Asking for help is such a funny thing in our society. Somehow it seems to indicate a lack of something. When it comes to financial matters, it seems to be even more intimidating – whether you are asking for help understanding a concept or for help with a financial situation, it’s important to remember that people love to help – in fact, if you turn the table, I bet that given the opportunity, you would happily take time to explain a concept, product or strategy or to help someone you know with a financial matter in whatever way you can. Finally, remember that the only bad question is the one you don’t ask.
A Smorgasborg of Confusion
I was sitting in a reception area with a variety of magazine headlines competing for my attention: ”Ways to Save on Everything”, ” Live More Spend Less”, and the beautiful book beside them all, “The World’s Finest of Everything”.
This is a perfect example of the conflict we all face every single day in many unsuspecting ways. This is the reason why having a clear vision for our lives is critical. This is the reason why making financial decisions is stressful without a structure to link your vision to every day…
Learning to See the Big Picture
Many of the skills required to build and manage an investment portfolio are extensions of skills that are learned through sound personal money management. For example, balancing a check book requires an analysis of the transactions and a comparison of a bank produced statement. Evaluating corporate financial statements involves an analysis of the transactions and comparisons to other statements, industry standards or to different types of statements. Yes, evaluating corporate financial statements is much more involved, but both require similar skills. Learn to see the big picture. If you can handle the small stuff, your financial growth will evolve naturally.
How? Start documenting financial transactions on paper, and then progress to an electronic money program. Start with simple tracking, then balancing, cross checking and analyzing. If you compare the process to learning math in school, you learn multiplication and division long hand before graduating to a calculator. And, you learn the calculator before moving on to a spreadsheet. It’s the same process. Start with your personal financial statements, then move towards corporate financial statements for investment purposes, then for your own business or private company investing as your skill level and comfort with the process increases.
Planning Your Ideal Budget
Developing a budget does not mean adding up the total income you have to work with each month, then allocating funds within that level. The definition is: “planned expenditures and a program for financing them.” Figure out what you want to spend each month in order to live the life you desire while maintaining your true priorities, then look for ways to fund this budget.
Why? You might not know how you’ll earn the income that you’d like for your ideal budget when you first make it, but you’ll also never find out if you don’t start asking. Your option is to continue to scrimp and deny yourself the lifestyle you’d like to live and end up looking back on your life with regret. You might also find that when you make your ideal budget that it isn’t really as far off as you had imagined before you put it on paper in black and white.
The Financial Balancing Act
To be able to balance today’s financial and life priorities and needs with solid plans for the future will sometimes require some creativity and combination planning. For example, can you put money aside as savings in other ways besides a savings account?
How? Perhaps combining investments with insurance, or mortgages, or business development, or leveraging existing assets is a possibility. If you’re not sure how to do that, then find someone who can help you explore those ideas. And remember, if you go to one mortgage broker or insurance agent and they say “it can’t be done” does that have to mean that it really “can’t be done?” or can you keep asking? Obviously it’s your choice – different financial advisors have different resources and different backgrounds that give them different options to work with. This is why we help you see possibilities and find creative solutions.
Practice Positive Thinking
With practice, you can learn to take some typical financial concepts and see them as positive, rather than negative. For example, we are taught to set aside money for an “emergency” fund implying some sort of disaster could be looming around the corner. Instead, call it an “opportunity” fund and you can see that the same money could be used to take advantage of investment opportunities, “once in a lifetime” experiences or to support you through a rough time financially with more calm. You can also use the “opportunity fund” to take time to find new work if your existing employment ended, or an opportunity to do repairs or renovations to your home if needed.
What other common situations are there like this example? How about “bad debt” replaced with the belief that has the benefit of the purchase already been realized? Is it “risk” or “opportunity,” “spending” or “investing in your lifestyle”? These might not resonate with your experience, but the idea is to become aware of the way you speak and to think of more positively about common financial situations. There is more than one way to see everything.
Doing the Impossible
If a situation seems impossible, ask yourself if anyone has ever done anything similar before? If so, find someone or someplace to help you find out how they did it. Often people will say they are too old, too young, too broke, too tired, or too busy to do something they really want or need to do. Look harder, if you think you can you will, if you think you can’t, you won’t. Maybe there are other ways of accomplishing the task at hand besides the ones you have already tried or heard of. If it’s that important, keep asking until you find the answers you need.
