Market downturns can scare even the most seasoned investors. Last week after the yield curve inverted for the first time since July 2006, the Dow went into a tailspin plummeting 800 points.
Despite the markets, recovery fears about a possible recession now fill the airwaves and are seemingly on every newspaper's front page.
Douglas Boneparth, president of Bone Fide Wealth, says it's important not to fall into patterns of bad financial behavior because of daily fluctuations.
"The markets can move up and down in any short period of time. Markets moving up and down is just how they work," said Boneparth in a recent interview with CNBC.
The goal of any investor should be to focus on their long-term plan and avoid knee-jerk reactions, according to Boneparth. Ignore daily market fluctuations. Overreactions lead to bad money moves. Take pause. If you stay invested for the long term, you'll reach your goals sooner.
While this market anxiety should not be ignored, there are ways to calm yourself so that it does not affect your long-term investment strategy.
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Take control of your everyday spending
Boneparth says understanding your money matters and taking control of your finances can calm your fears during volatile times.
People are anxious about their finances, especially in times of volatility, because they don't realize where their "everyday" money is going, claims Boneparth. As a result, they are hopeful their investments will be the cure-all for their money woes. This could be due to "money disorders" — the average American carries $38,000 in debt.
To better understand your spending habits, Boneparth suggests reviewing the last 12 months of your expenses. He cautions that it will not be a fun exercise, but it is "singlehandedly the most important thing you can do."
If 12 months sounds like too big of a task, "Shark Tank" investor Kevin O'Leary suggests starting with three months. Whatever approach you choose, the key to this exercise is to categorize your expenses and find spending patterns that do not benefit you. These could be underused subscriptions or monthly spending sprees.
Once you cut out your bad spending patterns, you'll be able to save more and invest more.
CHECK OUT: Top 10 metro areas where millennials earn the biggest paychecks via Grow with Acorns+CNBC.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
