Markets go up and down. When your portfolio has a strong week, it can be encouraging to see your account balance grow. But it's important not to let a few good days in the market change how you make bigger financial decisions.
For example, if you've been thinking about buying a new car, a recent jump in your investment account shouldn't be the reason to move forward. Markets can change quickly, and gains over a short period aren't guaranteed to last. A purchase that makes sense today should still make sense if the market has a rough week tomorrow.
Look at the full cost of owning a vehicle. The cost of a car goes beyond the monthly payment. Insurance, gas, maintenance, repairs, and interest can add up.
Before making a purchase, take a step back and look at how it fits into your overall budget.
• Monthly budget: Can you comfortably afford the payment along with your other expenses?
• Savings: Will you still have enough set aside for emergencies?
• Financing: Have you looked at the total cost of the loan, not just the monthly payment?
• Long-term goals: Will the purchase affect your ability to save, invest, or work toward other priorities?
Keep the bigger picture in mind
This applies to more than buying a car. The same thinking is worth using when considering a home project, a vacation, or any other major expense. Try not to make those decisions based on a temporary increase in your investment account.
Your investment strategy should be built around your long-term goals, not what the market did this week. If a major purchase is part of your plan and fits your budget, that's one thing. Making the purchase because your portfolio had a good run is another.
A strong week in the market is always nice to see. Just make sure your financial decisions are built to hold up over the long run.