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How to Assess and Improve Your Level of Financial Health

When I first started working as a financial coach, many people would mistake me for a financial advisor or financial planner.  They thought I was someone who would help them learn how to invest their money for retirement.

And while financial advisors and financial planners are dear colleagues of mine and are very talented professionals, my work is very clearly in a different space where I’m helping people with their budgeting and money management skills so that they can focus on getting out of debt and saving money with the hope of building a financial plan to support their goals.

So in order to help people better understand what I did (and what I didn’t do), I created what I like to call “The Financial Health Spectrum™” which includes the 3 phases of Build, Protect, and Grow your financial assets.  These 3 phases simply reflect different levels of financial health, and while none of the phases are “bad” there is an increasing level of financial health as you move from the “Build” phase through to the “Grow” phase.  In helping people to understand what type of financial support they need, I encourage people to take a few minutes to assess where they fall on this spectrum so that they can properly identify which financial expert can help them with their goals and with improving their level of financial health.

In order to help you determine where you might fall on the Financial Health Spectrum™, let me explain each phase a bit further along with the respective professionals that you might want to connect with:

1)    Build phaseThis phase is typically where the 70% of people living paycheck to paycheck who are feeling out of control when it comes to their finances will land.  When building your financial assets, you’ll be looking to do such things as establish a budget (or what I like to call a “savings and spending plan” because budget is such a restrictive word), develop more proactive money management skills, get out of debt, and save more money.  To me, this phase is about improving your financial stability and strengthening and repairing your financial foundation so that in the future you can grow your financial assets. In this phase, you might look to work with someone who can help you increase your income, decrease your expenses, or perhaps do both!  This is the phase where I work with my clients, and some other colleagues who can help you in this phase include CPAs, money mindset coaches (to help you understand if you have money beliefs that are holding you back in some way), and salary negotiation coaches (so that you can maximize your earnings).

2)    Protect phaseThis phase is generally exemplified by wanting to either insure assets (property and casualty insurance, life insurance, health insurance, disability insurance, or long-term care insurance) or planning to have your wishes known about what to do with your assets in case anything happens to you.  Experts in this phase include licensed insurance professionals who can help you determine the right type and amount of insurance that you need and estate planning attorneys who can help you with drafting all necessary legal documents such as wills, trusts, family planning/guardianship paperwork, health care directives and proxies, and also Medicare/Medicaid paperwork.

3)    Grow phaseAt the end of the spectrum, once you’ve strengthened your financial foundation and protected the financial assets that you do have, you’ll also want to think about putting your money to work for you and growing it through investments and other financial vehicles (i.e. annuities, etc.).  The financial professional you’ll want to consider in this phase is a financial advisor or financial planner who will take the time to understand your future financial objectives and design a plan customized just for you to grow your money over time to achieve your goals.

As mentioned before, there is no “right” or “wrong” phase to be in, these phases are simply an opportunity for you to recognize where you’re at right now and determine the next steps that you’d like to take for yourselves to improve your financial health.  I also encourage people to think about moving along the spectrum as a longer-term process since strengthening your financial foundation and building financial independence is often a multi-faceted journey that takes place over time and with attention to progress (and not perfection).  It is also important to note that you may be in more than one phase at the same time (i.e. saving for retirement while looking to more proactively manage your monthly cash flow and put the proper legal paperwork in place).

So if you’re ready to get more information on how you can assess your financial health, make sure to stay tuned for more details coming soon on “The Financial Health Telesummit” coming in January 2014.  It’s a free event that you can attend from the comfort of your home phone, computer, or your favorite listening device (iPod, iPhone, etc.) with some of my favorite colleagues and financial experts who will help you to decide on the next steps to take in improving your financial health!

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Getting Out of Your Own Way to Step Toward Financial Freedom

Over the course of the last few months, I’ve had the occasion to talk to lots of people about what it is exactly that keeps them from wanting to talk about their money, and in particular what it is that holds them back from stepping forward to once and for all learn how to proactively manage their money.

