Tag Archives | Money management

How to Assess and Improve Your Level of Financial Health

By on December 11, 2013 in Financial Freedom, Financial Health, Financially Authentic

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 phase – This 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 phase – This 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 phase – At 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!

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
Comments { 0 }

Managing Your Own Money Marathon

By on September 17, 2013 in Money Management

I say all the time to my clients: building your financial foundation is not a destination, it’s a journey.  It takes time, dedication to certain habits and routine, and focus on consciously deciding what really matters to you in life.

Back in late April, I made the decision to do something crazy that I’d never done before (and quite frankly, never thought I would do since I don’t consider myself an athlete).  I committed to walking 26.2 miles for the Jimmy Fund/Dana Farber Cancer Institute, a charity that is important to me.  Why did I do this?  For a few reasons: 1) I was ticked off at what happened at the Boston Marathon and was determined to participate in something that honored the people who died or were injured; 2) my Dad was a patient at Dana Farber from April 2008 – August 2009 and my family has a lot of kindness to repay so raising funds is important to me; and 3) I wasn’t doing very well with maintaining an exercise schedule of any kind and so I needed to set a personal goal that would stretch and push me.

As someone who didn’t necessarily view themselves as an athlete, how did I get started? I decided that it mattered enough to raise the funds for a good cause and if I was going to stretch myself in the process, why not a marathon (I’d done the half marathon 3 years ago, I could do this too, right?).  I signed up to participate in the event.  I looked for a plan to help me do what I had no idea how to do because I’d never attempted such a feat before.  I carved out time and scheduled the plan into my calendar of an already-busy life.

Isn’t it funny how a lot of the process I used for my walk applies to money management too?  You have to decide that it matters to you to be proactive with your money; you have to sign up (or show up) to learn how to do it; you have to develop a plan that works for you and; you have to find time to manage your plan and your money.

And the parallels go even deeper than that.  Here are a few of the key reflections I had about how marathons and money management are similar:

1)     You have to manage your resources effectively – For the marathon walk (and to some extent during my training as well), I had to fuel myself regularly with water and food along the way but at the same time I didn’t want to carry anything too heavy.  So I didn’t carry much with me and every few miles at a rest stop I had to decide how to refuel and adapt accordingly.  I also had to decide when to reapply gel to my feet so I wouldn’t end up with raw feet and nasty blisters!  It was a bit like balancing a budget (I know, such a horrible word…savings and spending plan is so much better) as I had to stay in touch with my energy and fuel myself as appropriate.  In terms of a financial plan, you’re always able to manage your resources more effectively if you know what matters and what doesn’t so that you’re not using money wastefully on things that don’t make you happy.  Manage the money you have!

2)     Having a plan offers a framework for smaller steps to lead to bigger steps – When I found a plan online to use for beginner marathoners like me, I instantly sighed in relief.  I wouldn’t have to do it alone, someone (or the plan) would help me know what to do.  The plan kept me on track, focused and aligned with the smaller steps along the way that would be necessary to get to the bigger step of the actual walk.  In managing your money, smaller steps like monthly deposits in your savings account can add up in the end to helping you make a big purchase or serve as a stable source of money in the event that something unexpected comes up.  And in the larger scheme of things, smaller proactive steps managing your money can ultimately also lead to financial stability in the short-term and a secure retirement in the longer-term.  In a nutshell, if you do the work to take the smaller steps, you’ll reap the rewards of the larger steps later on down the road.

3)     TRUST the process – One of my favorite sayings is that it’s not about the destination, it’s about the journey and who you become in the process.  I trained for 4 months, and some of those days were super hard.  I also sweat something awful most days in the New England summer humidity, yet I kept on walking.  After an 18-mile training walk on a Sunday in mid-August, I somehow bruised my left heel and had to take a whole week off from training just several weeks before the event (can you say freaking out?!?!?).  Truth be told, there were several moments where I heard the voice in my head say “can you really do this?”  But I had to trust that everything was happening as it should, and use my plan as a guide and adapt as necessary.   That’s just what it’s like with a financial plan – you set it up with the best of intentions and use it as a guide most of the time but when life throws you a curveball that you weren’t expecting you have to trust and adapt.  Managing your money proactively and using money as a tool to support your life is like the training that I did, so that you can enjoy your life now (the journey) and in the future (the destination).

