5 Steps for Handling Emotions During Challenging Financial Times


Hi, it’s your Hendershott Wealth Management team, and today we’re closing out our three-part series on Behavioral Finance.

When the stock market takes a tumble, it’s important to keep an eye on the long-term picture.

If we take a look at the history of the stock market over the past 100 years, you’ll see periods of good, even great performance – and more than a few stretches where the market was down.

Yes, the market goes up and down, but it doesn’t mean your emotions have to go on that same rollercoaster ride.

In fact, we’re certain there will be uncertainty in the future.

Whether it’s life events, new opportunities, financial fallout from someone or something changing, or natural transitions and seasons of life, uncertainty is part of life.

These changes can happen in an instant, so how can you best prepare your emotions to stay as calm as possible during moments of uncertainty?

Instead of dreading uncertainty, what if you embraced uncertainty?

Doug Lennick, CFP®, in his book titled Financial Intelligence, How to Make Smart, Values-Based Decisions with Your Money and Your Life, shares the power of reframing uncertainty from a place of negativity to one of positivity.

If you can learn how to embrace the inevitable uncertainty in life – and plan on your response – you will be better positioned to thrive during challenging financial times.

You will naturally be able to stick to your guiding values, control your actions, and stay the course.

The question is how to practically lean into uncertainty in the future. There are five actions you can take to powerfully set yourself up for success and on the right path toward accomplishing your long-term goals.

01. Understand that you must save money.

No matter how much it may be, start the habit of spending less than you earn and putting money aside for your future.

Whether it’s setting up an automatic deduction from your paycheck into a savings account or transferring from your checking account, saving money on a consistent basis will increase your net worth over time and create an emergency buffer.

And setting up your contributions to your 401(k) through your payroll is an easy strategy to set up your automatic savings for retirement.

02. Put your savings in a variety of accounts based on their purpose.

You need a cash account titled your Curveball account (some people call this an emergency fund).

To prepare for retirement, invest money in accounts like an employer sponsored 401(k), 403(b), or IRA.

To save for your child’s education, you can use a 529.

If you’re a business owner who is uncertain about your day-to-day operational finances, we highly recommend using the Profit First system.

03. Select an investment strategy that matches your financial timeline.

Having a written, detailed financial plan is a good starting point, but you also need to know how to consider different opportunities in the future.

If an investment opportunity sounds too good to be true, it probably is.

You can invest in the stock market in your retirement accounts and the 529. What funds you choose and how you invest will depend on your investment strategy.

When do you expect you’ll need to draw from those funds? What financial obligations do you expect to have in the future that may influence your investing now?

Remember to diversify your investments to best protect yourself from market conditions. Consider working with a trusted financial advisor to determine your investment philosophy and create a portfolio allocation that’s aligned with your financial goals.

04. Leverage insurance to reduce some of the risks of uncertainty.

You have insurance for your home, your car, and even when you travel, right? Why not also have insurance to protect your finances?

Life insurance, disability insurance, and umbrella policies help reduce the risk of uncertainty, especially since a crisis is often the catalyst for needing to use those types of protections.

Your insurance coverage and benefits need to be in alignment with your will, trust, and other estate documents.

Most importantly, having the right amount and type of insurance in place will help you and your loved ones focus on more personal details instead of money-related stress.

05. Follow your plan, build habits, and revisit your values.

Yes, it’s natural to react emotionally during hard financial times, but one of your greatest investments right now may be working to keep control of your emotions.

As times change, opportunities and challenges happen, and life transitions, it’s important to follow your plan.

What are the habits you need to embody to reach your financial goals? What are the values that matter the most to you that will help you enjoy the future you’re creating right now?

You can change your plan with more wisdom. You can revisit your values and ensure you still believe and value the same principles over time.

You can take charge of your emotions and make better, smarter decisions with your money even in uncertain financial times.

Which one of these actions will you take today?

If you have questions or want to share what you’re facing right now in your finances, simply reply to this email and share your story. We read every response.

To your prosperity,
Your Hendershott Wealth Management team


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