Financial Wisdom For Chaotic Times
We have all experienced a string of challenges: 2 years of COVID intrusion and dread, Putin’s aggressive invasion of Ukraine, supply chain disruptions, run away inflation, increased market volatility, mass school shootings and finally interest rate increases. It is little wonder many of us are staggering from the mere number of external challenges none of us control.
However, these challenges impact and influence our day-to-day mood and behavior, no matter how hard we try and modify the effect any one of the challenges may have on us. When our emotional state is at the same time inflamed and depleted by the world whirlwind, we are more prone to impulsive moves or withdrawal from and avoidance of what is really going on. For example, one of my colleagues planned to move from a renting to owning a house. She felt lucky to find a fair priced house with interest rates still low. By the time she got to the paperwork and contracting for a 10% down payment, the market dropped nearly 20%. In order to come up with the down payment she had to sell stocks at their lows. Before she knew it, mortgage rates started to climb. And she wasn’t sure she had a low locked in interest rate.
When we are personally affected by circumstances we don’t control, our impulses easily lead us to take risks that turn into big mistakes. Furious that events had disrupted her dream of owning a house, her anger seeped into her relationships with her partner, her boss and her real estate agent.
So far, where is the financial wisdom? Well, we haven’t gotten to that quite yet have we? The first step toward financial wisdom is to become aware of what you are feeling during financial transactions. Can you compassionately say to your self that you and many others are in the same boat, that “bumps in the road” happen to everyone and yes, you are suffering some losses, but are they ego threatening or life threatening? Self supportive internal affirmations and support help minimize letting your fury dictate or compel your reaction to financial disappointment or loss.
The second step is not to blame yourself for making mistakes. The difference between an elite athlete and a recreational runner in a competitive race is that the elite runner examines their performance to better it next time; the recreational runner just gets upset and usually becomes a victim of their own self judgment.
The final step is to achieve balance. Identifying what you are financially grateful for amid chaos builds resilience and balance. Not taking events personally and not making assumptions about the future also helps build balance. Balance fosters internal calm and allows wisdom to flourish.
Maggie Baker, Ph.D.
Psychologist/Financial Therapist
Author/Narrator of, Crazy About Money:
How Emotions Confuse Our Money Choices And What To Do About It.