Editor’s note: This article contains information only. It is not intended as personal or general advice. Your Money recommends seeking professional advice specific to your personal circumstances.
The popular meditative technique of ‘mindfulness’ has been hyped as a useful way to improve mental health and happiness by ‘being present’.
But while experts say it can help to ease anxiety, how does that translate into financial wellbeing?
Financial coach Rebecca Pritchard of Wealth Enhancers told Your Money Live that it’s important to think about why the future makes you so uncomfortable in the first place.
“What makes you feel that queasiness in the stomach, what makes you feel uncertain? That’s usually a good sign that things need to be addressed,” she said.
That’s particularly important when it comes to dealing with money and the possibility of losing it.
“We’d all love to think that we’re invincible, but we’re not. And opening up conversations about risk and what happens when life throws you a curveball is so important,” she explained.
“Even though it’s uncomfortable, even though it makes us a queasy, even though we don’t know all the answers, we still need to have this conversation.”
She says when you think about risk, it’s helpful to think of a scale that measures both the likelihood of something going wrong together with the impact.
At one end of the scale, there is ‘high-risk low-impact’ scenarios, such as smashing your phone. At the other end of the spectrum, there are ‘low-risk high-impact’ situations, such as the death of a loved one.
“One thing I like to ask people is, ‘what are you doing right now to de-risk your life?'”
That might include insurance, debt reduction and increasing savings.
To start laying out a risk plan, she says it’s useful to start thinking about where you are in your current situation and what assets you have at your disposal.
That should include the contents in your home all the way through to the bigger picture, such as your ability to continuing working for X number of years and the support a person might have access to through family.
“[Ability to work] is a massive asset and somehow it’s easily forgotten in the conversation,” she said.
From there, Pritchard says you can think about where your gaps lie and what measures need to be taken to protect yourself.
“Some risks we will take on ourselves. So I don’t have phone insurance, because if I smash my phone I’m happy to cop that one on the chin, I have cash in the bank.
“But I’m not prepared to leave my husband with four mortgages without my income. So I have my life and my income insured. There are some risks that I’m just not comfortable with and I’m happy to pay someone in order to take on those risks for me.”
For more top tips from Pritchard, watch the discussion in the video above.