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Scott Neal

Scott Neal, CPA, CFP, is the president of D. Scott Neal, Inc., a fee-only financial planning and investment advisory firm with offices in Lexington and Louisville. Reach him at or by calling 1.800.344.9098.

Crisis and Cures

What exactly constitutes a personal financial crisis? Chief among those crises we have heard about is experiencing an event that consumes all readily available cash and having no one to turn to for help. If you have never been in that situation, you likely have little appreciation for the level of anxiety, or outright panic, that it can create.

Backing off from such an extreme example, what would it take to label something in your life a crisis? The dictionary defines crisis as “a time of intense difficulty, trouble, or danger.” Indeed, there are many situations in which decisions related to finances can cause intense stress, fear and anxiety. While the consequences may or may not be dire, they can seem so amidst the emotional turbulence experienced during times of personal crisis. Hopes and fears played out in our minds today can create an imaginary crisis even before the event occurs. Decisions unrelated to money can give rise to a crisis mindset, and often the reaction to that imagined crisis can lead to even more bad decisions.

Dealing with the Effects of Crisis

Often when faced with the emotional stress of a difficult situation, a natural response is to procrastinate. It is a human tendency to avoid the problem by pursuing activities that have nothing to do with it. Lack of clarity as to why the circumstances are the way they are can also intensify the stress and induce a sense of hopelessness over the situation. Remember that the negative emotions can act as a warning and a call to action.

We may not be in control of everything that happens to us. Some circumstances must be accepted as outside our sphere of influence. We can, however, decide what we will do in the moment of difficulty or challenge. A significant roadblock to an accurate assessment of our situation, and finding a solution to it, is our perception of what is happening and why. Whether a set of circumstances is our fault, moving to blame or shame can perpetuate negative emotions and intensify hopelessness and despair over the situation.

Often when faced with the emotional stress of a difficult situation, a natural response is to procrastinate.

Five Ways to Manage the Stress of a Crisis

Reframe the situation in your own mind. Rather than blaming yourself for your ignorance or poor decision-making, remember that you’re not the only one in your situation. Many people experience the same or similar circumstances you face.

Think more positively about a future. Envision yourself beyond the crisis. It may take some hard work to get through it, but there are plenty of examples of life beyond difficult periods.

Engage in stress-reducing activities. Prolonged periods of negative stress are harmful to the body. Getting enough sleep, taking part in simple forms of exercise, and even play will help you maintain your health and mental focus. Take 15–20 minutes of “me time” every day. That means you and you alone, no devices, and no guilt.

Be smart enough and courageous enough to ask for help. While experiences of crisis can embarrass us, an outside perspective by someone with a non-anxious presence can be invaluable. Make the most of the situation to learn and grow.
Get emotional support from friends and family. Sometimes we need to be reminded that were known and loved through — and apart from — our troubles.

Can Planning Avert Crisis?

Just as practicing risk management doesn’t prevent future risks from entering your life, having a plan will not help you avert every potential crisis. Yet proper planning can help mitigate the effects of a crisis when it comes. You know the adage: “hope for the best, but plan for the worst.” The value of a plan is not in it being failsafe, but rather in having it in place to begin with. Not only can a sound financial plan lessen the severity of a personal financial crisis, but it is also a place to deal with its effects. The government uses stress tests with banks to plan future capital requirements. Your financial plan should be stress-tested before the need arises.

A plan means the difference between being worried, concerned, or stressed to the point of ambivalence or paralysis — and being confident in one’s ability to handle the situation. Having a plan in place can turn a significant financial crisis into a temporary setback.

Scott Neal is President of D. Scott Neal, Inc., a fee-only financial planning firm with offices in Lexington and Louisville. Contact Scott at 1-800-344-9098 or email him