What I found out didn’t necessarily surprise me since I’ve been clear for a while now on what gets in the way of people choosing to financially empower themselves, however I was once again surprised by how what I shared with people seemed surprising to them.  It was as if a light bulb went off in their head!

Here are the top 3 challenges that I find people struggle with when it comes to even raising their hands to ask for help when it comes to their money:

1)     “I’m the only one who doesn’t understand money” – If I had a bullhorn and could walk around everyday life this is the #1 money misunderstanding that I would talk about so that people would understand that they are NOT the only ones who didn’t get the “money memo”!! (Alas, with someone as opinionated and vocal as I am it’s probably best not to give me a bullhorn!)  The statistics are staggering – approximately 70% of people live paycheck to paycheck, which means they likely don’t have any savings and they may be managing large amounts of debt as well.  Also, a new statistic I heard the other day said that a recent survey indicated 76% of people feel out of control when it comes to their finances (LearnVest, 2011).  So in essence, about ¾ of people are not at all comfortable or in control when it comes to using their money to their best advantage.  Does that still make you feel alone about not understanding money? I hope it helps you to understand that if you don’t understand money that you are actually in the majority.

2)     “I’m embarrassed/ashamed/guilty that I don’t understand more about my money than I do” – This is a subset of #1 above, and has people feeling that they should know more about money management.  But here’s what I have to say to that – if you were never taught how to manage your money in the first place, why should you know how to do it? It’s not taught in our schools, and overall it’s a systemic issue that most adults don’t know how to manage money.  I didn’t learn until I went to college that how I grew up (with parents who taught me how to manage money) wasn’t the norm (and in fact it was anything but the norm).  I tell people just to let themselves off the hook…if they never learned how to manage money in the first place, simply acknowledge that and ask for help to learn how to be intentional and proactive with your cash flow.  End the guilt and shame today and move forward, making sure to be compassionate with yourself about your financial past.

3)     “Managing my money will be too hard/will take too much time” – My typical client tends to be a real go-getter who is focused on their careers and their families and living an active lifestyle.  While that’s great (and I live actively as well), that means they have limited time to manage their money so they need a quick system that is effective and is streamlined to be used in their rapid-paced life.  What I find sad about this is that people tend to say “I make good money, so at the end of the day while I could be doing better I’m doing ok and it’s not too bad – managing money is hard and takes a lot of time.”  It’s not too bad?  Is that what we’ve come to accept in our lives…that it’s ok just for things to be “not too bad”?  How about we start thinking about each aspect of our lives and reevaluating just how awesome we can have things be?  With respect to your finances, after an initial investment of time to understand where you are and where you want to go, you can easily set up streamlined systems to joyfully use money on things that matter to you while saving money and getting out of debt.  I promise, it does not need to be hard and it can be simple and efficient (and yes, even fun!) if you’re willing to do the initial work to put together a solid financial plan and then actually work that same plan.

So while I’ve been known to help deflate the seriousness and stress that is typically associated with money and finance, I do take my work very seriously when it comes to helping people remove the roadblocks to financial freedom and financial independence.  I can help you when/if we have a chance to interact, however I don’t always get to meet everyone in person (or by phone), so how will you help yourself to get out of your own way and move toward a financially empowered future today?

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Things My Parents Taught Me about Money (and Life)

Have you ever had one of those moments where you had to admit to yourself that your parents were actually right?  And perhaps beyond that even that they were really smart (or if you’re from Boston like me, “wicked smahht”)?  It’s humbling…I have one of these moments at least once a week if not more often.  And as much as I may hate to admit I might be wrong about something, I’m so grateful that I’ve had my parents to show me the way (financially and otherwise).

As I reflected on what I wanted to write about this week, I’ve been thinking a lot lately about exactly what it was that my parents taught me about money and life that have made such a difference in how I was able to build a strong financial foundation that has afforded me financial freedom and choice in my life. I also thought it might be helpful to share what they taught me so that you could not only learn from what they taught me, but also understand why it’s so important for me to teach others how to plan for their financial futures and use their money efficiently and effectively.

While there were many lessons that my parents taught me, I’ve boiled it down to 3 key lessons that have impacted how I handle my money and to a larger extent, my life.

