A rocky week in the stock market has created panic among investors.
The Dow Jones Industrial Average DJIA, +1.38% fell 10% from its high last month, officially entering correction territory.
Hyper-ventilating about every rise and dip isn’t time well spent, experts said. “There’s a lot of volatility, corrections are perfectly normal, and they have happened over and over,” said Rachel Podnos, an attorney and financial adviser based in Washington, D.C. “They’ll continue to happen. It’s just inevitable.”
Rather than freaking out about the market’s rough rollercoaster ride, there are several steps consumers can take to better their financial health in just a few minutes.
Distract yourself from alarming headlines
If you’re a relatively young, long-term investor, don’t even look at your account balance, Podnos said. It is too difficult at this point to predict the market’s levels years into the future, when young investors will be cashing out accounts such as their 401(k)s. Money that people are saving for short-term goals shouldn’t be invested in the market, she said.
So instead of obsessively checking account balances, distractions like working out or socializing with friends can be more beneficial, she said.
Exercise has even been linked to financial health; a 2016 study from the American Heart Association found that individuals who exercised moderately paid about $2,500 less in annual health care expenses related to heart disease than those who did not exercise.
Better yet: Do a job you can earn money for, like babysitting, dog walking or signing up for an app like TaskRabbit, Podnos said. Extra money can go toward debt or savings.
Just don’t distract yourself through “retail therapy,” Podnos said: Anxiety is linked to making financially risky decisions. And shopping to relieve stress and anxiety can leave you in a worse financial state than before.
Take time to evaluate your budget
Many Americans would do well to take a look at their budgets — if they even have a budget at all, said Greg McBride, chief financial analyst at the personal-finance website Bankrate.com.
About two-thirds of American adults don’t even have one, according to the polling firm Gallup. And about the same percentage say they would have trouble coming up with $2,000 in an emergency, according to the New York Federal Reserve.
Some obvious places in the budget to make cuts: Cable TV subscriptions or cellphone plans, McBride said. “Does the plan you have right now still fit your needs? Shop around and negotiate,” he said. Cook more meals at home, or put money saved by using online coupons directly into a savings account.
Amp up your investing
Have you signed up for a retirement account? There’s no time like the present.
Many employed Americans don’t have a retirement account at all. Of the 150 million Americans employed in 2015, just 54 million put money into a 401(k) account, according to an analysis by the Investment Company Institute.
If there’s room in your budget, you can also amp up the amount you contribute to your 401(k) in order to get a contribution match from your employer, if it offers one.
For those who don’t have 401(k) accounts at work, it can be fast to sign up online for a traditional IRA or a Roth IRA, McBride said. All of those accounts allow consumers to save while receiving tax benefits for doing so.
Pay off debt
Do you have a student loan, or even some credit-card debt? Make a payment, instead of worrying about the market, Podnos said. Many credit-card accounts have compound interest rates of 20% or more. So money spent on that debt can guarantee high returns, she said.
Even paying student loan debt, which typically has lower rates, can guarantee a better return than the market can at times, she said. “You get immediate satisfaction, and that’s a guaranteed high return, as opposed to what you’re guaranteed in the market, which is nothing.”
Open a higher-interest savings account
Many traditional banks offer very low interest rates on savings accounts, McBride said, but there are several online banks in “an arms race” to offer higher rates to consumers.
Consumers holding an emergency fund in cash could be earning more than they are currently, he said, and setting up an online account can take only a few minutes.
Several online banks offer 1.5% in interest on savings accounts, even for minimum deposits of just $100, including Goldman Sachs Bank GS, +1.20% Synchrony Bank, Barclays, CIT Bank and DollarSavingsDirect, according to a ranking from Bankrate.
“You could literally increase your interest earnings tenfold,” McBride said.