In tough financial times, avoid paralysis and sweeping change in favor of small steps

The California wildfires are just the latest major unsettling event.

To mix metaphors, if misery loves company, there is no room at the inn.

I was thinking about a recent day where a few things did not go the way I wanted. Was it a bad day or did bad things happen during the day? I think the distinction is important. By isolating the bad incidents, I made room to also recognize some of the good things that happened that day.

Chapter 64 of the “Tao Te Ching” states: “A journey of a thousand miles begins with a single step.” I have noticed a couple of typical reactions when clients feel unsettled. They are either completely paralyzed or they want to make a major change.

Let me instead make a case for the power of small actions; maybe just a single step.

When we are unsettled, we tend to globalize external events that are not going the way we wanted or are far away and out of our control. In our financial lives, this can cause us to not do what we know we could be doing or do more than we reasonably should. So let’s first find perspective.

Try to create context when paralyzed. I could decide to not turn bad events into a bad day by taking the small step of breaking them down into separate, unrelated circumstances. I didn’t diminish them, because they were real, but I did start to think about other things that happened that day that I appreciated.

Good things and bad things are never equal, but they are also never one-sided. Another way to break paralysis is by setting something up to look forward to in the future. Make it distant enough to have the full enjoyment of anticipation.

If you are prone to trying to do big things to calm your discomfort, the best thing you can do is pause. Most of our clients who took the major-action approach prolonged their unease or just transferred it to something else.

The first small step is to allow yourself to feel uncomfortable. You can’t rush solving unsettling feelings, you can only manage them. Try doing the least you can do. If you are uncomfortable with the markets, for example, raise a bit more cash rather than exit completely.

A single step will bring you closer to feeling settled than either standing still or taking a giant leap.

Spend your life wisely.

Ross Levin is the founder of Accredited Investors Wealth Management in Edina. He can be reached at ross@accredited.com.