Why it Pays to Stay Calm in a Financial Emergency
When facing a significant financial setback, it’s easy to fall into a tailspin. You may feel overwhelmed, anxious and uncertain of what to do next—all of which is understandable. But what’s the best thing you can do when facing a financial emergency? Stay calm. Here are a few reasons why.
1. You can protect yourself from rash decision-making.
When a financial problem arises, a common first instinct is to act quickly. You might cash out investments, for example, or quickly accept a loan with a high interest rate. These impulsive decisions can be quite costly in the long run if you aren’t careful. Stay calm, slow down and research your next step before you make any moves.
2. You can prevent decision paralysis.
While some people rush their decisions, others freeze and take no action at all. This phenomenon is called decision paralysis, and it’s risky because it can make your financial situation worse. For example, if you’re in debt and feel so overwhelmed that you cannot decide how to move forward, your debt will only grow. If you stay calm, you’ll have the clarity to assess your options and figure out next steps.
3. It’s better for your health.
Stress can lead to all kinds of health problems: insomnia, headaches, heart conditions and more. It can also escalate the health problems you may already have, which can then lead to medical appointments or hospital visits. In other words, staying calm can help you avoid costly medical bills.
4. It can help you set your emotions aside.
Finances can be emotional. It’s common to feel shame or embarrassment when you face a financial setback. These feelings can cloud your judgment and make it more difficult to choose what’s best for you and your financial health. So let go of shame and cut yourself a little slack, even if it feels counterintuitive.
5. You’ll have a better shot at seeing the full picture.
If you’re panicked, you’re more likely to think about the now rather than the future. By keeping your cool, you can not only make more educated choices but do so with greater awareness of how your actions might affect your future.
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