Use a nonfinancial emergency fund amid coronavirus

You and your clients are going through an unprecedented crisis. But there are techniques to help you cope, starting with caring for yourself.

Hopefully, your clients heeded your advice to build up an emergency fund, which can see them through if their income drops or dries up. But our finances are only part of the challenge we all face. We may also be struggling to stay mentally and physically strong during one of the most stressful and isolating times we’ve had to endure as a nation. With that in mind, help your clients — and yourself — prepare a nonfinancial emergency fund, too.

The nonfinancial emergency fund

Like its financial cousin, the nonfinancial emergency fund can be called upon when times get tough. And just as it is wise to keep the financial emergency fund in cash, rather than REITs or something else illiquid, you should ensure the nonfinancial emergency fund is just as fast and easy to leverage. This can be as simple as an index card on which your clients list three readily available activities that bring health, sanity and joy to their lives, such as:

• Walking the dog the long way around the neighborhood.

• Writing an email of thanks or gratitude to someone important to them.

• Taking a bath.

Consider not only a list of easy activities, but also photos that bring delight or comfort, small food items to savor or a list of phone numbers of people to connect with to reduce feelings of isolation.

Critical to health and financial success

Human beings have two nervous systems: sympathetic and parasympathetic. Despite its nonintuitive name, the sympathetic is the “fight-or-flight” nervous system that is useful when humans feel they are in danger. It works perfectly in situations like escaping lions on the Serengeti: Blood flow to the brain decreases as we pump blood to the legs and arms, readying us to run or fight. But as we’ve all experienced when clients call us to shift to cash once the market bottoms, this same system can push us toward instinctive actions such as fight, flight or freeze that can hurt in the longer run.

The parasympathetic, on the other hand, is the calm, rational nervous system; it allows blood to return to the brain, resulting in clearer thinking. By taking nonfinancial emergency fund actions when we feel angry, scared or stressed, we can engage the parasympathetic nervous system — but only if we actually follow through. That’s why it’s critical that the actions are accessible and easy.

When we’re in a negative state of mind, it’s harder to take these actions because our minds narrow, focusing on survival instead of long-term health. To make good short-term decisions that lead to better long-term outcomes, we must pull ourselves out of that negativity.

Compassion fatigue

As financial advisers, we are doubly or triply at risk. Fee-based business revenues are shrinking while expenses stay the same. We are watching our own investments shrink as we are encouraged or forced to distance ourselves from those who bring us sanity. All the while, we must provide emotional strength and comfort to our clients and loved ones. This can lead to compassion fatigue. It may sound like an “out there” term but, much like post-traumatic stress disorder, it has been studied and is very real.

If we are to help others, we must stay physically and mentally strong throughout this crisis; we must practice what we preach.

Specific suggestions

Although customizing these suggestions to your preferences and abilities is useful, it’s most important to just take some positive, healthy actions. So in the name of simplicity, here are a few items to consider including in your nonfinancial emergency fund:

Physical

• Make time daily for physical activity you enjoy (walk a pet, go for a leisurely bike ride, or take an online yoga class).

• Try a quick power workout (jog for 20 minutes, hop on an exercise bike, or search for “10-minute workout” on YouTube and take your pick).

• Eat a healthy meal.

• Take a 20-minute power nap.

Mental

• Make or review a beloved photo album (physical or online).

• Practice meditation (if this is new to you, search “five-minute meditation” on YouTube).

• Engage in spiritual or religious practices.

• Think about something you’re grateful for.

Relationship

• Make a list of at least three people who lift your spirits to call or video chat.

• Send a physical letter to a loved one.

• Express your appreciation for something someone has recently done.

• Play a board game with a family member.

Purpose

• Volunteer (google “online volunteering” or go to catchafire.org).

• Create an email, phone, or videoconference support group for those in a similar situation.

• Have video coffee with someone who is isolated.

• Contact your local school to see if they need help delivering meals to families in need.

• Check in with neighbors to see if they need anything.

Just do it

The original root of the word “perfect” meant “done.” It doesn’t matter whether these activities feel perfect to you; it just matters that you do them. Start right now. Pick one. Do it. If it helps you feel better, add it to your personal list. If not, try something else. We have a sacred role in our team’s and clients’ lives. By keeping ourselves healthy, we can be at our best when they need us most.

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Kol Chu Birke is managing principal of technology and corporate strategy, and a financial behavior specialist, at Commonwealth Financial Network.

Related Topics: Client Servicing