Making financial planning decisions in tough times.

I heard a staggering statistic the other day about the number of homes that are going into foreclosure each day. In addition, people are losing their jobs as many businesses experience a decline in revenues and are struggling to keep their doors open. It's certain that most of us are feeling the effects of this tougher economy. What we don't yet know is how deep and how long we will experience these economic tough times.

Financial stress can either paralyze us into taking no action when we should or cause us to make poor, impulsive decisions. When we're in a flourishing economy, it's so much easier to recover from any bad decisions we might make. However, when things are tough there's not as much room for error and a misstep will take a longer time to recover from financially. Over my years of experience in working with clients, I've come up with these six steps that will help you make better financial decisions in tough times.

Step 1: Know what's truly important
The first step is to take the time to know what's most important to you. This is more difficult when you're feeling financial stress. Ask yourself the question, "What makes my life richer?" For example, spending time with your children or your spouse, and staying healthy might be most important to you. Once you have clarity on what's most important, it's easier to make financial decisions that keep you in alignment with your life values.

Step 2: Be proactive about your spending choices
The second step to making good decisions in a tough economy is to be proactive about how you spend your money. Look for ways to cut household expenses and before you buy, ask yourself "Is this purchase really necessary?" In addition, check to see if any loans or credit cards can be refinanced or consolidated to lower your monthly payments and interest rates.

If you are self employed and experiencing a business slow-down, look for ways to reduce your overhead. Many business owners who are renting space have been able to re-negotiate a lesser rent. You'll also want to explore creative ways of finding and keep new customers while keeping your current ones happy with your products or services.

Step 3: Seek input from professionals
The third step to making good decisions in a tight economy is to research the options and the consequences of major financial decisions. The more research you do the better outcome you'll have. Seek input from people who have more information and experience than you. Also, check into the possible tax or legal consequences of your decision. This is particularly important if you're considering a decision on the disposition of property such as a short sale, deed in lieu of foreclosure, or going into foreclosure.

Step 4: Check In With Yourself
The fourth step to making good decisions in a tough market is to take the time to have a quiet moment with yourself once you've gathered all the information. How does the decision feel? Do you have any nagging doubts? Do you feel "fear" about making the decision? Ask yourself, "Have I gathered enough information to feel good about this decision?" Every person I've ever met who made a financial decision that resulted in the loss of money, time and energy admitted that they ignored their small voice or that feeling in the pit of their stomach.

Step 5: Make decisions based on where you are now
The fifth step to making good decisions in a tough market is to make all of your spending decisions based on where you are now and be cautious about the future. Making decisions based on where you are now means don't spend money until you've received it no matter how certain it appears - whether it's an inheritance or a "for sure" commission check. Avoid using your credit cards if you are unable to pay them off each month. Also, don't spend money unnecessarily because you're hoping the economy is going to get better soon. This is not the time for impulsive purchases. Being cautious about the future means that even though your job may seem secure or your business is doing well, stay alert to the fact that we are in a tougher, uncertain economy and make your decisions with this in mind.

Step 6: Good Self Care will keep you creative
The sixth and final step to making good decisions in a tough economy is good self care. Good self care will keep you feeling good emotionally and will enhance your creativity. You may wonder why it is important to enhance your creativity. You may even feel that since things are "tight" you don't have time to play creatively. When we're in a creative state we are able to see things more clearly. It also allows us to see other perspectives, such as finding creative ways to solve problems or challenges.

It's easy to slide down the rabbit hole of doom and gloom when things get financially tough, and it's also easy to let go of everyday self care activities such as eating right and exercising. It's more important than ever to take care of our physical well-being and to take the time for relaxing activities. Develop a daily practice of some type of soul-soothing activity. It might be painting, playing a musical instrument, playing golf or other some other type of sport. Explore what you can do on a daily basis that will keep you vibrant emotionally and in your most creative state.

Don't let these tough times send you into a spiral of unproductive and unnecessary worry. Instead, these six steps that I've outlined will help you stay creative to all possibilities and will help you make long-term, smart, proactive financial decisions.

Remember, this economic slowdown is a part of the ebb and flow of life. Keep in mind that this will eventually pass into a prosperous time once more. If you are one of the millions who are experiencing financial stress, this is a good time to challenge yourself to stay positive and find creative solutions to challenges as they arise. Stay calm in the knowing that everything will eventually come around.