Two Choices for Dealing with Financial Fear: Accept or Resist
I recently read the results of a study commissioned by Nationwide Insurance that had some interesting results.
For the study, 783 adults 18 and over who have $100K or more in investable assets were asked, among other things, what their greatest financial fear is.
More than 80% of respondents in every age group and among high net worth investors shared the same concern: Fear of another financial crisis.
If you think that having a lot of money is going to allay your fears, think again. Even 85% of the high net worth investors have this fear.
You’re Hard Wired to Look for Danger
It’s no wonder that the fear of another financial crisis is so prevalent. Our brains are hard wired to look for danger. It’s a survival mechanism that’s aided by the adrenal gland that secretes adrenaline, the fight or flight hormone, so we have an extra burst of energy to deal with the danger.
And the fact is, that financial good times are often followed by financial downturns. There are cycles that individuals can’t control. Thus the predictable fear of an uncertain and possibly uncomfortable future.
This fear creates its own problems because, as neuroscientists will tell you, fear makes you stupid. So making financial decisions when you feel stressed and afraid is not a good idea.
So how can you stay out of a constant state of fear when you know that, at some point, there will be a downturn.
Accept or Resist
Recently, when thinking about this, the phrase that came to my mind was accept or resist. What does this mean?
Accepting the real possibility of a future financial downturn gives you the option of finding ways to protect yourself. Some investors will “go to cash” when they feel a downturn is imminent. Others will protect stock investments with options. The point is that they take action rather than just sitting and waiting while in a state of fear.
Resisting the possibility of future difficulties doesn’t leave you with many options. You can pray a lot and/or you can stay in a state of fear. You can also get angry and upset, which doesn’t provide a solution, just more adrenal responses.
Stay Focused in the Present
Fear, which is sometimes defined as “false evidence appearing real,” is stimulated by unpleasant thoughts about the future. Yet every story you are making up about what can happen is a fairy tale. The unpleasant event hasn’t happened; you are reacting to a thought, not a reality.
One of the greatest things you can do for yourself is to stay focused in the present. When fear arises, ask yourself, Is everything ok today? Do I have food to eat and a place to live? If I don’t, what am I learning from this situation, and what action can I take to change the situation?
When working with my clients, I often help them train themselves to stay focused in the present – to let go of regrets about the past and fears about the future, neither of which are useful.
It takes time to retrain your brain to stay focused in the present and to determine what actions you can take to protect yourself. But with consistent attention you can do it.
In the meantime, you might want to read the book The Power of Now by Eckhart Tolle
Dealing with Financial Fear: The Prosperity Show Podcast — Episode 4.