Have you ever felt overwhelmed by the volatility of the financial markets? You're not alone. Some people fear stock and bond fluctuations, while others do not know how to navigate them; luckily, there is something that can assist – the economic calendar. With the help of an economic calendar, you can orient yourself in the market and track the changes, which will help you manage your finances more efficiently or protect your investments.
An economic calendar contains information about the events that happen in the economy that can impact the markets, including changes in the monetary policy by the central banks, the release of the key economic indicators, like the unemployment rate, and the earnings reports of the companies. In fact, to anyone who is in charge of his/her own finances, acquaintanceship with this calendar is a first step toward more independent and better financial planning. As simple as it is to compare it to having a map of a city you are not very familiar with, it will definitely make your work easier, and you won’t have to guess which way to turn or which way is the right way.
The economic calendar can be described as a calendar of significant economic events that may determine global markets. It encompasses government employment reports, interest rate reports, and other economic indicators that the financial markets heavily rely on.
On any given day, the economic calendar may feature events like:
Integrating the economic calendar into your financial strategy can significantly affect how you manage your money. It allows you to prepare for potentially market-moving news before it happens. For instance, if a report is due that might weaken the dollar, you might decide to adjust your currency holdings. Similarly, if positive economic growth is projected, it might be a good time to increase investments in the stock market.
There are some steps one needs to go through in order to choose and use the economic calendar. Here's how to make it a part of your routine:
When you're looking at an economic calendar, here are some tips to keep in mind:
Incorporation of the economic calendar into your financial plan is a way of ensuring that you are well armed with a tool that will enhance your decision making process and enable better control of your investment. Consider it as a way to understand the underlying factors that drive the market so that you can control your reaction to the events in the economy instead of being controlled by them.
Do you remember the most significant movements that occurred in the markets right after the news concerning the state of the economy? That's no coincidence. Economic news causes a significant reaction in the financial markets and should be exploited. For instance, if a report has been produced with a suggestion of increased inflation, it could be a good idea to invest in commodities or inflation-indexed securities. Likewise, positive numbers in job creation could translate to strength in consumer stocks since employment means increased consumption.
This is not about changing your savings based on current market trends; it is about predicting those changes. For example, if you are aware that there are indications that interest rates are likely to go up, you may put your money in accounts with higher interest rates earlier than later. On the other hand, if the economic indicators suggest that there will be a decline in economic activity, then increasing the size of the emergency fund may be more advisable. The thing is that the economic calendar should be used not only for watching but also for forecasting and scheduling, making your financial safety net as tight as possible.
This means that one needs to keep abreast with information and be flexible enough in his or her management of his or her resources. First, establish the practice of checking the economic calendar weekly or at the beginning of each month. This assists you in making forecasts on major events that are likely to occur in the future before they actually occur so that you can plan on how to make changes to your financial plan as per the new developments. Whether you are working on adjusting the investment plan or revising the budget, early preparation can be a game changer.
Second, do not simply create an ‘always on’ account that is left to gather dust. The economic environment is dynamic and thus there is need for you to adapt to the changes in the environment. It is also advised to engage in real-time updates through alerts and financial apps, and schedule a quarterly check-in to evaluate how your financial actions are performing in relation to your goals. As such, it becomes easier and more effective to control change instead of waiting for it to occur and then respond to it.
It is much more than simply monitoring numbers and forecasts; it is about realizing that in the world of finance, the only certainty is change. When following the economic calendar to make your financial decisions, one should bear in mind that being prepared and willing to change your approach helps improve the financial condition.
Here's a final tip: the solution is to diversify the sources. However, using it together with other resources that can be found in the financial calendar will give you a more extensive view of what is happening in the market and help you make more correct decisions. When you incorporate different kinds of information, you can be more confident and accurate while moving in the financial environment. Just like in any other aspect of life, the more you know, the better prepared you are to deal with the reality that is out there.
