5 'New Normals' that Control Your Finances

  • Be an old hand at 'new normals' Stop waiting for the economy to return to normal. Factors such as the recession and tablet computers led to the disintegration of many of the old economic norms for good -- no matter what happens to the stock market or gross domestic product. As the "old normals'' fade, they're being replaced by what economists are calling the "new normals" -- that is, new norms for working, spending and saving -- no matter your age. Learning what the new normals are and how to capitalize on them can bring you many happy returns financially, professionally and personally. Here are five new normals that affect your finances and how to make them work for you.
  • Steer a veer in your career The old normal: You got a degree. You launched a career. Your career lasted until retirement. The new normal: Careers have a shelf life shorter than sliced cheese. Recessions and technology mean many of you find yourselves outsourced, downsized or furloughed about 20 years before you can get cineplex senior discounts. Solution: Try midcareer education and retraining. These days, the economy's only constant is change -- and change starts with you. If you're forced to reinvent yourself, make sure you have at least the basic skills the market wants, says Laurence Shatkin, author of "2011 Career Plan." "If you don't know how to do an Excel spreadsheet, this is the time to learn," he says. Don't have a lot of time or money? To save on both, ask senior executives in the field you're targeting which skills they most value. If you have your heart set on a specific company, find out which schools and training programs they target for recruiting. Remember, knowledge is your key resource. A good place to start gathering it is the Department of Labor's Occupational Information Network, where you can find a wealth of information on growth fields and their educational requirements.
  • Volatility is market's stock in trade The old normal: You invested. Your investments grew. You relaxed. The new normal: You invest. Your investments rise and fall like Disney's Space Mountain ride, much like your blood pressure. Solution: Stay focused on the long term. Richard Ferri, founder of Portfolio Solutions in Troy, Mich., and author of "All About Asset Allocation" says retirees getting adequate income, for instance, should not obsess on daily market swings when investing. "It doesn't matter if the chickens have gotten a little skinny, as long as they're still laying half-dozen eggs a day," he says. If wild swings still have your stomach churning while investing, go with your gut -- within limits. For example, you could reduce your portfolio's stock holdings by 10 percent with more conservative securities. "It won't make that much difference to your portfolio, but you'll sleep better at night and it may stop you from selling everything," Ferri says.

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