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Money Management Interviews to Start 2014 Off Right

Please enjoy these 2 interviews that I did in November that will help you to learn more about how to live a financially authentic life.  I hope you learn something new to help you start 2014 off on the right financial footing!

The Magic of Life – Blog Talk Radio with Max Ryan (November 13, 2013)

Breaking Free – with Marilyn Shannon (November 25, 2013)


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How to Make Your Own Financial Rules

It’s confession time again.  I am a classic “Type A” and overachiever in recovery.  For the most part, I like rules, I like order, and I like structure and systems.  There, I said it out loud.

But can I confess something else?  In the last few years, I’ve broken a lot of the financial “rules” that the financial experts say I should adhere to.  When you start a business like I’ve done, sometime you have to break the rules to get yourself on the fast path toward a longer-term goal.  So yes, I’m currently carrying debt related to the business. And yes, I’ve taken money out of my retirement account to fund the business (I can hear the experts screaming now “noooooooooo!!!!).

When it comes to financial “rules,” there are lots of financial experts out there telling you what you should do with your money.  Pay yourself first, save 3-6 months of living expenses, don’t carry credit card debt, etc. etc. etc.  And in general, I think they have solid ideas that should be considered when you’re building your financial plan.  I incorporate many of these ideas in the plans that I design for my clients.

But the one big thing I find that these experts are missing is that people want CHOICE in their lives when it comes to how they live it.  People want to live and be happy now, and not wait until they “get to retirement.”

Can I tell you a secret about these financial experts? Sometimes they drive me nuts.  They have a lot of good intentions and are doing their best to teach you what has worked in the past to be financially “safe” and end up with a boatload of money when you retire.  It’s what I like to call the “accumulation method” where you save up a ton of money and for the most part, wait until “someday” to have fun.

Well you know what? Life’s way too damn short.  And from my perspective, life is to be lived NOW and experiences are to be had NOW (not when you retire).  It’s time for us to create our own rules!

Now, before everyone starts to go off the reservation spending all their money and racking up credit card debt to live a life that they can’t afford and saying that I said it was ok to do that, that is NOT what I’m saying.  What I am saying is that it’s in your best interest to invest some time in developing your own financial rules that work for you and your life and that will help you to achieve your goals and choose what is important for you.

Be intentional with your money.  Be intentional with your life.  Sit down and take time to decide which of the traditional financial rules will serve you well and which ones you want to redefine a bit more for yourself so that you can enjoy your life here and now.  It’s important to have a financial framework that allows you to build financial freedom for yourself while also experiencing life joyfully.

Establishing your own financial rules can be a bit tricky if you’ve never tried before, so here are the 3 steps I would recommend if you’re wanting to reconsider your own rules:

1)      Ensure your financial stability – I’ve had clients that get really excited when they hear that I’m not afraid to break some of the more traditional financial rules that most people would suggest.  However, let me be clear – while I am not afraid to bend and mold the rules to meet each client’s need, it is critically important to be working toward a basic level of financial stability before changing the rules in any substantial way.  The reality is that life takes money to live, and money is a tool to support goals.  So first and foremost, develop a financial plan to suit your life that allows you to handle your commitments (i.e. bills, etc.), save some money, and pay down your debt, if applicable.  Having a financial foundation will allow you to absorb future unanticipated bumps in the road.

2)      Consider the rules of the past – Many of us learn things about money from the people around us while we’re growing up (parents, grandparents, neighbors, etc.), and we never stop to really think about whether these rules or beliefs actually work for the lives we are building for ourselves now.  In my household, both of my parents worked as employees and while they taught me many great things about money, I absorbed the belief (or rule, if you will) that financial security came from a paycheck and benefits.  It wasn’t until I realized that this little gem of a belief was rattling around in my head (unconsciously rattling, I might add!) that I could examine it and decide consciously whether it was still true for me as I considered entrepreneurship that would require me to be responsible for my own paycheck and benefits.  So, ask yourself this question as you think about changing your own financial rules – what beliefs or rules were you taught that may no longer serve you where you are in your life now?  Once you gain awareness of what these beliefs and rules are, you can spend time understanding them and begin to choose differently and consciously.

3)      Balance short-term goals with long-term goals – If you listen to many of the financial experts, a significant portion of them are highly focused on saving for retirement as the “mecca” of all times in our lives.  While I agree that long-term saving for retirement is indeed important and that there are smart ways to do that, for me life is also to be enjoyed now and money is to be used to experience the present as well.  As you’re considering new financial rules for your life, think about some of the experiences that you say you’d like to do “someday” and think about whether you should fast track those things to do sooner rather than later.  Should you save for that vacation to Italy 3 years from now instead of when you retire in 20 years?  Perhaps you’d enjoy date night with your husband or wife once a week to keep your marriage strong?  Maybe you love a certain place to vacation and you’d like to buy a small second home for regular time off to rest and relax with friends and family? Each of these choices might make you happier now and result in a better balance between fun and financial responsibility.

