How to handle a financial scare

It’s the witching month, when Hallowe’en will soon be upon us and many of us will enjoy the low level ‘scares’ of spooky costumes and the occasional horror movie.

What many of us can probably also agree on is that there is nothing light-hearted or thrilling when it comes to financial scares. Whether it is a job loss, financial insecurity stemming from a relationship breakdown or simply a large and unexpected bill, money scares can be deeply distressing. So what is the best way to deal with the situation when life puts us unexpectedly in a position of financial jeopardy?

Step one: Understand your fear

When it comes to our initial reaction to bad financial news, it can be helpful to understand how your brain chemistry is working, so you can rationalize your emotions. It’s very likely that when faced with a shock, our fight or flight response will be triggered. It is a very natural and deep-seated reaction as in the modern world, money represents our capacity to afford food and shelter and basic needs.But while this heady mix of stress hormones was helpful in the days when a shock meant being faced with a sabre toothed tiger or a forest fire the primitive part of our brain which controls our stress response is not so helpful when dealing with a bank manager or mortgage company.

Taking practical measures to control the physiological response, such as deep breaths in the first instance, then going for a walk or a run, or just taking some time out to let your emotions settle is the first thing to do. Never try to resolve the situation while you are in full panic mode.

Step two: Gather information

Possibly the hardest step is to face the situation full on and gather as much information as you can. It’s really tempting at this point to put your head in the sand, but stepping back and finding out exactly what you owe and when it will need to be paid is the first step in putting together a practical plan. Now is the time to contact your Serenity Financial Adviser so we can help.

Step three: Get things into context

Most financial shocks are short term events. You may fear long term consequences, but your adviser will be able to talk you through different options and model the long term results for you. This is a really beneficial process not just in practical terms, but psychologically, looking at your financial situation in a longer time frame can help you to put things into perspective. Your adviser can also help you look at all your assets and liabilities and will probably have some options for dealing with the situation which you haven’t considered.

Step four: Be honest

You don’t have to broadcast your situation to the world, but being honest at an early stage with anyone you owe money too, and close friends and family is usually the best option. Clear and early communication with creditors will help you to get the best possible outcome from people or companies you owe money too and talking to friends and family will probably result in valuable support. It is common for people who experience a big financial blow to suffer from anxiety and depression and these health concerns can spiral. It’s an issue we really care about here at Serenity, so please always pick up the phone or email us.

If you’re ever in doubt about asking for help, think back to all those horror films. There is always a scene where there’s a scary noise and the hero or heroine goes to investigate. You don’t have to be that character who goes alone in the darkness to find the monster — we’re here to help — and importantly to switch the lights on.