War, terrorism top list of financial fears
By Laura Bruce • Bankrate.com

In boom times it doesn't seem to matter much if our emergency fund isn't funded, or if we spend more than we earn. Everyone has a job and if our financial well-being is a house of cards, another paycheck is just a week or two away.

Rocky times have a way of yanking off those financial blinders. We realize that so many things that are out of our control affect our economy, possibly our paychecks, our livelihood, our dreams, and our future.

Who would have thought, just a few years ago, that terrorism would top the list of Americans' financial fears?

When Bankrate.com asked 1,000 people how concerned they are about 10 issues that could affect their wallets, terrorism and war ranked first and third. Seventy-nine percent said they were either very concerned or somewhat concerned that terrorism will weaken the economy; while 72 percent worried war will weaken the economy.

Psychologist Ken Doyle, a professor at the University of Minnesota and a retired financial planner, says it doesn't surprise him at all that terrorism and war are among the top financial fears.

"Different people have different fears; some are more afraid of abandonment, some are more afraid of failure. Something as dramatic as terrorism or war triggers everybody's fears.

"We just don't know what is going to happen, so, since our main job in life is to watch for threats, our threat alarm will ring and we'll assume that what we're particularly afraid of is what's going to happen.

"It's not especially rational, but that doesn't matter," says Doyle.

War and terrorism aside, a great many of us are also dogged by more commonplace, more local concerns that could thwart our financial future.

Watching investments lose value came in second place at 73 percent, while 55 percent said not having enough money put away in case of an emergency bothers them the most.

The control factor
In general, the more in control you are of a potential financial problem, the less you feel threatened by it. So war and terror and your stock portfolio's performance -- things over which individuals have relatively little control -- had the highest financial fear factor. More familiar financial issues -- such as paying your bills -- were seen as less of a threat. Here is how the issues rank:

Despite numerous news reports of job layoffs, Doyle says "perceived probability" may be the reason survey participants aren't as concerned about layoff or inadequately funded emergency funds.

"Most people are pretty sure they're going to be able to pay their credit cards or mortgage, and they're not going to lose their jobs, etc. But lots more people think we're going to war, and that war won't do them much good."

What to do about your financial fears
So, what should we be doing during this time of uncertainty? First and foremost, don't allow things that are out of your control, such as terrorism and war, to fog your thinking or steer you away from tried-and-true financial planning

"Take care of all the things we'd normally do in financial planning," says David Bohannon, a certified financial planner based in Louisville, Ky.

"Pay off your credit card bills, refinance your mortgage. If you've paid off your bills, have an emergency fund, have contingency arrangements if something happens, then we can go on.

"We can't control terrorism but we can plan and anticipate our own personal finances, and then we can be better prepared for the consequences of terrorism or war. If terrorism or war is going to cause you to lose your job, then you need to be prepared for that."

-- Posted: March 16, 2003