As we come to the close of another year, there are no doubt many people who are feeling glad the year is over. For some people, it would well have been the worst year of their lives, with everything imaginable having gone wrong. Death of loved ones, loss of a job, poor health, business failure, the end of a relationship – all manner of traumatic events are possibilities in any year and some people cop more than their fair share.
Your financial situation is inextricably linked to key life events, and traumatic events can lead to a huge loss of wealth. Whether that becomes a permanent loss depends on one key factor – your resilience. Research has shown that one of the most important determinants of your financial success is not how much you earn or the circumstances of your birth, but how resilient you are.
Resilience is the ability to recover quickly from adversity, trauma, tragedy, threats, or other significant sources of stress. Some people bounce right back from difficult experiences and some don’t. There is a strong element of choice in how we respond to adversity. Some people get extremely anger, others become overwhelmed and paralysed with fear, while others are initially upset but adapt to the change and move on. Those who get angry or overwhelmed are reacting passively to adversity, while those who adapt are more able to cope and to spring back. Negative emotions such as fear, anger, anxiety and helplessness decrease your ability to solve problems and weaken your resilience. Lower resilience in turn impacts on your financial success.
Building resilience is achieved by modifying behaviours and thought patterns. It’s not what happens to you that can ruin your life and financial success but how you respond to what happens – and that is largely your choice.
Liz Koh is an Authorised Financial Adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847. For free eBooks, go to www.moneymax.co.nz and www.moneymaxcoach.com