The world financial market is looking pretty shady. Stock markets around the world continue to drop after weeks of losses and many indicators show that we are heading for a major crisis. In this post I want to give you a few ways to mentally prepare for a financial crisis so that if it happens you are better able to cope.
Do we need to prepare ourselves?
There is no way of knowing how bad this financial crisis is going to get. For some people it is already serious. If you had a lot of superannuation in the stock market you might already be hurting. Some indicators are showing that the crisis is easing, while others show us that it is getting worse. I do not know how bad it is going to end up. What I do know, however, is that people who prepare themselves early always come out of a crisis better than those who don’t. That is why I am writing this post for my readers.
How to mentally prepare for a financial crisis
The following tips are designed to help you cope with the cards you are dealt. I am not going to give you any secret stock picks or sound financial advice. What I am going to give you, however, are some practical things that you can do in order to put yourself in a better mental position if and when the worst happens.
1. Don’t panic. Just don’t.
The first thing you need to learn is that panic gets you absolutely no where. I have been in one or two life threatening situations in my life time and I am not sure how well I would have fared if I panicked. Now I am not saying that this economic stuff is going to get life threatening. It’s not. But what I am saying is that in any scary situation you need to know that panic doesn’t help.
Every time you see a little bit of panic creeping in to your mind just repeat “panic doesn’t help anyone”. It doesn’t help you and it doesn’t help others. The first step to dealing with a financial crisis is to learn how to keep your panic under control.
2. Learn your stuff
The people who do well in these times are the people who know their stuff. They know how the stock market works, they know where their money is kept and they know how to react if something bad happens. A relative of mine made many millions of dollars a few months back when he predicted the stock market crash and sold all of his shares. He is now sitting on a big pile of cash instead of worrying about his stock prices. He was able to do this because he knew his stuff.
It would be a good idea to spend a few minutes every day from on learning about the stock market and how to best optimize your money. Look at diversifying your investments. Look at maybe shifting money in to more stable economic climates. Read, read, read. If you learn your stuff you will be better able to react when something bad happens.
The other advantage of study is that it puts your mind at ease. There is a lot less panic in people who are educated on the problem. Look at doctors and nurses in the Emergency Room. If I got presented with a patient who had just had his face cut off by a circular saw I would probably run out of the hospital screaming. But a doctor or nurse would know exactly what to do and be relatively panic free. This is the same for the financial crisis. Learn your stuff.
3. Don’t watch too much mainstream American News
Please don’t get angry with me but American News channels are all about panic. They feed off of it. Their ratings depend on it. If they get you scared you will watch more news because you “need” to know what is going on. It is very sensationalistic. [Read more…] about How to Mentally Prepare for a Financial Crisis
Originally posted on October 23, 2008 @ 7:41 am
