I believe everyone operates in at least three financial economies: your personal economy, or how you make and manage your finances; the national economy of the country where you live; and the global economy, which ultimately impacts both your national and personal economies. While your personal economy includes issues within your control, the other two economies have a greater impact on your personal finances than you might imagine.
Lessons From My Own Experience
I see many people treat economic policies and news like they don’t matter, especially when it comes to how they affect their finances. I am reminded of the early days of my career, when, as a chartered accountant, I didn’t care about organizing my own finances, let alone what was going on in my country’s economy or global economic news. It was only when I started to pay attention to economic policies and news that I realized how important it is to understand and manage one’s finances with a national and global perspective to achieve one’s goals.
A few financial mistakes with quite unpleasant consequences taught me important money lessons. For example, many years ago, I resigned from a well-paying job without savings. My reasoning was that I wanted a new lease on life, to get a new job and to change my work environment. I didn’t consider how inflation was affecting the national economy at the time and the impact that could have on me if I quit my job without a backup plan. I did quit, and I went through the worst financial time of my life. I had no savings, no income, and had to learn the basics of managing money while starting with nothing.
The national and global economies can have a big effect on personal finances because they change everything from the number and kind of job opportunities to the prices of goods and services, which affect personal budgets. For example, during a recession or economic slump, it might be harder to find a job, and prices might go up because there are fewer goods and services on the market and more people want them. Moreover, inflation and fluctuations in interest rates can have a major impact on how much it costs to borrow money, including when getting a loan or a mortgage.
Gone are the days when individuals could afford to take a back seat to the larger currents that affect their economic well-being and future. It has become imperative to get more interested in how economic policy works, and to stay up to date on national and global economic news to understand how the national and global economy can impact your own finances.
The following tips have helped me understand and navigate economic news and make better money decisions, and I believe they can help anyone seeking to better understand economic issues.
1. Use social media well and for good reasons.
I’ve spent years on social media staying up-to-date on economic news, especially as it affected my finances. While it has its downsides, social media has become a powerful tool for informing yourself.
When it comes to your finances, be intentional about what you’re learning about your personal economy and from whom. Keep an eye out for reputable economists and financial analysts on social media pages and keep interacting with their insights and analysis on economic news and trends.
2. Work to understand financial news.
This does not necessarily require a knack for figures, just an interest to start with. I became more informed about economic news by paying close attention to what the government and central bank said and asking friends and coworkers in the same field for more information about inflation, interest rates and economic policy. One key question to ask: How does this particular monetary policy affect my finances and disposable income?
3. Subscribe to publications that cover finance and economic news as well as market trends.
This will help you understand and analyze financial news better. I have carefully curated my subscriptions so they cover my city, my country, my continent and global news. These resources help me receive updated news about my area of interest—finances—for my use both as a coach and as a consumer.
4. Attend finance-themed conferences and money seminars.
I have realized that attending events on topics of interest, particularly finance and economics, provides a lot of insights as to how money works and how the national and global economies affect personal economies. These events give academics and professionals a chance to educate people about their work and give people in the same field a chance to get to know each other. Short courses could come in handy as well.
5. Work with a financial expert.
Full disclosure: I work as a finance coach. But there are many ways to engage with a financial expert, whether as a client, an online follower or even through an informal chat with a well-informed friend. This will help flex your personal finance and economic knowledge muscles. These experts can help you by giving you information, explaining confusing economic terms and pointing you in the right direction to help you reach your unique financial goals and manage your money in a way that fits your risk tolerance.
Because the status of the economy can have a big impact on your personal finances, it’s critical to keep up with economic news, as the performance of the national economy, market trends and prospective hazards and opportunities are all important factors in your financial future.
Get informed and involved.