12 ways to overcome your financial fears
Here are 12 steps (not necessarily in that order) that you can use effectively to overcome your financial fears.
- Acknowledge your money fears. That is where it all begins. We all have some conditioning pertaining to debt, equity, trading, commodities, gold etc. That has an impact on your current investment strategy. But it begins with identifying and acknowledging that fear.
- Write down your long term goals on paper. This may appear to be quite mundane but is extremely powerful. It gives a sense of purpose and completion to your financial activities. Knowing why must come before knowing how and that must begin with writing down your goals.
- Talk to your advisor about your fears. Remember, your financial advisor is your friend, philosopher and guide when it comes to your financial future. If you talk to them about your fears, they will be able to explain things in a much better way to you. Otherwise, your conditioning will stand between you and your advisor.
- Involve your spouse and kids in the process. You can never have a good financial plan unless your family is part of the process. Your fears are that your family may have to make some sacrifices in the financial planning process. If you talk to them and get their buy-in, you find the process getting a lot simpler.
- Commit yourself to a discipline. The best way to get over your financial fears is to adopt discipline in terms of regular allocation, regular investing, asset allocation, portfolio review etc. This discipline can go a long way in allaying fears through a process approach.
- An ounce of action is worth a pound of planning. There is no use just talking about finances and planning. You need to act, make a plan and get down to investing. Unless you dirty your hands on the shop floor, you will continue to live with your financial fears absolutely intact. Action is the best answer.
- Read up on the latest on financial planning. Don’t be satisfied with static knowledge because the field of finance is dynamic and is changing almost on a daily basis. That is only possible with constantly updating yourself about the methods, techniques and products all around you.
- Get comfortable with technology. It is one of the best ways of overcoming your financial fears. The best way to allay your fears is through more information and knowledge at your disposal. Thanks to smart phones and the internet, a lot of focused content is at your finger tips. Just make the best of it and watch your financial fears vanish.
- Learn to review your plan frequently. Nothing beats regular and methodical review of your plan and your portfolio. Are you on track to achieving your goals; both medium term and long term? Is your portfolio mix in sync with your risk appetite and the current market scenario. When you ask such probing questions, you automatically get over your financial fears.
- Open a trading account and start investing. You may wonder, how this is going to help. This is live action. The purpose is not to become a master day trader; that is not necessary. You must learn how to initiate investments and how to monitor and review investments. This portfolio may be very small in size but it will do a world of good for your confidence as you will adopt a do-it-yourself (DIY) approach.
- Keep your mind open for new ideas. The world of finance is changing rapidly and drastically. The change is in terms of products, processes, technologies, use of artificial intelligence, application of machine learning etc. These may look like rocket science but are basically intended to make your job easier and more scientific. Be open to new ideas and be willing to experiment. It will help you dispel a lot of your fears.
- Get a good night’s sleep. The whole idea of finance is to put it on auto mode and manage only be exception. That will ensure you are still able to manage financial planning without too much of stress. That is really helpful.