Lesson #1: Failure to plan on your part does not constitute an emergency on mine.

This phrase was (and still is sometimes!) one of my Dad’s favorites.  Any time I used to try to rush him to do something that I needed quickly (a ride to the mall, a decision about something I wanted to do, etc.), this gem of a statement would pop up.  And while it annoyed me when I was younger, I’ve come to appreciate the importance of looking ahead at where you want to go and establishing a roadmap on how to get there.

From a financial perspective, this lesson also applies.  I’ve had clients in the past who tell me “so-and-so did this” or “so-and-so wouldn’t let me XYZ” and that’s simply putting the power in someone else’s hand when perhaps you didn’t take the time to plan financially in advance on your end.  When you understand your “money map” and know how your money is being used, you can use money as an effective tool to live your life and avoid situations where someone else has control over the decisions that you make.

Plan ahead, and you’ll be less likely to run into an emergency where you’re dependent on someone else!  As I say to my clients all the time, focus on developing your own personal economy and you’ll understand what true freedom and choice is all about!

Lesson #2: Live within your means

This one may seem obvious, and it’s said often by lots of financial experts, yet I find that the true lesson in these words is often missed since they are repeated so often (and people get tired of hearing the same things).  While both of my parents used this phrase and lesson often, since my Mom was in charge of the family finances it was primarily her who taught my sister and I what this really meant, both in word and in reinforced action.

Let me share a story from when I was about 17 or 18 years old.  (PS – My Mom doesn’t remember this story, but I absolutely do because it taught me powerfully about living within my means.)  At this point, I had a license and my parents had given me a credit card that was an extension of one of their cards.  This was as much to learn how to use a credit card responsibly as it was for my parents’ convenience for me to be able to buy certain things on my own that I needed (with their approval in advance).  One day, my mother told me I could buy new basketball sneakers for the upcoming season and I could spend $80.  I headed off to the mall after school that same day and found a pair of sneakers that cost $100.

I rationalized to myself, “what’s another $20? This newer brand and color looks better so I’ll go with the $100 pair.”  Time went by, and a few weeks later my mother showed up at my bedroom door holding her credit card statement and said “do you have $20?”  I looked at her funny and said “yes, I do – why?”  She said “if you want $100 sneakers then you can pay the difference from the $80 I asked you to spend since you work and earn your own money.

Now, this might seem harsh to some of you but I have to tell you it was one of the best lessons my parents ever taught me about money.  It wasn’t about the fact that my parents couldn’t afford the additional $20 (they totally could).  This was a lesson that taught me the importance of planning and sticking to a plan because without one my parents would not be happily and successfully retired in their early 60s with the opportunity to spend several days a week watching their 2 beautiful grandchildren.  Those small $20 differences add up over time when you start to think about the freedom that our daily choices can provide for us, don’t they?

Lesson #3: Always be ahead of the “financial 8-ball”

While my mother didn’t necessarily explicitly teach us this lesson, her financial habits and actions of sitting down each weekend at the kitchen table to pay the bills and attend to financial matters showed us everything we needed to know. Sometimes it was simply writing checks and paying the bills, sometimes it was following up on charges that didn’t make sense (i.e. medical bills, odd charges on monthly bills), or perhaps even transferring money into a savings account.  No matter what she was doing, it usually involved about an hour to 90 minutes of her time and for the most part we never saw her sit down with the checkbook and the bills again until the following weekend.

I use this habit with my clients all the time, and I call it a “money date!”  It’s amazing how impactful and freeing it can be to sit down just once a week and handle all of your financial matters for the week ahead.  You stress less about money knowing that you have set space aside to pay your bills, transfer funds between accounts, and look ahead to make sure you’re always ahead of things that you need to address. 

So what does all of this boil down to? Having a plan, living within your means and being ahead of the “financial 8-ball” doesn’t just happen without some effort on your part.  In my mind, having a cash flow plan (a.k.a. “budget”) that helps you to be in control of your money is a critical piece of being on a path toward financial freedom and independence.  But here’s the catch – you have to start somewhere, yet many people were never taught and don’t know how to develop a plan that works for their life.

