focus on what you can control. 

Check in with your financial plans, and spend some time growing your earning potential. Take care of your budget and your estate, and then concentrate on the important stuff in life – the things you value and the people that bring you joy. 

If you’re ready to take that first step and get control of your budget, check out BudgetingBlocks™. It’s an innovative system that’s designed to get you out of boring spreadsheets and time-consuming apps. Find out more about this unique budgeting system to see if it’s right for you.