4 financial resiliency tips

Almost everyone in America goes through at least four major life events that result in a 10% or larger drop in income. These challenges – a major illness, job loss or divorce – cause 60% of people to go a full year or more without making any money at all, according to a 2017 study commissioned by the National Endowment for Financial Education.

While these events sound commonplace when presented in context, when it happens to you it feels like the end of the world. Why do some people bounce back easily while financially devastating life events completely derail others?

According to an October 2017 article on forbes.com, the following four emotional resilience traits separate financial survivors from financial victims.

Prioritize tasks

While it’s completely natural to be overwhelmed with what to do next after experiencing a major life loss, wallowing in your pain only makes things worse. Instead, identify your most urgent tasks at hand and focus on them. Reducing your to-do list will help make your situation more manageable, and also allow you the time you need to grieve.

If you don’t know where to begin, go online. Forbes recommends this list for new widows and widowers from Vanguard or this one from the financial education nonprofit Take Charge America, about steps to take after a natural disaster.

Crossing even the simplest tasks off a list helps recover a sense of control, which can get you back on the path to reclaiming your life.

Be kind to yourself

It’s normal to blame yourself for your difficult situation but remember: almost everyone experiences at least four major financial setbacks. Money problems are a fact of life for everyone.

And while you’re being good to yourself, don’t let pride stop you from asking for help. Most lenders are willing to work with borrowers who experience a hardship if they are proactive in seeking help.

Don’t make any quick decisions

If your major life event includes a lump sum of money, such as a divorce settlement, insurance payout or a severance package, don’t stress about what to do with the money right away. Instead, put the money in an insured account like a CD or money market, and give yourself time to heal before deciding what to do next.

Financial planner Susan Bradley advises creating a “decision-free zone” that lasts one year or more before making any big decisions. Sure, you may lose some money by earning low interest rates, but it’s much safer than making a bad investment decision while under emotional duress. Also resist advice from family and friends, who tend to come out of the woodwork when big money appears. Tell them, “thank you so much for your advice, but I’m just not ready to make a decision yet.” And leave it at that.

Rediscover your joy

If your financial setback has resulted in a new reality – that requires you to cut back and live on less – don’t eliminate everything. Occasional splurges have been shown to help people stick to tight budgets and eliminate debt.

The key is to find less expensive ways to enjoy your previous splurges. For example, if you use to love meals out at your favorite seafood restaurant, learn how to make lobster or scallops at home. You may find that the process of creating these new pleasures for yourself is more rewarding than your splurges before.

The key to financial resilience is embracing a growth mindset and appreciating the wisdom that comes with life experiences. That newfound resilience will help you overcome all of life’s challenges.