Financial loss is going to hurt you, financially and emotionally.
I’m not a financial advisor, of course, so I won’t be able to help with stock tips or interest rates. This article is about the particular kind of grief that comes along with sudden and unexpected loss of assets, the emotions that follow, and how to cope with the setback.
With many businesses forced to close (temporarily or permanently) due to the pandemic, owners and employees have been left in difficult situations both emotionally and financially.
Financial loss is not just about money...
The abrupt alteration of your life plans, changes in your lifestyle and housing, and the shattering of dreams for yourself and your family all magnify the emotions that surround financial loss.
Financial Grief
We’re accustomed to thinking of grief as something that occurs only after a loved one dies.
Is it true that people can actually grieve over lost money, jobs, and houses? Yes, and here’s why: any kind of loss can trigger a grief reaction.
Sadness
Anger
Guilt
Anxiety
Loneliness
Shock
Disbelief
Confusion
Sleep and/or appetite disturbances
Absentmindedness
Social withdrawal
Crying
Restlessness
This is just a partial list of the feelings, thoughts, and behaviors that are a part of the grieving process. If you have experienced some of these when you had a loss, you were likely experiencing grief. The emotional and physical effects resulting from a major financial loss are similar to the grief you feel over the loss of a loved one.
A study found that people who lost their investment or savings:
Experienced shock, fear, regret, and anger
Their personal relationships deteriorated
Their health suffered
They found it hard to move on
These findings demonstrate that the emotions caused by a financial setback are not to be taken lightly.
But, that being said, it’s equally important to realize that a major investment loss doesn’t doom you to a life of depression.
We’re far more resilient than we give ourselves credit for…
…And this isn’t just empty reassurance.
How to Cope with Financial Loss
We can grieve over losses brought on us by the economy. But even in such tough times, there are ways to cope and develop resiliency, and not only bounce back but thrive.
1. Acceptance
What is in the past cannot be undone and going with the current of the river is much easier than fighting to swim against it.
"Once the stock market comes back, everything will be fine”
“Even though this new job pays half of what I made before, we can still live the same way we did before,”
If you find yourself thinking about any of the above, you are in denial. It’s time to assess your situation and accept its reality. Accepting the fact that it has really happened to you is the first step to coping with the financial loss. Denial is a strong and protective mechanism. It only helps to numb you against pain from the situation until you’re ready to deal with it. Sometimes, it is necessary to consciously move out of denial, though, and work toward acceptance.
2. Redefine your needs - Spend less and save
That money is really gone and it's never coming back. You can’t keep living as if it's still there. It's time to redefine your needs - slash down expenses - and cut down to essentials. You can build back to where you were, but you have to plug your leaks right away; track your expenses, and find small yet significant areas to cut down your expenses.
3. Talk about it
It's Okay to be stunned by a BIG LOSS. There will be some real feelings of hurt and anger and guilt and disappointment. Bottling up those emotions will prevent you from releasing them to move on.
Find people you trust: friends, family, spiritual leaders. Talk! You don’t necessarily have to share the specifics of the loss, just your feelings about it. This is a good way to process your grief and not get stuck in it.
4. Increase Sources of Income
Rebuilding after a financial loss requires you to fill the gap left behind.
This can be achieved by increasing the cash inflow. If you think your current income does not suffice, consider increasing your income with alternative sources. Most successful people have and advocate building on multiple streams of income to reduce risk at all levels. With the Internet, you can find various ways that you could end up earning money on the side - side hustle. You may end up finding something better than you have or starting a new business that grows beyond what you expected.
5. Assess the situation and take measures to avoid the same loss in future
Each failure, when seen through the right lens, is a great teacher and cab become a stepping stone to greater success. When possible, it is important to assess the situation
Was it an investment gone wrong? Was it inherently risky or was it well within your personal risk appetite? Did an asset become a victim to an unforeseen tragedy, for instance a factory fire? Could a good insurance cover have reduced the extent of losses that you faced in such an instance?
Methodically, go through the situation and take necessary measures to not have to go through those again. If necessary, talk to a financial advisor for help to do this.
Coping with or bouncing back from the financial loss may not mean getting your money or assets replaced, but it does mean learning to survive in the most difficult times.
Closing Thoughts
Things happen positively or negatively in everyone's life as a personal experience and a lesson. Life brings with it many challenges and many things to learn.
Don't beat yourself up. We all make financial mistakes at some point in our lives, and financial setbacks often are out of our control. Avoid dwelling too much on the situation or on how you would have done things differently, but do recognize and learn from any mistakes you made, and take measures so you don't end up making them again.
Learn and thrive. There’s a lesson in every situation. Maybe you did make some poor decisions. Try to learn from your mistakes. The sand that irritates the oyster eventually makes a pearl. The economic loss you experience today may be the very thing you need to learn to thrive into the new opportunities opening before you. Keep in mind that a financial setback can provide you with the jolt you need to become a better investor and perhaps, ultimately, a richer one.
Nothing in life is insurmountable. When looked at in a cool rational manner, the biggest problems including financial loss can be resolved. The most obvious fix for a hole in your financial situation is to spend less and save more.
Have you ever faced a big financial loss? How did you cope in its aftermath? Let us know in the comments below.