Why? Quite simply, even if a task or situation has never been done before to the best of your knowledge, does that mean you abandon the idea? That’s your choice, but history has proven over and over again that human ingenuity and perseverance are key components to creating anything new. If you want something different, find successful people to associate with. They don’t necessarily have to have done exactly what you’ve done before, but they will have had experiences of setting goals, and reaching them, which is invaluable support if you are intending to make changes to your financial situation. Creating new associations is like making new friends: you don’t have to lose the old friends, you just have to be willing to go places, and do things where you are likely to at least hear the conversations of people who are already experiencing the sort of lifestyle you desire.
Write it Down!
The idea of putting on paper either your existing financial situation, or your desired future, can be fearful; yet this is the only way you can properly plan. It is not enough to “guestimate” the expenses. You must know exactly what you are spending each month in order to do any future planning as well as to be able to make informed decisions about your current financial situation. The exercise of gathering this information is not to judge the spending; rather it is simply research required to help you become more informed and more in control.
How? Start with gathering the receipts of existing expenses; then write them down; then categorize them; then consider what you would like to ideally have for each of your categories; then analyze “the current” versus “the desired” and start to make some decisions. You will likely modify the current, postpone some items and explore options to realize the idea. Take small steps in the direction you want to go, find others who have what you are considering, and keep moving in a forward direction. Enjoy today and the process along the way.
Decide Your Own Goals
Don’t let someone else, or society, decide what your financial goals “should be.” There is no such thing as “common goals.” You must be able to articulate and write your very own unique financial goals in your own handwriting, not simply check off a list of possible goals that someone has suggested to you.
Why? This concept has been proven by study after study and we have all experienced it and know it to be true. You might not have recognized the significance of this simple concept to lifestyle and financial planning, but… have you ever gone to the grocery store without a list? Have you tried shopping when you were hungry? Have you gone to the store with a couple items in your mind to buy, then gotten home and realized you had forgotten one. I called my husband from inside the store once and asked what else we needed besides salad. When I got home, guess what I had forgotten to buy?
If this simple idea of writing out a shopping list has such vivid results, can you imagine how much more effective you could be if you started with a handwritten list of goals? Now, in reality, it can be quite difficult to put something on paper that you don’t have and don’t really know how you’re ever going to get. That is a key reason why ongoing support and additional resources are so necessary: to provide support that bridges the gap so it’s not so fearful, painful or unbelievable
Your Ideal Lifestyle
Your ideal lifestyle must have a dollar figure attached to it. It’s not okay to say, “I want to be rich”; or “I want to be comfortable”; or “I want to own a house”; or “I want to travel,” etc. Your ideal lifestyle must have a price tag in a monthly amount. If you want to live in a certain house, how much will it cost to own and maintain? How much would you need to set aside for annual holidays; for someone to clean your house; for you to drive the car you want; to wear the clothes you like to wear; for you to give the money away you want; to do the things you like to do, etc.
How? Start shopping – not to buy – but to do research, to become informed. Go to open houses, visit travel agents, sit in cars, look in stores you wouldn’t normally shop in, research charities, go online, talk to people, go places, write notes, keep files, and do what any informed buyer would do. If you have an idea, you’d like to take a year off with your family and live in a foreign land, then find out the cost. Find out who and how you’ll have things looked after at home; where you’ll go; where you’ll live, and all the prices if you were to do it today. Even if you think you won’t live out your vision for five to ten years, you can find out the costs today, then update your figures later, or learn to apply financial math calculations to project likely increases. You need to know the price of your dream, of your desired lifestyle, of your life outside of your current working and income situation; otherwise you’re giving up control and working with “averages” at best. Is your life just average, or is your life unique and personal? This is not a hard step unless you make it about lack, regret, fear, and self-pity. This is about making it happen. Without this step, even if you won a lottery, you wouldn’t know how to use the money. Enjoy this process. It’s far easier than living a life of “coulda, shoulda and woulda.”