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Money Shock™ Management: Financial Triage
Many of us are experiencing record levels of uncertainty in our lives these days. Not only our finances, but our bodies, behaviors, and the way we feel and function are suffering. The Sudden Money® Institutecalls this phenomenon Money Shock™: like a national punch in the stomach we areall trying to get our air back and breathe normally again.
Money Shock™ Management is a three-part process, with a course of action to help you productively manage the shock of abrupt life changes, regain your stability and deal with a new reality. There are three stages of Money Shock: 1) Financial Triage—where you lower stress levels and restore more rational thinking; 2) Change Management—where you create a new financial plan; and 3) Well Being—which is movement towarda state where monetary wealth is only one third of the equation. This article deals with the necessary first step: Financial Triage.
Financial Triage
When you’re constantly bombarded with what feels like threatening or dangerous information, your adrenal glands continuously pump out adrenaline and cortisol. Your body and mind can’t return to a relaxed state. Severe physical and emotional exhaustion sets in. This chronic stress diminishesyour capacities. Physical and mental health suffers. You are less able to make rational decisions making, see the big picture and or creatively solve problems.
Financial Triage is similar to medical triage. It prioritizes threats and dangers, deals with the most hazardous ones first, and then movesto a more stable level of care. Before you can move forward, or be comfortable not moving forward if that’s in your best interest, stress levels must come down. Failing to treat a state of shock complicates an accident victim’s condition and further compromises their recovery. Untreated Money Shock may lead to regrets, poor decisions, and other negative consequences.
The goal of Financial Triage is to replace fear and panic with an increased control and confidence, which leads a rise in stability and clear thinking. Theequation to reach this goal is: Normalize + Prioritize + Organize = Stabilize.
Normalize
This is the time to talk about your fears and concerns with your financial planner or a trusted advisor.Talk aboutyour worries: what tapes are repeatedlyrunning through yourhead? You’llrealize that you really do have reasons to worry given all the uncertainty you’reexperiencing. Talk about what you are afraid that the currentchange or lossmay mean to you and family. Talk through what you think will change. Is it your relationships, career, home, self-esteem, the ability to enjoy life, your healthor your kids’ security?
After tell your story, pick out the individual fears, concerns and worries and write them down. The process of listing and naming your fears helps reduce stress.Your fears will feel less abstract and more manageable.
Amidst the stock market decline and recession, Phyllisthought her retirement was all worked out –a paid off home, money invested with a son-in-law’s brokerage firm and she had her good health. Believing she was not affected, her first reaction was compassion for others. Then, her son-in-law told her she had lost about 25% of her principal and her income from preferred stock also dropped as low as 50%. He said the only thing to do wasto wait it out.
Without the benefit of the normalizing step, Phyllis was left to absorb this terrible news on her own. That phone call played over and over in her head - she couldn’t sleep and she didn’t want to be with friends or family. Feeling tired and embarrassed, Phyllis worried about her adult children’s jobs. Would she have to mortgage her house if they needed money? Mightshe lose her home? Phyllis’ mental and physical health began to deteriorate and she required medication for the first time in her life. After three weeks of worrying, she called her son-in-law, who told her she was “being silly,” and that she wasn’t going to lose the house. Her stress continued.
Phyllis’ son-in-law missed the opportunity to validate her feelings and help her name her fears (her health, the needs of her children, her investments and losing her house). He addressed only the fear most unlikely to occur (losing the house) and didn’t give any reason why it wouldn’t happen.
Prioritize
Once worries and concerns are named and listed, you can move on to prioritizing and sorting them to determine what is an immediate threat and what can be controlled. You’ll sort the list according to the immediacy of the threat: Immediate, Possible, or Unlikely. Next, you sort these threats by the degree of control using these categories:Control, Manage and Monitor.
For Phyllis – her health is an immediate threat. Further market declines and her children’s needs are Possiblethreats and losing her house is an Unlikely threat.
She can Control her health, Manage her investments in light of further market declines, and Monitorher children’s needs and the possibility that she may need to mortgage her house.
Organize
You don’t want to create a plan based on fears, and fears don’t just go away because an advisor says everything is okay. Action is what lowers fear. Organizing creates a plan of action according to time frames that even the most stressed person can understand: Now, Soon, and Later. Here is what Phyllis might be able to do:
NOW (Immediate threats and anything that can help to regain well being):She can become proactive in stress management and set new goals with her doctor to monitor her health. Phylliscan up with a protocol for bonds coming due, talk to children about finances and cut a few expenses.
SOON (Important but less urgent)Phyllis can set more frequent meeting with advisor and doctor.
LATER (Need more time before acting): Consider financial help for children if they need and if she has the resources at that time.
Asfinancial advisors trained through the Sudden Money Institute, the XXXXX firmknows how to ask questions and actively listen. This triage process takes some time but we will spend it with you to help you have apositive, proactive experience.
We will help you go through theFinancial Triage Check List:
Normalize + Prioritize + Organize = Stabilize
Normalize:Tell us your story. We will validate your concerns and help you name the worries and fears.
Prioritize: We will help you sort by immediacy and by degree of control.
Organize: We will help you assign time frames for action.
The result will be clarity, balance, confidence and a plan of action. The outcome is stability to get through these times of change and the unknown so that you can move to a sense of well-being.
For more information or if you have any questions, please contact us at the XXXXXXXX firm (website and contact phone number goes here)