Taking Charge

Jonathan Clements

“GOD, GRANT ME THE serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

No matter what our religious beliefs, we’re constantly bombarded with reasons to invoke the serenity prayer. There are so many things we can’t control: what our bosses decide, what acquaintances say behind our back, how stocks and interest rates perform. This lack of control can be a source of endless anxiety, while the opposite feeling—autonomy, financially and otherwise—can give a big boost to our happiness.

Many folks have told me that the world feels especially chaotic right now, given the conflicts in Ukraine and Israel, U.S. political polarization, stubbornly elevated inflation, rising interest rates and a lackluster stock market. I understand such handwringing, but I’m not inclined to join in. I’ve spent my entire life hearing that things have never been worse—and yet somehow they keep getting better.

Want to sleep at night and avoid panicky financial decisions? We need to make our peace with the world’s uncertainty. A lack of control is one of life’s constants and, indeed, it can get worse as we age. As the years sap our physical and mental capabilities, we may increasingly feel like we’re losing control, and any further threat to our independence—such as our family insisting that we stop driving or that we move into an assisted living facility—can trigger fierce resistance.

What to do? Here are five thoughts.

1. Control what we can. Faced with an uncertain world, this is the standard suggestion, and it has the added virtue of being good advice. If we want to be prudent managers of our own money, we should save diligently during our working years, spend judiciously once retired, limit our fixed living costs to perhaps 50% of our income, insure against major financial risks, plan our estate, hold down investment costs, manage our annual tax bill and diversify our portfolio broadly. All of these steps are largely or entirely within our control.

But when it comes to investing, perhaps the most important step is controlling our reaction to the financial markets’ ups and downs. A measured optimism about the world and the broad financial markets can be an investor’s best friend, allowing us to take the daily turmoil and the scary headlines in stride.

But even if we control what we can, there’s no guarantee of financial success, especially over the short term. Still, the steps mentioned above should stack the odds in our favor, making it likely we’ll grow wealthy over time, while easing much of our financial stress along the way.

2. Anticipate future needs. There’s the stuff we can control today—and then there’s the stuff we’ll want to control tomorrow. We should give serious thought to what those things might be. Should we buy or rent a larger place in a good school district because we anticipate having kids? Should we hold down our living costs now and start building up our taxable account, so we have the financial flexibility to change careers in our 50s?

Perhaps the most crucial example: Are we prepared for our later retirement years? Among other steps, that might mean clearing out the basement now, getting financial and health-care powers of attorney, buying a single-story home and getting on the list for a continuing care retirement community.

3. Avoid the illusion of control. Even as we tackle aspects of our financial life that we truly can control, we should be leery of actions that give us a feeling of control but will, if anything, likely end up hurting us. I’m talking about things like trading excessively, following the markets closely, and investing with active managers because we imagine they’ll save us from losses during plunging markets. Such steps can make us feel like we have more control over our destiny—but, like shaking the dice vigorously before we throw them, that sense of control is an illusion, and sometimes an expensive one.

4. Accept that we can’t control everything. There are many aspects of our life that are simply beyond our control, and we should try not to let them upset us. I realize this is good advice—that’s extraordinarily difficult to follow. It’s hard not to be bothered by aggressive drivers, plunging markets, uncooperative colleagues and gossipy neighbors, even if we can’t prevent such things. But as I see it, when we allow such things to bother us—or, to use a phrase I’m fond of, “rent space in our head”—all we do is compound our own misery.

5. Take solace in acting wisely. How can we limit the distress caused by both financial misfortune and the misbehavior of others? Even as we try mightily not to be bothered by things we can’t control, we should strive to always do the right thing, whether we’re dealing with our finances, our social circle, our colleagues or some other dimension of our life.

To be sure, just because we behave well doesn’t mean that things will work out well. But the knowledge that we’re endeavoring to do our best should bring us comfort, and most of the time it’ll work to our benefit.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.

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