HerMoney Podcast Episode 207: How To Make Good Decisions During Uncertain Times

Trying to make the most of hermoney podcast episode 207? You are in the right place. Below we break it down in plain English, with practical tips you can actually use.

Key Takeaways

• A look at how to deal with uncertainty as it relates to our lives and our money, and some tactical things we can do when we’re facing so man...
• It may only be a few weeks since you first heard of Coronavirus, but chances are that it’s already changed your life , or the lives of peopl...
• March was officially Wall Street’s worst month since 2008, when the S&P 500 fell nearly 13%, and the the COVID-19 crisis that tipped it...

A look at how to deal with uncertainty as it relates to our lives and our money, and some tactical things we can do when we’re facing so numerous questions.

It may only be a few weeks since you first heard of Coronavirus, but chances are that it’s already changed your life , or the lives of people you love , perhaps drastically, perhaps forever. March was officially Wall Street’s worst month since 2008, when the S&P 500 fell nearly 13%, and the the COVID-19 crisis that tipped it all off  has left millions of us unsure what’s happening. We may be unsure what’s next with our jobs and income, our children’s’ education, our loved one’s health, our 401(k)s and portfolios, the list goes on. And all of it makes us feel uncertain and in need of answers. 

In this week’s episode, we’re diving into the concept of dealing with uncertainty as it relates to our lives and our money, and some tactical things we can do when we have so numerous questions on our minds. We’re joined by Carl Richards, Certified Financial Planner and the author of two books, “The One-Page Financial Plan: A Simple Way to Be Smart About Your Money,” and “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.”

Jean and Carl dive into the topic of making good decisions, and how those decisions can’t come from a place of panic. They discuss the steps we should all take towards making good decisions when we’re worried, and what people should be doing now. Carl talks about the importance of sticking with the plans you made, and then what to do when your plans get “blown up.” He lays out a step-by-step plan for what to do to bring back feelings of control. 

He also talks about the importance of perspective , that even though we know “this time” is different from the 2008 Excellent Recession, the only reasonable thing to do right now is to assume that even though this time is different in terms of the cause of the downturn, it won’t be any different in terms of the fact that it will end, and at some point we will all return to normalcy. 

Carl talks about what “panic behavior” looks like during times of crisis (we’re looking at you, hand sanitizer hoarders) and the importance of both talking to someone when we need to, and focusing on the things that are within our power to control. Even if the only thing you can control at the moment is your breath, then focus on that. Then once you’ve got that under control, you can focus on the next thing, until your feelings of control gradually begin to expand. Eventually you’ll start to feel a greater sense of ownership and control over everything you do. 

If you’re worried about making the “right” decisions at the moment, Carl advises a mindset shift , instead of wanting to be right every day, just try to be “a little less wrong.” He says it’s the notion of the “least bad option,” which is, unfortunately, what we’re faced with sometimes. But we’re better at figuring out our problems than we think we are. 

For people looking to make an immediate cutback on expenses, Carl advises taking stock of our blindspots , What expenses could we cut back on now? As more information becomes available, what small steps can we take that are going to help us make it through this time? 

Then, in Mailbag, Jean and Kathryn take a question from a listener who’s curious if she should purchase a new car, or wait in light of the economic shift brought on by coronavirus. We also hear from a woman who is curious about refinancing her student loans, and a listener who has questions about refinancing her mortgage and catching up on her retirement contributions while the markets are down.  In thrive, Jean talks about resilience, perseverance, and what it really means to achieve success. 

Transcript

Jean Chatzky: (00:03) HerMoney is brought to you by Fidelity Investments. Fidelity is committed to helping clients through any market conditions with financial planning and advice when you need it most. Learn more at Fidelity.com. HerMoney comes to you through PRX. Hey everybody. It’s Jean Chatzky. Thank you so much for joining me today on HerMoney during week, during a month where nothing seems normal and when everything feels uncertain. The COVID crisis has left millions of us unsure what’s happening with our jobs and our incomes, our children’s education, our loved ones health, our 401ks, our portfolios. I could go on, but all of this makes us unsettled and in need of answers and I’ve got to say, I’ve been looking for somebody who can tell me more than, we just don’t know, or at least if that is the answer, then how to handle, we just don’t know. I think it’s particularly key during these times to recognize what you can’t control versus what you can control and focus on the latter.

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Jean Chatzky: (01:30) And I know that today’s guest agrees with me on that. Carl Richards is joining me from London where he is living with his family these days. He is a certified financial planner. You read his napkin sketches in the New York times and online. He runs behaviorgap.com and he’s the author of two books, The One Page Financial Plan and The Behavior Gap. Carl, welcome. Nice to see you.

Carl Richards: (02:02) Jean, thank you. How are you?

Jean Chatzky: (02:04) You know I’m okay. I’m okay. I feel pretty lucky actually. I’m in my house able to Skype with you from halfway across the world and see you and see that you’re okay. I’m able to talk to my kids every day and pet my dog and I feel pretty lucky. How are you?

