Understanding and Addressing Fears: Making financial decisions often triggers fear due to high stakes. Liz Davidson, CEO of Financial Finesse, advises acknowledging fear’s origin and purpose. Farnoosh Torabi, creator of the “So Money” podcast, applied this when buying a home during the pandemic, emphasizing that sometimes, not taking enough risk can be riskier. Yemi Rose, CEO of OfColor, acknowledges the unique challenges faced by communities of color in risk-taking due to a lack of safety nets.
Building a Bigger Emergency Fund: Financial experts highlight the importance of building a robust savings account to mitigate potential risks. Pamela Capalad, a certified financial planner, suggests tailoring your savings goal based on factors like job stability and dependents. A larger emergency fund provides peace of mind, financial freedom, and the ability to cover basic needs during tough times.
Upleveling Financial Knowledge: Carol Petrov, a certified financial planner, stresses that knowledge is key to confidence and stress reduction. Educate yourself about investing, home value trends, and related topics to make informed decisions. Access resources like educational videos, books, articles, and financial podcasts to enhance your financial literacy.
Creating a Concrete Safety Plan: Thinking through worst-case scenarios can help you create a safety plan. Farnoosh Torabi suggests imagining the steps you’d take in case of a financial setback, such as job loss or home foreclosure. By planning ahead, you’ll be better equipped to handle unexpected challenges and rebound effectively.
Knowing When to Seek a Safer Route: Financial experts advise evaluating your choices when concerns about investments or mortgage payments become overwhelming. Carol Petrov emphasizes the importance of maintaining a balance between financial risk and security. Pamela Capalad suggests considering the impact of a potential recession on your current decisions and recommends a balanced approach in times of financial uncertainty.