When something unexpected happens, our initial reaction can bring up fears of the unknown. Our usual patterns are upended, our equilibrium is disturbed, and we want to fall back on habitual behaviors. A flurry of possible and confusing consequences come to mind, and it’s hard to know how to proceed.
Crisis is defined as a time of great danger, difficulty, or doubt when problems must be solved, or important decisions must be made. Positive but unexpected news can provoke a similar reaction: a moment of immediate surprise that gives way to a sense of overwhelm in deciding how to move forward. The situation asks for focus, but stress makes clear thinking difficult.
In the initial moment of reaction, complex emotions compete with the sense that there are many decisions to be made, whether personal or financial. When making decisions we naturally anticipate the responses of the important people in our lives. We have empathy for the ways a situation will impact others, and all of this is in our minds when we are trying to plan. How can we simplify enough to know the best way to move forward?
Taking Some Time
A good first step is a dive into the complexity. Articulate your concerns with friends or family. Even just writing down worries can help you organize chaotic emotions, get perspective and determine which issues feel central. When you are mindful of the circumstances as well as your own reactions, without judgment, you can be more deliberate with your decisions. Mindfulness helps sift the vital elements from the superfluous ones and determine what needs to be handled right away, and what can wait.
Let’s look at a few different sorts of situations in which stress makes decisions harder, and how you can approach them.
Unexpected Health Issues
Receiving news of a long-term health problem is never welcome. Following the flood of emotion, a sense of urgency arises. Meeting immediate needs is a good way to take some deliberate action, such as ensuring important bills will be paid uninterrupted while you deal with your diagnosis. This can allow you to calm down, and breathe. Taking the time to enlist trusted friends or appropriate professionals to join your decision-making team can prepare you to face more complicated choices. The reality is that some decisions need to be made now, but many can wait months or even years.
With a team in place, and immediate needs taken care of, you can turn your attention to other issues. If a change in living situation is on the horizon, begin to look at options. Assess whether you want any change to your choices for people who can make decisions in your stead. These sorts of issues take both time and consideration. You don’t need to put a complex plan in place all at once but can work through decisions as they need to be made.
Crises in the World
Major world events may cause emotional and mental stress and lead you to wonder how to offer help and support. Just as with a personal crisis, it’s important to take a moment to reflect on your own reactions. If you are moved to, engage with organizations that are getting help to those who need it by volunteering your time or making a financial donation. Taking direct action that makes a difference in people’s lives helps you know you are acting to resolve the crisis. When you can find a simple next step and actively create the positive change you want to see, you ease your own distress over what feels like too large a problem to solve yourself.
Navigating an Inheritance
For some, even a perceived financial opportunity can be mixed with complicated emotions. When you receive an unexpected inheritance from someone close to you, grief and loss are natural reactions, as well as gratitude. Beyond the strong connection to your loved one, these resources may open possibilities previously unimaginable. Where do you put your focus first?
For most of us, expressing gratitude begins with remembering your loved one, your relationship, and what they meant to you. The money comes later, and when it does, the range of choices you face may be more complex than you initially expected. A good place to start is with immediate needs you already have, perhaps allocating to upcoming tuition payments or paying down credit card balances. With that taken care of, you can give yourself permission to take time to consider larger decisions such as buying a house.
Right-Sizing Your Next Action
Whether it’s a pandemic that upends our lives, or a diagnosis that unsettles yours, the stress of unexpected change can lead us to fall back on familiar financial behaviors. Narratives about money developed early in life inform habitual decision-making, as we recently wrote. They give us a sense of stability, but conversely, they can make it harder for us to make the best decisions. Being aware of our habits and motivations allows us the space to make decisions more intentionally, even in times of upheaval.
With mindfulness comes clarity, and with clear intention, you can pace your decisions and actions appropriately. Friends, family, and advisors can help you manage the collateral stressors of a crisis, and ready yourself for big decisions. Simplify things where you can, break down decision making into segments, and determine what areas in which you’ll need professional help. And breathe.
An exploration of how our personal narratives and relationship with money shape our decision-making and sense of financial fulfillment.
This commentary on this website reflects the personal opinions, viewpoints, and analyses of the North Berkeley Wealth Management (“North Berkeley”) employees providing such comments, and should not be regarded as a description of advisory services provided by North Berkeley or performance returns of any North Berkeley client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. North Berkeley manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.