Coping with Financial Anxiety During COVID-19
There are a few things I want to cover about financial anxiety with the Coronavirus anxiety reaching a fever pitch. It's normal to feel all of your feelings right now. Whether you feel overwhelmed, anxious, avoidant, whatever, it’s all a normal response to this unprecedented stressor. And I'm specifically going to be talking to you about financial anxiety. (For those of you who don't know, I wrote an entire book on this, called "The Financial Anxiety Solution.")
First and foremost, I'm less concerned about your finances right now than you might imagine that I would be, given the space that I'm in. But the reality is, before we even talk about money, how are you connecting and collaborating with your partner right now? Are you guys connected and on the same team? Because if one of you is over here in freaking-out land and another one of you is over here, searching for cheap flights, we're going to have a conflict. We have to put aside the noise for a second and come back together. Before you even talk about money, make sure you're connecting with your partner and making sure that you are talking about things in a safe way.
Anxiety tends to come up when we feel a lack of control and certainly in this particular snapshot of time that we're in, it can feel like we have no control over anything and again that's not really true. There is certainly a lack of control when it comes to like the bigger, broader scale, but in terms of day-to-day, what are some things that you can do to create a sense of control and a sense of ownership? And that is doing your best to maintain me sort of routine even if that routine is different than going into the office or dropping the kids off at school. What type of routine can you cultivate that is consistent as it can be, given the new world in which we are currently living? How can you take care of yourself and practice some self-care by implementing routine? It can be tempting to stick your head in the sand and binge on Netflix, but what we know is that, as humans, we need a predictable routine to help us to feel good. Starting and ending your day with something like a walk or a meditation can be helpful right now. And staying connected with family and friends even if that doesn't mean in-person can help you to practice self-care. Looking at what you do have control over and taking ownership of those things is helpful right now. Practicing a little bit of self-care and then practicing gratitude for the things that you can't control. And it sounds weird to say, how can I be thankful for all the chaos that's going on around me? No, no, no, no, we're not thankful for the chaos. But, how can you practice gratitude for the way that you're showing up for yourself, for the way that you're showing up for your partner, your children, your coworkers, your family, your friends? How are you practicing gratitude for being here at this moment and at this moment in time being healthy enough to be able to read this blog post? How can you practice gratitude for having food in the pantry? Or for the ability to work from home? And if you can't work from home, particularly if you're one of our frontline workers, like a person in public safety, a person who is in healthcare. How can you have gratitude that people are holding space for you to be able to do your job, and to do it well right now? And if you don't feel that, let me tell you right now, I appreciate you and your hard work and please pass that message on to anybody in your life who is really on the front lines of these things. I know for military people, it can feel really scary right now. For people who work in healthcare, it can feel really scary right now, and I'm holding space for you, and I'm saying, "Thank you for your work during this time."
2. Onto the money part. We need to talk about two things. One is your emergency fund, and one is the stock market. When it comes to the emergency fund, the old rule-of-thumb of having six to eight months of your living expenses in an easily accessible fund, that comes from old data that says it takes six to eight months to find a new job. Please keep that in mind if you're consuming information about an emergency fund, be sure to ask yourself does that apply to you in your situation? It may, it may not. I think it does make sense to bulk up that emergency fund a little bit more over these next couple of weeks. The benefit of social distancing is it may be easier to spend a bit less (I know, that doesn’t help all of our people who work in the service industry).
3. The second thing we need to talk about is the stock market. Do not check your stocks right now. I repeat, do not look at your retirement account. Don't check what's going on with your mutual funds. Don't look at your investments. And I know that sounds counterintuitive, stocks have been falling, and they've been falling pretty consistently for about the past ten days. Remember, we were in a growth period for ten plus years. The market goes up and it goes down. If you look at the stock market from the beginning of time, it has tended to trend upward, but not in a straight, linear line. I'm advising you not to look at your stocks not because you're avoidant. It's not because you're silly or an uninformed investor; it's because if you look at them right now, you probably are going to feel anxiety or fear because it looks like you've lost money. If you are not retiring within the next four years, you weren't going to touch that money anyway. You only lose money right now if you go to take it out. Let me repeat that, the only way you're going to lose money right now in the stock market is if you sell-off your stocks and you take that money out. If you wait, it will come back, okay?
I can't predict the future, but I can read the past charts and tell you that historically, the money will come back. After a recession, it typically takes two-to-four years to rebound. If you were planning on retiring within the next four years, you might have to delay that just for a smidgen, just a little bit for the market to correct, and that is okay. OR you can go ahead and retire knowing that to be in a safe place to retire you weren’t planning on pulling out more than 4% per year.
The important thing is to put in the same type of money that you have been putting in and know that, yes, it might keep dipping down for a little bit. In the long run, it's best to keep your money there as you'll earn more on the investments than you would if it were just in a savings account.
To recap: ONE how are you taking care of yourself, and how are you and your partner connecting during this time? TWO, if you feel comfortable doing so, go ahead and beef up your emergency fund a little bit, and THREE, don't look at your retirement accounts right now.
Practice some deep breathing, wash your hands, connect with people via Zoom, via social media. Be mindful of how much news you're consuming, and we will get through this.
We are resilient.
People are kind.
We can do hard things.
If you need some help coping with anxiety, I can help. Before I became a financial therapist, I specialized in anxiety treatment. If you are looking for short-term anxiety therapy, conducted all via video, click the button below to get started.