“The pocket does not pull the stock”: how to insure in case of a crisis

Our body is so arranged that in moments of panic, the prefrontal cortex of the brain is practically turned off. The one that is responsible for the analysis and search for various behaviors. The limbic system remains active, historically responsible for automatic fight-and-flight responses. The body comes to the conclusion that it has no time to think, and begins to make decisions – spontaneous, provoked by the crowd, panic, very fast and most often completely counterproductive.

Imagine that you are driving a car and it skids on a slippery road. Your automatic reaction will be to turn the steering wheel in the opposite direction and apply the brakes with all your might. But the correct action is to turn the steering wheel in the direction of skidding and in no case touch the brake. This is taught to motorists in extreme driving courses through many repetitions, bringing the reaction to automatic.

How can we ensure that in moments of panic or crisis we make the right and informed decisions? The answer is to bring to automatism those actions that are necessary in the event of a crisis. Therefore, it’s time right now, in a calm environment, to read and remember, or better even print out tips on what to do and what not to do in a crisis situation.

What Not to Do When Talk of a “Coming” Crisis Begins

1. Try not to discuss the “future crisis” or any difficult situations with your friends. Remember that your brain doesn’t care if the situation is real or just imaginary. It will work as expected – it will force the adrenal glands to release the stress hormone into your bloodstream, which you definitely do not need in excess volumes.
2. You don’t have to run anywhere. Remember the first paragraph – in stress, the limbic system controls you, and it just needs to run around. No need to run to the exchange office and on the go try to count how much you have already lost without exchanging rubles for currency or currency for rubles yesterday. Remember also that it is best not to buy cash currency, but to open a foreign currency account in your own bank and transfer funds from account to account, so you will pay minimal commissions. In the case of buying currency, regularity is important, not volumes – by making purchases every month in equal volumes, you will fix the average price for the year without too much fuss.
3. Do not rush to take out loans, make expensive purchases or take your money to the bank. These decisions are not always bad, but you can definitely make them later, when the passions subside. Then pre-evaluate all the pros and cons. On the website of the Central Bank of the Russian Federation, you can always see the weighted average rates on deposits in order to compare the offer of your bank with them.
4. You do not need to buy goods “in reserve”. The world economy works in such a way that there will most likely not be any long-term shortage of any goods, and by buying goods, you only stimulate the price increase for them.
5. You also do not need to sell everything that is acquired by overwork, – an unnecessary dacha, a husband’s car or a grandmother’s apartment. Remember that in a panic, when you need to make a sale “quickly”, you are likely to lose value. It is not uncommon for a crisis to help sell a thing that has been waiting for its buyer for a long time – but this is more an exception than a rule.

What can and should be done to insure against a crisis

1. You can and should review your expenses and optimize them. Try to calculate how much money different monthly subscriptions eat up. Check your kids’ subscriptions as well – it might come as a surprise to you. Recent studies say that the optimal number of monthly subscriptions is no more than 10, otherwise you forget what you signed up for and how much money you lose on it.
2. Try saving some money each month. Even if it will be a very small part, it is psychologically much more comfortable to have your own airbag. It is believed that a 3-month supply of funds will allow you to survive a short crisis, a 6-month one – to change jobs, an annual one – to maintain a standard of living under greatly changed circumstances (for example, on maternity leave or divorce). Everyone chooses the comfortable size of the monthly pillow replenishment for himself. Savings from 10% of income per month are considered optimal.
3. Diversify your cushion and don’t put all your savings in one basket. Regardless of whether the dollar or the Chinese yuan is rising now, decide for yourself one day that you will keep your money in a different currency. Portfolio diversification has been and remains the main tool for preserving and increasing capital in all financial markets.
4. Invest. Even with a small amount, it is now possible to open a brokerage account and try your hand at investing. Many banks offer applications and special tools that are very convenient even for beginners. In online calculators, you can calculate how much money and in what instruments you need to invest in order to receive a certain amount after a specified period. It is worth paying attention to the compound interest rule – even seemingly small amounts multiply in the long run and can become a reliable basis for your capital.
5. Start to be interested in the topic of finance in general. Don’t avoid it as difficult or boring. Subscribe to expert channels on Youtube or other social networks. Take a financial literacy course, of which there are a lot now. The financial world is infinitely interesting, and it is knowledge that will give you the opportunity not to panic in moments when it seems that everyone around you is going crazy.

And last but not least.

Crises have happened and will happen in our lives regularly. – always remember this. And each time, as a result, the amount of our knowledge increases, skills are honed, skills are acquired to be calm, no matter what happens.

Don’t use the word “crisis” at all. Talk about a new twist, an interesting page, an exciting journey. And rest assured that everything will turn out well.