-Money is one of the most stressful and necessary parts
of our lives that we'll ever have to deal with.
The coronavirus pandemic has exacerbated that anxiety,
and there's no clear end in sight.
I talked to experts to better understand
some of the psychological consequences of financial stress
and how we can manage it.
I'm Nicole Ellis, and this is "Coping with COVID-19."
-Prior to this whole thing happening,
money was already the number-one source of stress
in the lives of the average American.
Like, three out of four Americans, studies have shown,
are really stressed about money.
And then you add in the concern
about our physical well-being with the virus,
and our emotional brains are all just going haywire right now.
-What had been the biggest hurdles for people
as they try to figure out how to move forward,
in terms of financial planning for this?
-The biggest challenge we're discovering for folks
is simply coming to terms
with the severity of the COVID-19 crisis.
People I think are still even today not fully internalizing
and accepting the fact that this is going to last months,
probably the rest of this year.
-Is a part of that behavior aversion to looking
at our own personal financial landscape?
-Yes, and so, when we're scared about something,
and we're worried that we don't have the confidence
to address it, it's real easy to avoid thinking about it.
Even before this, about a third of Americans would admit
that they try not to think about their financial situation.
Well, it makes sense if you're really stressed about it.
-When you are in fear,
your natural inclination emotionally is to run.
-What are the financial ways
that you can either put yourself at ease or at least plan
to the best of your ability in the here and now?
-You need to have a week or two-week-out plan, I mean,
just for basic necessities and food and fruits
and vegetables, that kind of thing.
So, you want to have that sort of plan.
And then, also, I think it's a good idea to stretch out
a 3-to-6-month plan.
-Right now, we are in a hunker-down,
survival environment.
And that means we need to prepare ourselves,
not just emotionally,
but financially, at the prospect of losing our incomes.
-Very often, our subconscious, if it feels like
we're not paying enough attention to a threat,
it'll just throw it in front of your face all the time,
and you'll be dreaming about it, and you can't sleep at night.
And sort of ironically, when you turn and face that
and actually maybe journal about it
and go around your worst fears
and just sort of give it time to breathe,
quite often that lowers your level of anxiety
because your subconscious is like,
"Okay, so, you're taking care of this, right?
You're paying attention to this."
And the hardest part is when we're
pushing it down all day long
and trying not to think about it.
That's when it can rear its ugly head,
as we're trying to drift off to sleep.
-What are some of the ways that people can process
some of this stress,
if it's become overwhelming because of this pandemic?
-This is an exercise I call the worst-case-scenario exercise.
The terrible thing about financial stress
is financial stress can actually kill you.
But your financial situation
probably isn't going to kill you.
So, the worst-case-scenario
exercise puts you through this process.
So, essentially, let's say, for example,
you're afraid of losing your job,
or you've lost your job.
Well, then, what would happen?
And you might say, "Well, then,
I wouldn't be able to pay my mortgage."
Then, what would happen?
"Well, I might lose my house."
Okay, well, what would happen next?
And you just go down the rabbit hole.
"And maybe I have to move in with loved ones
or sibling or parents."
And that wouldn't be fun, but it's not life-threatening.
-What would your advice be for people who are
on the opposite end of the spectrum,
in terms of how they are dealing with this financial stress,
the people who are constantly looking at their stocks,
constantly looking at their bank accounts
while we're at home and vulnerable to cyclical thinking?
-So, I would suggest that you actually do do that.
So, just go ahead and totally immerse yourself
in all of your anxiety and all of your concerns,
but try to schedule it for maybe just an hour a day.
Don't stretch it out throughout the whole day
and be careful that your frame of reference isn't too narrow.
If you looked at a Dow Jones Industrial Average chart
for the last month or two,
and you're looking at it like this,
it's gonna look like the whole world went off a cliff.
Look at a 3-year chart, a 5-year chart,
a 10-year chart, or even a 100-year chart.
And when you see that, you're gonna see that
this is sort of just a blip on the screen.
It's more of a pothole than it is going off a cliff.
And so, I think where we get extremely anxious
when we have that short, narrow frame of reference,
and when we can expand that out, it feels much better.
-There's also the sort of trauma piece.
Like, getting fired or furloughed or laid off
is a traumatic life event.
What would your advice be for navigating and healing
from the types of traumatic events
that Americans are experiencing in the millions now?
-One of the key things that keeps us from not being
totally impaired by that post-traumatic stress
is our ability to take action to help ourselves.
We can easily get in a frozen state of panic and fear
and just to try to override that,
to take action that you can control.
And, for example, with the virus,
there's a lot of things that many of us can control,
right, in the sense that we can wash our hands more,
we can social-distance,
we can be more purposeful around that.
It's an opportunity to, for me, personally,
to be a better husband, to be a better father.
Quite frankly, I'm actually a way better father now
than I was a month ago.
And so, this is something that I can actually control,
and it's one of the ways that I'm trying
to sort of keep myself moving and find ways to improve myself
in something I have total control over.
-What are some of the other pieces of our relationship
with money that we should be mindful of?
-Well, we need to recognize that our relationship
with money has changed,
and the relationship that money has with us,
meaning the family environment, has also changed.
And that means we need to have an open,
honest communication with our spouse
or significant other, with our partner,
with our children to help them understand
that yeah, things are different now.
The crisis itself is actually helping us
to control our spending,
because we can't leave the house.
So, we're not going to restaurants.
We're not going to shopping malls.
We're not going to movie theaters or bowling alleys.
We are not spending money the way that we were.
We're not even putting gas in the car,
which is kind of a shame since gas prices are so low.
But -- go figure.
So, we are already doing a lot inherently
by simply staying home.
But, having said that, we need to look in as many places
as we can for how we are spending the remaining money
we're spending to see what is truly essential
versus what is more optional and discretionary
so that we can continue to buy food and medicine,
no matter how long this crisis happens to last.
And after you have built up your cash reserves,
and you've started contributing to your retirement plan at work,
now you can start focusing on long-term debts,
such as expensive credit cards.
And after those are gone, you can then focus
on saving more in ordinary, taxable accounts.
But for most of us, it's the cash reserves
that really count right now.
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