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To Avoid Crisis, Control Little Things First

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By Jean Chatzky

The Tampa Tribune

Published: May 11, 2008

I've talked a lot about the anxiety that money causes. But this is a very relevant topic, with what's happening in the financial markets. Housing prices are crazy - stock prices, crazier. And although the government is trying to step in and lend a hand, even it is at a bit of a loss when it comes to finding a solution.

So, of course, you're afraid. For a lot of people, this is 10, 20, even 30 years of savings and investments we're talking about.

But the stock market, sinking real estate prices, the balance sheets of big-time financial corporations - these are all things you can't control. And in times like this, my perspective has always been that getting control of the little things, the things you can actually get a handle on, is the best way to reduce anxiety.

Here's how to start:

Open the mail. That's right: the bills, the 401(k) statements and anything else that has been in that pile on your desk for weeks. You don't have to do it all at once, but you do have to get an idea of where you stand if your anxiety has caused you to hide from the numbers.

It's hard to see a high credit card bill or rapidly falling investment statement, but it's just going to get harder if you leave things like this on the back burner.

"I think part of the problem we have is we get into this cycle, where one small thing comes in the mail, and it triggers this whole sense that you can't cope with the bigger picture. That's what you have to get over," says Patricia Pearson, author of "A Brief History of Anxiety ... Yours and Mine."

The easiest way to do it? Every time a bill or statement hits your mailbox, open it up, take action, if necessary, and then file it away.

Educate yourself. People are slowly realizing that personal finance should be a part of the curriculum in public schools (and Financial Literacy Month in April helped spread the word), but just because you missed out doesn't mean it's too late.

Paying your bills on time, keeping tabs on your bank accounts and investing are all things you can learn to be good at. I'm living proof. I wasn't always a money whiz, and I've had my fair share of screw-ups in my 20s. But eventually, I realized that paying attention - watching account balances grow, knowing where the money's going - is empowering.

Get some help. Reading books and magazines isn't going to automatically make you an expert, and that's OK. In fact, it's what financial planners and investment advisers are there for.

If you're in the market for a financial adviser, the first place to look is with friends and co-workers. Ask for recommendations of people they've worked with and liked, then call around and set up a few appointments.

The person shouldn't make you feel intimidated; in other words, be sure you're completely comfortable asking for an explanation four, five, even six times until you understand it.

By that same token, watch out for advisers who speak in a language you can't grasp. A good one will easily break down the financial jargon into something that makes sense to the average Joe.

Protect yourself. Having extra cash on hand in case you need it will go a long way toward helping you sleep at night. I usually suggest an emergency fund with three to six months of living expenses for a two-income family, but in a downturn, you want to strive to hit at least six months.

"Anxiety comes from a state of uneasiness and future uncertainty. Am I going to be able to buy groceries, or put gas in my car if I'm suddenly hit with several unexpected expenses at once? People who feel the greatest anxiety are those who are unprepared," explains Kathleen Gurney, president of the Financial Psychology Corp. in North Miami.

With emergency savings, liquidity is your top priority, but you should still earn some interest in the meantime. Put the cash in a high-interest savings account or money market fund where you can easily access it.

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