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4 Ways to Overcome Financial Inertia

June 11, 2014
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By  Richard M. Rosso

Learn more about Richard on NerdWallet’s Ask an Advisor

It has been five years since the financial crisis, and those who cross my path say it feels like the recession still grips us. They are still stressed over personal finance, investing and debt management.

I understand.

The concerns are valid. The stock market is up close to 200% since March 2009; housing is bumpy but recovering. In several pockets of the country, real estate is now expensive, and prices are out of reach for many individual investors. Wage growth is stagnant (have you received a raise, lately?), and we are working longer hours. Heck, the masses are burning out.

However, there are ways to take smart actions now to overcome fear and most often, procrastination— to feel alive and in control again.

Here are four ideas to get you thinking:

1. Go beneath the fears.

Sure, you can recite what concerns you, verbally. But until you write down what’s heavy on your mind, you’ll never fully understand the concerns. You may be surprised to discover that there are other issues masking real ones. For example, I had a friend who had a fear of saving for retirement. However, the true issue was that his employer offered limited choices in its retirement plan, and he didn’t realize he has other choices outside of his job.

Documenting the fear will allow you to get down to the issues you can explore with professionals or confidantes. An action plan outlining multiple steps will provide a sense of accomplishment and empower you. Most of the time, one action can lead you in the proper direction—and to greater steps as you gain momentum.

2. Imagine your life in 20 years; you’ll be motivated to take action now.

Nobody says you need to move quickly on battling fear. Take small steps and move. One way to create a sense of urgency is to imagine what your life would be like in the future if you don’t tackle the sources of financial inertia. What will your life be like 20 years from today if you don’t begin saving for retirement?

Forget all the financial industry babble that makes you feel that if you didn’t start socking away retirement money by the age of 25 you’ll never get ahead. It’s as if I were to say, “Hey, you’re 40. Too late to improve your health through diet and exercise, so just forget it.” I’ve worked with late accumulators who have hit their stride, made several changes to reduce debts and increase savings. With an investing strategy, they haven’t lost much time at all. You may be late in starting­—but at least you’ve started.

3. Do some research.

Knowledge is power. As you learn more, the fear will fade. A lack of knowledge will stir up uncertainty and freeze you in place, sort of like what happened to us immediately after the Great Recession.

Don’t succumb to it. Dig in, a piece at a time, until you feel less uneasy about the topic. Nobody expects you to be an expert; don’t be too hard on yourself. Gather opinions from professionals. Know the rewards AND risks.

However, be wary of too much knowledge. Yes, you read that right. In other words, those who immerse themselves in a subject such as retirement or stock trading begin to feel invincible. It’s at that point when mistakes are made. You must always remain humble in your quest to avoid overconfidence bias.

4. A little fear is healthy.

When it comes to money, I find fear to be a motivator if used in controlled doses. Slight discomfort is healthy and will help you push ahead. It’s through time and experience that fear will be perceived as friend. You should never get too comfortable when it comes to handling your finances. Discomfort breeds curiosity. Curiosity leads to awareness, especially of risk.

Eventually, your inertia will be a memory and no longer preventing you from making improvements, seeking opinions and basking in accomplishment.

Household financial stagnation is still with us. And not tackling it head-on is detrimental to your long-term accumulation of wealth.