If you’re looking for a place to learn how you can get started on your own path, make sure you take advantage of the FREE CALL this coming Tuesday to get the information you need to move beyond financial overwhelm and stress into a world of financial peace!!

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3 Steps to Reclaiming Your Money Power

Standing in your power with money is both an art and a science.

What do I mean by that exactly?  Well, it’s a science in the sense that there is a method to the madness, a systematic way to manage your money that will keep you well-informed and ahead of the proverbial 8-ball.  However, standing in your power with money is also an art because beyond the systematic processes of money management it’s also about how you energetically put yourself out into the world when it comes to money.

Let me explain a little further.  When I think of people who are powerful with their money, I think of people who have lots of “money mojo” – they set boundaries, they stand up for themselves with class and grace, and they are not afraid to handle what needs to be handled when it comes to financial matters.  However, many people don’t have solid “money mojo” because they don’t even realize that they are often giving away their money power.

So how do people give away their money power? It happens in 5 key ways, mainly because people are:

  • Afraid of conflict;
  • Afraid of facing responsibility and being a financial “grown-up”;
  • Afraid of what others will think (embarrassed that people will talk about them or that people will be angry with them);
  • Afraid of looking like/being a failure (usually further aggravated by comparing oneself to others);
  • Afraid of disempowering someone else (i.e. with their success, etc.).

Do any of these ways resonate with you? Could you be paving a more powerful path to financial freedom just by plugging up one of these power leaks in your life?

Claiming your money power starts with one thing – a commitment to understanding where you’re giving away your power so that you can then understand where you would like to set a new standard in your financial life.  A bit of a heads-up and warning here though as often when people shift to a new standard of power with money, it can (and has often been known to) cause an unpleasant reaction in others as you shift toward that new standard.  You change the dance steps in an old routine that someone else is comfortable with (and where they can potentially take advantage of you), and they tend to get a little testy!

Start with these 3 steps to take back your money power today:

  1. Identify your money power leaks – This may be the toughest step of all of them and that is to honestly own up to those situations where you give away your power with money!  Review the 5 ways noted above that most people give away their power with money, and see which one of the five is most applicable to you (hint: it’s usually the one where you read it and want to immediately pretend you didn’t see it J ).  It might be ugly at first, however try to have compassion for yourself that you’re doing your best to be honest and step forward to improve your financial future.  It may also be helpful to review the list with a loved one that you trust; often we can’t see for ourselves what others more easily and objectively can see.
  2. Decide what boundaries you will put in place going forward – Usually when money power leaks exist, it has a lot to do with boundaries that have either lapsed or were never there in the first place.  It’s time to strengthen the boundaries around your power leak, so brainstorm on what boundary you will put into place to prevent any future leaks.
  3. Take action immediately – Now that you’ve identified what you’d like to work on, and you’re clear about the boundaries you’re putting in place, it’s time to be proactive.  Complete the following sentence, “The action I will take is _______ by _____ (set a date within a reasonably short timeframe).” It doesn’t have to be a big step; it can be a very basic step that’s intended to get you moving forward.  If you’d like extra credit, come up with several steps that will get you blasting through to setting a new standard for yourself in no time!

It takes practice and courage to claim your money power, and at first it can feel really uncomfortable.  Also, as you’re figuring out where you’re not being powerful with your money, there can be a tendency to feel ashamed or embarrassed.  Do yourself a favor and don’t stay at the “pity party” long though, ok?  Envision each situation as a gift that is sent to teach you something about yourself and your life and work through the issues one step at a time to stand in your full money power!

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Why it Matters: Living a Financially Authentic Life

Why it Matters: Living a Financially Authentic Life

One thing that intrigues many people that I meet is how I came up with the name of my company, Financially Authentic.  It’s not exactly a common term, so I find myself having to explain it often.  It’s an interesting story on how it came to me, and in a way it was divinely given to me in a “thought flash” early one morning (and the website domain just happened to be available too…how convenient!).  As background, one of my lessons in life has been to find my way back to a place where I can be all of who I am meant to be, and I call this my journey to authenticity.  It’s been a long journey (and it’s still ongoing) and it hasn’t always been easy, however it has always been worth it in the end.  So my company name is a blend of my love for finances and my own personal journey of becoming more authentic.

