How the Stock Market Impacts Your Personal Finances and Could Lead to Bankruptcy

Have you ever watched the news and seen stories about the stock market going up and down? It might seem like something only investors should care about; but the truth is, the stock market can have a big impact on everyone’s personal finances – including yours. In fact, we’ve seen time and again that the stock market and bankruptcy go hand in hand.

Understanding how it works can help you make better financial decisions and even prevent you from facing bankruptcy. So let’s dive into how the stock market affects you and what you can do if you find yourself in financial trouble.

How Does the Stock Market Affect You?

Your Job Security

The stock market is a place where people buy and sell shares (or small ownership pieces) of companies, hoping to make money as these companies grow and succeed. If the stock market is doing poorly, it can mean bad news for businesses.

Companies whose stocks drop often start losing money. And when that happens, they might need to cut costs by reducing pay or even laying off employees.

If you or someone in your family loses a job, it can suddenly make it much harder to keep up with bills and debts. We’ve seen many people explore bankruptcy after a job loss. But many people don’t realize how big a role the stock market plays in their employment.

Your Savings and Investments

If you have money invested in the stock market, a bad market can decrease the value of those investments. This means you might end up with less money saved up than you thought you would have, which can be really stressful if you’re planning on using that money for big future expenses.

The problem is, many people have no idea they actually invest in the stock market.

Most retirement accounts (like a 401(k) or an IRA), savings accounts, health care accounts, and even insurance are invested in the stock market. A lot of folks pay into their retirement accounts through their jobs, and this money requires a healthy stock market to stay strong and grow over time.

A serious depression or even recession can leave some people in dire straits with no warning – especially if it happens right before or during retirement.

Consumer Confidence

The stock market can also affect how confident people feel about spending money. When the market is up, people usually feel more secure and are more likely to make purchases. When it’s down, people might cut back on spending because they’re worried about the economy.

This can affect all sorts of businesses. And if enough people stop buying things, it can lead to more job cuts or lower wages, which might affect you, too.

What Can You Do If You’re Struggling Financially?

Fortunately, there are some steps you can take to protect yourself in case of an economic downturn.

Review Your Budget

Always keep a budget of some kind to help you understand your own spending. Whether you depend on every dollar or make far more than you need to spend, a budget helps you stay on track and out of debt.

Take a close look at your budget. See where you can cut expenses and how you can manage your money better. Sometimes, finding small savings in several areas can add up and make a big difference.

If anything changes in the economy, already having your budget in place can help you know what changes to make on your end.

Talk to Financial Experts

If you feel like you’re starting to struggle, don’t wait until it’s too late. A financial advisor can help you understand your options and make a plan.

Some banks offer help with these conversations, and there are also other free options depending on your situation:

  • The AARP Foundation offers financial counseling to seniors and people planning for retirement.
  • Many community centers and universities offer free financial workshops and sessions.
  • In our home city of Memphis, the Greater Memphis Financial Empowerment Center offers one-on-one financial counseling to residents who need it.

And if you’re really in trouble or worry you have too much debt to begin with, talking to a bankruptcy lawyer like me can help you understand your rights and options.

Stay Informed and Open-Minded

It’s worth it to learn a little about the stock market – even just from a simple Google search. If you have a retirement account, get the information from your employer. You can keep an eye on your investments and see how the general state of the economy affects the account.

The more informed you are, the better you can plan and react to changes that might affect your finances.

Sometimes, despite your best efforts, things don’t go as planned. If you’re overwhelmed by debt, filing for bankruptcy offers a fresh start. It’s not an easy decision, but it can help you reset your finances and protect you from creditors.

Worried About the Stock Market and Bankruptcy? We Can Help

If you’re feeling the pinch from a downturn in the stock market or if your personal finances are suffering for any reason, remember that you’re not alone. Many people face these challenges, especially as the economy is so unpredictable.

As a bankruptcy lawyer, I’m here to help you navigate these tough times and find the best path forward. Don’t hesitate to reach out if you need help understanding your financial situation and exploring your options.

We offer a free consultation, where we can discuss your financial situation and look at all of your options. If you need a bankruptcy, we can help you figure out which chapter best suits your situation. And our award-winning team will talk through any questions or concerns with the compassion and care that’s made us one of the highest-rated firms in the region.

To get started with a free conversation, just contact us now or call us at 901-327-2100.