Five Strategies for Coping with Financial Challenges
The media has been full of reports and reflections on the financial crisis of 2008. The focus has been largely on what happened, why it happened, and could it happen again. Newspapers, radio and TV are talking about whether the financial industry learned from the crisis and are more resilient.
Most individual investors are haunted by the event, whether you lived through that time in September 2008 or heard about it. There’s no doubt it was extremely stressful, and investments took a long time to recover. If you were fortunate enough not to need proceeds from your investments, you were able to wait it out; many of those close to retirement or already retired, could not.
While the media focuses on the big picture, let’s focus on ourselves, our lives and our strategies for coping with financial challenges.
Here are five strategies that work.
1) Take a close look at the situation and clearly identify the underlying issue. Are you concerned about any of the following or is it a different challenge?
a) Riding out a crisis similar to 2008?
b) How well your investments will do over the next months or years because of uncertainty?
c) Saving for post-secondary education of your growing children?
d) You and your family living within your means and either debt free or paying off all “bad debt”? (Bad meaning credit card debt or lines of credit used to pay for holidays or expenses that are not covered by your take-home pay.)
Whatever the issue is for you, advisors like myself have strategies to cope with them. Provided you are not close to retirement and you spend less than you earn, your investments are likely able to withstand any downturn in the market.
2) Create a plan to deal with the challenge. If you are consistently short of $100 at the end of each month, look at your expenses and decide what you can change to bring that amount down to $0. Once you’ve done that over the next while, you can probably find a way to put aside $100 per month towards your RRSP or TFSA. A Cash Flow Plan helps to identify ways to reverse the situation.
3) Get qualified help. A Financial Advisor works with many people who face similar concerns as you and can provide advice that has worked for others. You may be looking for that essential Cash Flow advice and plan that gets your family ahead so that the money doesn’t run out before the month ends. Contact me for strategies that work for your personal situation.
4) Identify small steps you can take today to achieve the larger goal.
Keeping track of your progress may seem like a small thing to do, but you’d be surprised how much it helps motivate you to continue. Whether it’s the gradual increase in your TFSA or the satisfaction of the expenses costing less than the incoming cash flow, seeing these accomplishments is gratifying. Keep track of them, reduce your financial stress, and pat yourself on the back as you move forward. Remember you can only eat an elephant one bite at a time!
5) Keep your focus on your WHY. Have you stopped to really consider what you REALLY want your money to do for you? What are the lifestyle goals that are priorities for you?
- Family trips with your children to create life-time memories?
- Retiring early?
- Retiring without debt?
- Enjoying travel that was sacrificed while raising a family?
- Cottage ownership? (summer will be back again next year)
When you focus on what you want your money to do for you, you can make spending choices that contribute to achieving YOUR GOALS. Without that focus, it is easy to succumb to the marketing messages that tell you 24/7 what others believe you should spend on. Nobody but you has your best interests at heart.
I sincerely hope there will never be another crisis such as September 2008. I know I cannot prevent it so I do what I can to ensure my own financial situation can survive it. Contact me for advice on how to do that for yourself.
It’s just good advice.