Now that you know the personal story behind how I came up with my company name, would you like to know how I define it in the context of my work with others?  As I started on this journey and before I started my own business, I found that when I used my money in a way that mattered to me (i.e. experiences, things, etc.) that the energy money had in my life decreased significantly – things felt lighter and more simplified.  When I share what it means to be financially authentic, I explain that when you use your money in a way that is aligned with what is really important to you in your life that you can then use money as a tool to live your life with more confidence, ease, and grace.  Essentially, building a stable financial foundation filled with clarity on what you want in your life is the beginning to bigger things.

So why does being financially authentic even matter, you might ask?

Well, it has to do with those “bigger things” I just mentioned.  When you are financially authentic in your life and have gained financial clarity and stability, this then leads to space to be able to think, breathe and reflect because you’re not stressed about money.  As you have time to think, you can consciously decide who you want to be and what you want to do…you get to have choice.   With choice comes the ability to live in a more conscious way which usually leads to the question of “what am I here to really contribute?”  And when everyone in this world is really making a powerful contribution, then this world will become a much more connected place.  Because if you haven’t noticed lately, we’re in a bit of a dark place with a lot of negativity surrounding us and it doesn’t have to be this way.  You can have clarity, choice, contribution, and connectedness….if you’re willing to be brave.

Ok, wow – that felt like a lot to get out all at once.  It’s all part of my bigger mission beyond spreadsheets for cash flow and net worth – to help people make a bigger impact with their lives and contribute and connect.  I’m not 100% sure how it’s all going to work, but it feels right…so I’m moving ahead and have faith that it will all work out!

Beth, this is all great, but how do I get started with being financially authentic – HELP?!?

This is a great question and don’t you worry…I wouldn’t leave you hanging without some practical tips to get started!  Here are 3 key ways you can get started on your own journey to financial authenticity so that YOU can have more clarity, choice, contribution and connectedness:

Step #1: Know Your Numbers  – It’s very difficult to be financially authentic if you have your head lodged firmly in the sand about your financial situation.  It can be very painful and stressful to feel like you’re not in control of your money.  There’s blame, shame, guilt and embarrassment that you don’t know how to handle your money as well as you would like to.  STOP IT.  Stop the blame, shame and guilt, and instead know that you’re not alone – almost 70% of people live paycheck to paycheck these days, and that includes really successful people too.  Personal finance simply isn’t taught in our society, and it needs to be as a critical life skill.  Be kind to yourself, be willing to look your financial situation in the eye, and ask for help.  There are many compassionate and non-judgmental professionals out there willing to help.

Step #2: Consciously Decide How to Spend Your Money – In our fast-paced world where we’re always on the go, and we’re constantly bombarded by online advertising and social media, it’s hard to control the urge to buy and satisfy the desire to immediately reward ourselves with something for working hard.  In my experience, it’s only when you consciously decide in advance how to use your money that the unconscious spending stops.  I’m convinced from what I’ve seen in my own life and with my clients that when you take responsibility for how you use your money that you’ll be happier and that you’ll actually attract more money into your life as a result.  (PS – this is that “financial alignment” I referred to earlier…decide to use money in ways that matter to you!)

Step #3: Always Be in the Financial Flow – Always being aware of your financial situation takes some routine and discipline, so I recommend to everyone to just start with a weekly money date.  A weekly money date is like going to the financial gym, if you will. Once a week, sit down to pay your bills and handle any other financial matters that need to be addressed (i.e. follow-up phone calls, etc.).  Having a plan to use your money intentionally and purposefully is important, however life is always changing and so our financial plans have to adapt with those changes as well.

In the end, be sure to remind yourself of this often (I know I need to)…financial authenticity is a journey, not necessarily a destination.  So hop on the train wherever you’re at, and enjoy the ride to a more meaningful and impactful life, ok?

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