Tackle financial fears with a rational plan
Posted
Nov 20 2008, 08:20 AM
by
Karen Datko
Rating:
This post comes from Trent Hamm at partner blog The Simple Dollar.
Most people have financial worries in their lives: How will I pay the bills? What will happen if I'm suddenly injured and unable to work? What if I lose my job?
I'm in the same boat. Although I've come a long way in the last few years, I still have a lot of concerns. What would happen if I were to pass away suddenly? What if my wife were to die?
Many people bury their concerns and don't consciously think about them. They hide them deep under the surface and live life pretending such things could never happen. Under the surface, though, worry builds up -- and bursts out when they hit a bump in the road.
I've seen it, both in my own early adult life and in people I know. Everything is fine for a while until suddenly you need $1,500 for a truck repair and panic sets in. There's no money to pay for it. My financial low point, for example, occurred when I pulled a pile of bills out of my mailbox and realized that I didn't have the cash to pay them.
I discovered that the best way to soothe a financial worry is to have a plan in place to deal with it. But how can you do that rationally?
For me, it wasn't easy. It took me quite a bit of fishing around in the dark. I eventually realized that the quicker you begin to take steps -- both general and specific -- to lay your worries to rest, the quicker your mind can begin to be at ease and you can focus on other areas, like getting ahead in your career.
Here's how I'd tackle things if I had to start all over again:
Have a healthy emergency fund to deal with any bumps in the road. Each and every week, I automatically transfer some money out of my checking account into a savings account that I keep for emergencies. Then, whenever an emergency happens, I have cash to take care of it. If you start saving $50 a week, it takes only a few months to have an emergency fund with $1,000 -- and that'll take care of a lot of hiccups.
Don't be tempted to spend that emergency fund on unnecessary things. When you do have some cash built up, it's tempting to grab it and buy yourself something fun as a reward for your hard work to save it. Don't. That undoes all the hard work you put in, and normal human luck dictates that the second you do it, an emergency will pop up.
Make a list of the things that worry you. What are those things that keep you up at night and cross your mind when you're driving home from work -- the nightmarish scenarios you hope never happen? Instead of just shuddering and packing them away, write them down. Make a list of the things that are bothering you and get them out in the open where they can be addressed (and likely fixed) with a little bit of focused concentration.
I've been lucky enough to take care of a lot of my worries over the last two years, but even today I still have a few. My biggest one revolves around the long-term stability of my work. What can I do to keep my writing career stable over the long haul?
For each problem you write down, investigate a solution. Perhaps the solution is as simple as making out a will and deciding what will happen to your children should you die unexpectedly. That relieved some significant concerns for us. Perhaps you're worried about your career. The best path might be to become proactive about looking for another job or casting about for a new career.
Come up with things you can do to take control of those fears. Some solutions will seem easy. Others will seem painful, likely involving a conversation you don't want to have. Others will seem very difficult or even impossible.
Take care of the easy ones immediately. Get that will drafted. Look into life insurance and get that policy set up.
For the painful ones, ask for support from trusted people. If you think it's time to talk to your parents about their future plans and how they're managing things, consult your siblings or trusted family friends. Take it slowly and gently, a piece at a time. Make an appointment. Set aside time specifically to handle such things. You'll be glad you did when it's over.
And what about the big, difficult ones, like helping your children pay for college? Break things down into the smallest pieces you can. For example, can you put $5 away each day? Do it entirely in cash for a while until you get the hang of it. When that becomes easy, make it automatic with a $150-a-month transfer into a college savings account.
In the end, taking the time to address those worries will pay huge dividends. Not only will those worries be addressed by your own actions, but you won't have to expend mental or emotional energy worrying about this stuff anymore. Instead, you can use that energy to build a better career, be a better parent, and succeed in whatever avenues of life you choose.
Tonight, go home and start addressing whatever problem is eating you up inside. What do you need to do to make that worry go away? Then, if you can, take that action and start making a positive change. That first step makes all the difference.
Other articles of interest at The Simple Dollar:
The talk: Tips for difficult financial discussions
Love, marriage and money: Should a couple combine their finances?
Educating children on fiscal responsibility
