Should you be freaking out about the economy?

With the loonie's recent slide, oil prices at their lowest in 12 years and China's stock market volatility sending reverberations to our own, the news of Canada's economic decline is hard to ignore. And while the economy may be too reliant on natural resources (Bank of Canada governor Stephen Poloz said the drop in oil has cost Canada $50 billion), diversifying it isn't going to happen overnight. So what are Canadians supposed to do in the meanwhile?

And if you're not a high-net-worth investor, it's hard to figure out how your household will be impacted (if at all) and what you can be doing about it. If that makes you panic, don't. Moneysense columnist and personal finance expert Bruce Sellery has some wise words on how to keep it together while the economy tanks. Here's what Sellery has to say:

1. Take the longview. 

A big stock market decline sure feels bad when you're in it. But the market goes up and then it goes down — 'twas ever thus and 'twill always be. When you look at the stock market graph over the last 20 years, you will be reassured to see it generally rises over time.

2. Don't sell.

When you open your mutual fund statement you'll see how much you have lost on paper. But this a "paper loss." It only become a real loss when you sell the fund or the stock. Unless you desperately need the money, don't sell. Hold on until the market rebounds. It could be years, but in the meantime you'll be able to buy more at these discounted prices.

3. Focus on what you can control: your spending.

You have no control over what happens on the stock market. But you have a lot of control over your spending. Take this time to find ways to spend less and save more.

4. Build up a buffer.

If one of your fears is the safety of your job, focus fiercely on paying off all credit card debt and then saving an emergency fund. You might also open a line of credit to be used only in the case of dire straits — not to replace a broken dishwasher and repaint the family room.

5. Turn off the news.

If you are someone who gets anxious when you hear or read stories about stock market declines, turn off the news and tune it out. If you are investing for your retirement and you still have a decade to go before you will be cashing in your investments to put groceries in your fridge, this decline doesn't mean much to you.

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