After the Government announced that they were plunging the country into a third, and hopefully last, lockdown I received a frantic phone call from David*. David is in his mid-40s, is married to Sarah*, and they have 3 kids. He told me that he was at his wit’s end trying to sort out the family’s finances, and asked if I could help. As a Family Financial Advisor, one of my first steps when starting to work with a client is to understand and then neutralize the stress that the person is experiencing. I usually encounter three types of stress: the first is they don’t know how to start dealing with their finances and build a budget; this describes the majority of my clientele. The second is that they don’t understand Hebrew well enough to grasp what is going on. These first two types of stress are quite common and very easy to alleviate. The last type of stress is self-imposed and more complex because it is in the sub-conscious
During the first Coronavirus pandemic lockdown in March 2020,, everybody experienced some form of financial stress. Was this stress due to fear of the unknown, or did it have deeper roots in our subconscious?
So what are the symptoms of stress? It is that queasy feeling in the pit of your stomach, palpitations and maybe shortness of breath. More acute symptoms could be headaches, fatigue, loss of appetite and insomnia. Stress can also prompt us to freeze: meaning that we do not know how best to react in order to take control of the situation, and therefore do nothing.
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Beverly Erlich, a Transformational Life and Relationships Coach, explains that stress related symptoms are usually caused by a trauma. The trauma is not necessarily a sudden one, like an accident, but is based on early childhood experiences. It is an invisible guest that manifests itself again in adulthood in stressful situations. Children are rarely taught how to handle money by parents, the extended family or in school. Therefore, money becomes a taboo subject in the child and causes stress. My personal story is that my parents constantly argued about money. How did this affect my marriage? I could not speak to my husband about money for the first 10 years of our married life, since I thought that we would naturally argue about it. This is not uncommon: money can be a cause for extreme stress for some people due their childhood experience.
How does this affect us in adult life? Yisrael Gutman, the CEO of Mesilot, in his recent lecture to the Israeli Union of Family Financial Advisors, of which I am a member, explained that financial decisions are made on the basis of 20% rationality, and 80% emotional, in other words, the subconscious. Therefore, one of the most effective ways of dealing with stress that is self-imposed, is in fact to know how to budget and leverage our money. This will result in us feeling more confident about our finances and financial future.
Due to the third lockdown, I encountered more people like David and Sarah, who were feeling acute stress about their finances. You cannot ignore the symptoms of stress, but you need a strategy for dealing with stress related symptoms.
Bev Erlich recommends that you first acknowledge the fact that you are feeling stressed, take a deep breath and look at options for how to deal with the situation. You can talk to a good friend, but Erlich recommends that here, the friend needs to listen and not talk about their own financial challenges. You need to be heard. The object of the meeting with your friend is not necessarily to feel better, but to alleviate stress and improve your self-confidence so that you can act to resolve the situation. How do you know whether this approach is working for you? Erlich suggests that you tune in to your instincts. You might be feeling better, which is fine, but can you move forward? If you decide to go to a therapist, ask yourselves the same question.
If you feel embarrassed or ashamed about your financial predicament and do not want to talk to family, friends or a professional, try writing down your feelings in a journal on a regular basis. The emphasis should be on taking control of the situation to alleviate stress.
The symptoms of stress may come and go. What happens if they persist? Consider meditating, doing a physical activity, taking Rescue or some alternative therapy. If the symptoms are acute, then please seek medical assistance.
I asked David how he was alleviating his stress symptoms, and he told me that he finds going for a run very helpful. I asked him if he could define the type of stress he was feeling, whether it was due to the pandemic or due to his finances.
How can you identify if your stress is due to mishandling of finances? You experience palpitations or other stress-related symptoms when you check your bank account. Or you avoid checking your bank account. You are struggling to make ends meet. You are forever taking out loans, find it difficult to meet your commitments and end up searching for alternative sources of additional loans. You have no idea how and where you are spending your money and this is causing other stress related symptoms. You are anxious about your financial future.
Financial stress, as mentioned, is usually due to the fact that you have not budgeted your money and do not have short, medium and long term financial plans. To me, that is like driving a car with no idea how to arrive at the destination. You may have a rough idea of where you need to go, but no clear directions on how to get there. Another perspective is hoping to win the lottery without filling in the form.
I explained to David that I am a Family Financial Advisor and not a therapist. I explained that people who work with a budget are usually very confident and less stressed about their finances since they know exactly how much they can afford to spend. Of course, situations can still arise that cause financial stress: We are made redundant and are unclear how long it will take until we find alternative employment. Our income is lower than usual (this applies especially to self-employed people). Other examples are that the car breaks down or the pipes burst. An unexpected illness or accident has a direct impact on expenses. Mazal tov – you just had your first baby or more additions to the family. You are newly divorced, which means your financial status has changed drastically. Congratulations, you have finally retired – a massive change in your lifestyle. You suffer from an addiction which will eat up all your capital. Unfortunately, in Israel, we sometimes go to war with our neighbours. Then there is a once in a century occurrence, a pandemic like the one we are experiencing now.
Research has found that people who understood how to manage their finances were in much better shape when the pandemic started and much calmer than those who did not. Their mindset was one of how to minimize the financial damage, as opposed to how to survive. Following this explanation, David then understood that his predicament was due to the lack of control over his finances. When you do not feel in control, there is a tendency to go into panic mode and make poor financial decisions. This results in solutions for a short term crises that cause a long term financial disaster. The panic can also result in paralysis and a lack of action, which is the worst situation to be in. Before making any important financial decisions, always review your entire financial situation.
After this conversation, David realized that he needed help to determine which steps would improve the situation, and he and Sarah have started working with me. In order to take control of the situation, I always suggest taking the following steps; there is no better time than the present to ensure your financial stability. During our first session, we reviewed the family’s expenses and income, comparing pre corona and current expenses. The couple’s finances improved during the pandemic, since there were no expenditures for restaurants, movies and shows, or vacations. No clothing was purchased because the shops were closed and nowhere to go. I have also seen this with other couples. Yet in some cases, the finances were not helped by the pandemic. Therefore, I highly recommend taking your time before making any major financial decisions. If you require a loan, calculate how much you will need for the next year, and make a financial plan for the bank. Be realistic and honest about your financial situation, since it will only help you to make wise financial decisions. The next step is to build a realistic budget, which David and Sarah did and immediately implemented. I am happy to say that David and Sarah are feeling much more relaxed since their finances were organized very quickly.
Hopefully, once all of Israel’s population has been vaccinated, the country will finally return to some normality. I hope you all stay healthy.
Suzy Kahati is a Family Financial Advisor
and the author of “HOW TO SAVE MONEY IN ISRAEL”
* Names changed to protect confidentiality.