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What to Do When Life Throws You a Financial Curve

by Chris Poindexter

I have a friend who has been sailing since he was a kid. He has a somewhat peculiar habit of heading out on the water when most small craft stay safely tied up at the dock. He says the same conditions that make rough water also make great sailing. Blustery weather doesn’t bother him because he’s used to managing a boat in difficult conditions. Managing your personal finances is very similar in many ways. Anyone can manage money when life is calm but how you react to a financial disaster and the stormy seas of life is a better measure of your true character.

No matter how good you are at managing money, life will sometimes throw you a curve. A car accident, job loss, a sudden illness, a tax bill coming out of the blue can all upset even the most seasoned money manager. How you react to that disaster, how you manage when things get tough, will determine how well the rest of your financial life goes.

Give Yourself a Little Time To Wallow

Whether it’s a divorce, job loss, accident or the death of a loved one it’s okay to feel bad. Give yourself a little time to grieve and even wallow in a bit of self-pity. It’s natural to feel bad when something bad happens and you shouldn’t try to put on a happy face. Being fired, getting in an accident or losing money are all significant blows. Admit it, recognize the unfairness and acknowledge that you have a right to feel bad. There are two opposite mistakes you can make when disaster strikes: Shutting the event out through denial, or letting self-pity become a way of life. Give yourself some time to wallow, then shake it off and move on.

Make a Plan

The cure for depression is decisive action. The key driver to decisive action is having a plan and writing it down. Just making a plan will sometimes be enough to lift the gloom. The act of writing down your plan is important because that ensures you’re not simply flailing desperately. Having a written plan will keep you focused on productive steps that will lead you out of the hole you’re in and not dig it deeper.

Forget About Fairness

Bad things in life, including damages to your finances, are frequently not fair. You took great care of your car and some jackass came along and wrecked it. It’s not fair but it is what is and you have to deal with the reality in front of you. The concept of fairness comes from comparing your situation to others and forgetting about time and chance, which weigh upon all of us equally. Bad things happen, even to good people. Good people will make mistakes and do bad things, sometimes to you. It’s not fair but that’s life. Forget about fairness and you’ll realize that rarely is calamity personal. How you react to unfairness and calamity is far more important than what happens to you.

Work Out

That may seem like an odd addition to an article that’s about personal finance but health and happiness are inextricably entwined. Working out is also a mental break from your troubles. Other mental breaks, like drinking and drugs, may work but they come with some highly negative side effects, especially when practiced habitually. Working out helps dispel stress and release endorphins, both of which make you feel good about yourself, and when you feel good you’ll present yourself more capably.

Believe in Yourself

I realize this one sounds a little tree-huggy but confidence is contagious. Feeling good about yourself will project a more positive image to those around you. People who feel good about themselves are less self-absorbed and more interested in other people. Confidence and taking an interest in others are qualities that will make you more popular. Bizarrely, there’s a reciprocal connection between money and confidence and confidence and income. Science still isn’t entirely clear on the chicken and egg nature of the relationship between income and confidence but the negative correlation also exists.

All these elements work together to create a blueprint for working through financial adversity. Engaging in the grief process, channeling that grief into a decisive and written plan of action and believing in your ability to carry it out will inspire confidence which you’ll radiate to those around you. A process doesn’t have to be complicated to be effective.

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