Carl Richards: (02:25) I feel the same way. I was just thinking about that list of uncertain things you read off and it’s interesting sometimes to just sort of sit right in that for a minute and realize like how, I don’t know if painful is the right word, but it’s pretty close if it’s not the right word, like just how scary all of that sort of uncertainty feels and acknowledge, we’re frequently in such a rush to get answers. Like you and I are like. We’re answering people. We’re solution people. How do we solve this or that? That we don’t pause long enough to just go, well what’s that underlying current that I feel because if we don’t sort of feel all the feels right?

Jean Chatzky: (03:09) Right?

Carl Richards: (03:09) They just live there under the surface. They don’t go away. But taking the time to pause. And so I don’t know if we’re just maybe everybody who’s listening or viewing this to just to give yourself a little permission to take a breath.

Jean Chatzky: (03:23) Well and to be comfortable with being uncomfortable. Right? There’s nothing about the volatility in the markets for example, or the things that we don’t know about how long this virus is going to be with us and the economic chaos that it’s going to bring. There’s nothing in that that makes us comfortable. Right? So we have to get okay with being uncomfortable and decide how much of that we can take before making decisions about what to do with our money and the other parts of our lives.

Carl Richards: (04:03) Yeah. I think like if we think through a case, like what are the steps cause we all want steps. Yeah. I think that first step is really, really key because we can’t make decisions, at least we can’t make good decisions, from a place of panic. And so we can be uncomfortable. We can be sad. We can be mad. Like I cycle a hundred times a day through like just wanting to get in my bed and throw the covers over my head. Or you know, like somebody emailed me today and said I just got in my tub and cried. Those things, I cycle a hundred times a day through that and it’s going to be okay.

Jean Chatzky: (04:44) Right.

Carl Richards: (04:44) But I can’t make decisions from panic.

Jean Chatzky: (04:48) No. I mean I know in your book you say very clearly that the decisions that we make are more to blame for us losing money than the markets. And that I gotta say is a little hard to swallow right now. But explain it.

Carl Richards: (05:05) Well I think there’s two really sort of lenses we have to view this with in terms of next steps. Like, what should people do. And one is, you hear a lot of this and it’s really useful if you fit in this category. One is stay the course, right? And I think of it as like defending the plan. Like you made a plan. So let’s just go down that path a little bit. Cause another one is, what do you do when the plan’s blown up? Right? And we need to talk about both because for the first time that I can remember, more people may be in that category of what do you do when the plans blown up. I’ll define that in a minute, but let’s say that you made a really thoughtful long-term financial plan. It had a set of goals, maybe even values sort of underlying, I call it a statement of financial purpose, right? Like an underlying set of… Like for it’s time with my family, mainly outside and serving in the community that sits underneath everything. And then on top of that, it’s sort of a set of goals. And those goals get more specific, right? I want to save this much or I want to retire here, I want to fund kids’ education. The goals have a little bit of framework. And then from the goals you built your investment portfolio, and I’m making a bunch of assumptions here, but I think it’s key like your investment portfolio was built based on those goals. Then you pick products to populate that investment portfolio. And so every step of the way you can go back through, you can take yourself out of this like ahhh, and you can reconnect almost like a touchstone to those things again. Like okay, how have the values changed? Time with my family mainly outside, no. Serving the community, no. How did the goals change? Maybe, but for me, no. And for a lot of people I’m having conversations with, no. Is the investment process changed? Now we have a lot of discussion here, but the only thing we have to do here and realize that we shouldn’t even be having this conversation until we’ve had a little empathy first. So we had that right. You got a chance to cry. We have a chance to throw something in the backyard like whatever, but now we get to these facts and we’re like, you built that portfolio based on the way the evidence of history, and you used data for the last 97 years to build that portfolio? You may not know that you did that, but you did.

Jean Chatzky: (07:24) Yeah.

Carl Richards: (07:24) And imbedded in that data was 1974, 73-74, the excellent depression, 87, Black Monday, 2000 when the S&P was down 54 and the NASDAQ down 80, the credit crisis, which some of these things look cute now, right? That stuff was all in the data. So it would be a responsible, when you built your plan, you knew we would have scary markets again. Right? Like you, knew markets would go up and down. You didn’t know why. You didn’t know how come, you didn’t know it would be this scary. You didn’t know any of those things, but you knew and then you can look at the products that you use to populate the plan. Right? If none of those things have changed, then we have that whole line of thinking around, stay the course, stay the course, stay the course. Right? Like if you’re in that boat, long-term money is still long-term, right? Like I don’t need it right now. We’re going to get to in a minute, like what happens if the plan’s blown up, but then we’ve got a lot of writing out there. You’ve done a ton of writing like that. The times is putting together, a lot of people are putting together really good sound writing around… Okay. Okay. The only reasonable thing to do right now, the only reasonable thing, is to make an assumption that even though this time is different in terms of how it started, and it’s very different terms of how it feels, or using words like global pandemic, like this is more than a market issue righ

Final Thoughts

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Originally published at savingswitch.com.