As my mentor would say, live life like you mean it and go for your dreams.  I know I live a much happier life now that my paycheck no longer defines my worth and I balance my retirement goals with living in the present, and I’d love for you to have the same for your own life!

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How to Get Started Building a Financial Plan

If I’ve heard it once (or some version of the following), I’ve heard it 1,000 times: “I don’t like numbers, they scare me.  I can’t seem to sit down and put together a budget even though I know I really should.”

So let me get this straight – you’re scared (which means you’re not thinking as clearly as you’d like to), you think you’re “supposed to” put together a budget (which is like the universal swear word of money), and you are “shoulding” on yourself that it’s an exercise you have to go through (and be tortured it sounds like to me).

C’mon….how about a little compassion for yourself please?  Is it possible for you to see that maybe it doesn’t have to be torturous and if you just had the right tools and information it would be easier?  I’d like to help you shift your perspective to have building a financial plan be a more joyful experience so that you can have the financial freedom, independence and choice that you’re seeking.

The way I see it, there are 3 steps that are required “pre-work” before you ever start looking at numbers to develop your financial plan.

1)      Retire the word budget from your vocabulary – I would say eliminate it, but since other people still use it frequently and we need to be able to recognize the word (I can only educate so many people at a time!), we’ll “retire” it for now.  Why retire the word budget?  Energetically speaking, budget just feels awful. It feels like you’re choking and like if you have a budget you’ll never be able to buy a cute pair of shoes or the newest technological gadget ever again.  Sounds pretty miserable and life-sucking if you ask me, no wonder no one wants to put together a budget! 

Instead of the word budget, I suggest using the phrase “savings and spending plan.”  As one husband reminded me across the kitchen table during a session with his wife one day, “Beth, it’s the same thing, why get caught up in semantics?”  My response? “Well your wife seems to be much more willing to participate in the conversation when we call it a “savings and spending plan” than when we call it a budget, right?”  The husband smiled and said “excellent point.” Sometimes it really is the small tweaks in life that make the difference!

So stop thinking about budgeting as something that weighs you down, and instead start thinking about a “savings and spending plan” as something that is just a financial illustration of how you want your money to move in the world that will help you get from “here” to “there.”

2)      Get really clear on what you want for your life – Before you plan your money, you need to spend a considerable amount of time thinking about what you want for your life.  Money is nothing but a tool to help you move from your present to your future (from “here” to “there” remember?), and without some sort of path to follow money will just exist without purpose.   Unless you tell money where to go it will go just about anywhere it wants to!

Being financially authentic means that you use your money in a way that aligns with what matters to you in your life.  When you’re financially authentic, a financial plan is nothing more than the full expression of what is important to you and all of a sudden the energy around money becomes much less chaotic, and financial decisions are simplified.  You have a road map for your life and your money and it provides you with clear guidance and direction.

In the end, a solid financial foundation and a good financial plan simply requires that you’re intentional, authentic, and proactive with managing your money.  Get clear and get real about your life, and using your money efficiently and effectively will become much easier, I promise.

3)      Set some specific goals with timelines – Now that you’ve gotten some clarity around what you want for your life, it’s time to set some specific goals so that you can then determine whether those goals will require money to support them.  Not all goals need money, although many goals do need some level of financial support at some point in time.  

When setting goals, I encourage people to think about them in 3 different time-based groups – short-term (1 to 3 years); medium-term (3 to 10 years); and long-term (10+ years).  This is important because depending on the goal, it can impact whether or not it’s a goal that needs to be reflected in the current financial plan or whether it can wait to be included in a few years.  Remind yourself when you’re setting your goals to be realistic – saying that you want a Ferrari in a year isn’t likely to be something that you can achieve (unless you randomly hit the lottery, and the lottery isn’t a financial plan it’s a fluke!).

Once you’ve determined which of the goals need money to support them, consider the short-term goals first and state the goals in a very specific and measurable way.  For example, saying “I want to save more money” isn’t very specific, whereas “I want to save $1,200 in the next year to take a vacation in spring 2014” is very specific.  The more specific goal allows you to measure out that you’d like to save $100/month toward that goal ($1,200 total / 12 months), whereas the more general goal doesn’t give you a solid target.

So before you even start to concern yourself with looking at the numbers, take some time to sink deep into your head and your heart to think about what you really want for your life.  Are you happy as you are?  Do you want to set a really big goal that needs financial support (i.e. like starting your own business)?  Do you want to simplify things and live more peacefully and calmly without as much “stuff” cluttering up your life?

The options are endless, it’s simply up to you to choose and design a financial plan to match your life!

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