WHAT IS "NORMAL" IN FINANCIAL TERMS?

The usual gut reaction when confronted with news that will negatively affect our life includes, “this couldn’t happen to me,” and “a catastrophe is imminent,” and “I must do something fast to avert it,” ending in “things will soon be back to normal.” What each generation in history considers “normal” is part of the past and gone. For us in this financial crisis “normal” is not around the corner. What’s here and now are the many ways to adjust to this new situation.

In my life I’ve learned a few things about human nature, and human nature drives finances. The usual gut reaction when confronted with news that will negatively affect our life is mixed. There’s the immediate suspicion that the source of the news is wrong, with the certainty that "this couldn’t happen to me." But there’s also the exaggerated fear of an imminent catastrophe. And with it the urge to do something fast that might avert it. This evolves into a decision to be "cautiously optimistic," as "things will improve," and, "things will soon be back to normal." What each generation in history considers "normal" is part of the past and gone. For us in this financial crisis "normal" is not around the corner. What’s here and now are the many ways to adjust to this new situation.

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