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Insights from The Mind Money Spectrum Podcast Episode #39
Originally published on Tue, 08 Sep 2020 06:00:00 -0400
As high-performance professionals navigating financial planning in uncertain times, the COVID-19 pandemic has challenged much more than just our portfolios. It has affected our mindset, daily routines, and long-term goals. This ongoing crisis is unlike the acute shocks we have faced before; it has become a chronic concern. Reflecting on the well-known five stages of grief — denial, anger, bargaining, depression, and acceptance — not only helps us process these unprecedented changes but also provides a useful framework for adapting our financial and life planning strategies.
In this article, I will explore how understanding and moving beyond these emotional stages can empower you to take control and steer your finances toward security and freedom, despite the continued uncertainty brought by the pandemic.
The Five Stages of Grief and Financial Mindset
Initially introduced by Elisabeth Kubler-Ross to describe the emotional progression after loss, the five stages of grief resonate strongly with many people’s responses to the pandemic. Let’s briefly connect each stage to the financial mindset and actions you can take to maintain control over your financial future.
- Denial: Early in the pandemic, many of us hoped this would be short-lived and minimal in impact. Financially, this may have meant postponing or ignoring budget adjustments, investment reviews, or emergency fund plans.
- Anger: Frustration can rise when markets falter, policies feel inadequate, or personal plans are disrupted. Anger can cloud judgment and tempt impulsive decisions.
- Bargaining: Finding ways to negotiate between what you want and what is possible, like counting on stimulus payments or assuming a rapid economic recovery to restore your financial trajectory.
- Depression: Feeling overwhelmed or stuck can lead to stagnation—neglecting financial checkups or giving up on goals.
- Acceptance: Realizing that the situation has changed permanently in some ways and adopting a new, realistic approach to your financial and life plans.
Accepting where we are allows us to respond effectively rather than react emotionally. The pandemic may stretch over months or years, so expecting a quick fix can be a dangerous trap that leads to poor financial decisions.
Actionable Financial Steps to Move Beyond Grief
Here are practical strategies tailored to professionals seeking financial security and freedom, helping you advance past the stages of grief into acceptance and proactive planning.
1. Conduct a Comprehensive Financial Review
Set aside time to reassess your current financial position with honesty and clarity. Update your budget, review emergency fund levels, check your savings rate, and gauge your liquidity. This will help move you out of denial and bargaining by grounding your expectations in reality.
- Emergency Fund: Ensure you have 3–6 months of essential expenses set aside in a liquid, safe place. If not, prioritize building this safety net immediately to reduce financial anxiety during extended uncertainty.
- Cash Flow Management: Track your income and expenses closely. Identify areas where discretionary spending can be trimmed without diminishing quality of life. This helps manage stress and create flexibility.
2. Reevaluate Your Investment Allocation
Market volatility during the pandemic has affected portfolios in various ways. Staying with a diversified mix of stocks and bonds remains the time-tested approach. Avoid chasing alternative investments that claim to hedge pandemic risk—many come with illiquidity or complexity that is unsuitable now.
- Diversification: Maintain a balanced portfolio aligned with your risk tolerance and time horizon. Rebalancing may be necessary as market movements shift asset weightings.
- Long-Term Focus: Avoid emotional reactions to short-term market swings. Historically, markets recover, reward patient investors, and compound wealth over time.
3. Adjust Financial Goals with Flexibility
Acceptance involves acknowledging that some life and financial goals may need recalibration. Whether it’s retirement timing, education funding, or major purchases, build flexibility into your plans.
- Scenario Planning: Work with your advisor to model different economic recovery timelines and impacts on your cash flow, investment returns, and liabilities.
- Prioritize: Focus on the most critical goals and identify which can be deferred or adjusted.
4. Adopt a Sustainable Lifestyle Mindset
The pandemic brings ongoing changes to work-life balance and spending habits. It’s an opportunity to redefine your personal and financial freedom by embracing new routines consistent with health and safety.
- Health as Wealth: Prioritize physical and mental health, which have profound impacts on financial well-being including productivity and medical expenses.
- Intentional Spending: Focus spending on experiences and needs that bring meaningful value rather than transient pleasures.
5. Practice Patience and Emotionally Informed Decision-Making
The stages of grief are not linear, and fluctuating emotions are natural. Emotional awareness can protect you from impulsive financial choices that detract from long-term freedom.
- Decision Process Over Outcome: Focus on making well-informed decisions with the information available rather than obsessing over “perfect” timing.
- Periodic Review and Adjustment: Set regular financial check-ins to revisit goals, budgets, and investing, allowing you to adapt as conditions evolve.
Lessons to Carry Forward
The pandemic has made it clear that crises are unpredictable and can last longer than expected. Embracing the five stages of grief offers a compassionate framework for processing these emotions. Yet the key is to aim for acceptance, where realistic plans are formed and sustained.
Professionally, this means financial planning is no longer about reacting to short-term disruptions but building resilience for a future that may include new challenges. Fee-only fiduciary advice can help you cut through market noise, reality-check your goals, and develop strategies tailored to you.
Remember, you cannot control a global health crisis, but you can control your financial preparedness and mindset. By focusing on prudent financial fundamentals — solid emergency funds, diversified investments, adjusted goals, and emotionally aware decision-making — you position yourself to come through the pandemic stronger and closer to your vision of financial freedom.
Final Thoughts
If you find yourself circling back through stages of denial, anger, or bargaining, that is normal. Be kind to yourself while also committing to small actions each day that move you forward.
Consider these steps as part of your ongoing strategy to not only survive the pandemic but to thrive in the new financial realities it brings. The effort you invest now will reduce future regrets and increase your capacity to pursue what matters most.
Should you want to take a deeper dive into proactive financial planning tailored to your unique situation and goals, feel free to reach out for a complimentary consultation. Together, we can help you shape a more secure and confident road ahead.
Stay safe, stay thoughtful, and keep investing in your future.
Trishul Patel, CFP®
Fee-Only Fiduciary Wealth Manager
InvestingForever.com
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Need More Help?
If you’re ever in need of guidance, these blog posts may be of help. But be sure to contact a financial, tax, or legal professional for guidance and information specific to your individual situation. And as always you can reach out to me directly here with questions or concerns about your personal situation.