Sometimes people think that managing money is too hard of a skill to learn and that they’re the only ones who don’t understand it.  I’m here to dispel that myth once and for all as I’ve proven that money management is a teachable and a learnable skill if you’re willing to train yourself in effective and efficient money habits and routines.

And all I have to say to that is if I can complete a marathon walk for charity, then trust me – learning how to manage your money will be a piece of cake in comparison (and I’m pretty sure you won’t walk funny or have blisters when you’re done!)!!!!

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
Comments { 0 }

Getting Out of Your Own Way to Step Toward Financial Freedom

By on September 3, 2013 in 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?

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
Comments { 0 }

How to Systematically Save Money to Support Your Goals

By on July 24, 2013 in Saving Money, Savings and Spending Plans

“There is no need to wait for anyone to give you anything in your life.  You have the power to create what you need.  Given commitment, clear goals, and action, it’s just a matter of time.” – Susan Jeffers

This is one of my favorite quotes because it feels so full of hope (to me anyway) that we can all design our lives intentionally instead of simply accepting what is in front of us.  However, so much of our world is unfortunately full of negativity and thoughts completely contradictory to this quote.

Ironically, I stumbled back across this quote just before I started writing this article and it couldn’t come at a more opportune time in my life than now.  I’ve been struggling with putting a dream of my own back into action (after what we’ll refer to as a “temporary delay of game”), and through a series of steps I’ve taken in the last few days, I have essentially decided that I do indeed have the power to create what I need and want.  And that dream now has my full commitment.

So how does dreaming and goal-setting connect with saving, you might ask?  It’s a great question.  While I do believe that you can create what you need and want in your life, I also believe that there’s something to be said for taking inspired action to support what you want to create.  Otherwise said, if your goal requires financial support, why not work to support your goal as soon as possible?

However, before we get into how to save money to support your goals, I’d like to take a moment to distinguish between a dream and a goal.  A mentor of mine, Alison Armstrong (www.understandmen.com), once defined the difference between a dream and a goal as follows:  goals are dreams with deadlines.  In other words, dreams are things that you enjoy thinking about and let mull around in your head (think daydreaming and smiling while you’re doing that), whereas a goal is a dream that you actually sit down to plan out and allocate resources toward.  Typically, one of the resources that you may want to allocate toward your goal is money.

If you’re one of the people who haven’t yet sat down to think about your dreams and goals and how to support them and you’re considering doing so right now, I typically advise my clients to walk through a very simple process:

  1. Decide if you have a dream or a goal – This may seem simple based on the definition above, however it actually requires a decision on your part.  Do you have something you’re just thinking about (a dream) or do you have something you’re committed to that has deadlines and needs resources (a goal)?  It’s an important distinction to make so that you’re not trying to allocate resources (i.e. money) toward something you’re not fully committed to just yet.
  2. Determine if financial resources are required and if so, how much – If you’ve decided that you have an actual goal that you’d like to commit yourself to, then it’s time to see if you’ll need money to support accomplishing your goal.  If the answer is “yes,” then take some time to quantify how much money you believe you’ll need to support achieving the goal and in what time frame you’ll need that money.
  3. Calculate a monthly amount, automate, and build it into your financial plan – Steps 1 and 2 are relatively simple in the sense that they require “yes” or “no” answers and an assessment of how much money might be needed to fund a goal (in the event it does require financial resources).  If a goal requires money, it’s important to break it down to smaller goals to begin taking steps toward your goal.  Take the total amount of money you’ll need to support the goal at hand, divide by the number of months that you have until you’ll need the money, and arrive at a monthly amount you want to save.  Once you’ve got that monthly amount, it’s time to kick it up a notch and build it into your financial plan (via a specific and budgeted savings account) and automate (whether by actually setting up an auto-withdrawal or simply scheduling a specific day for you to wire funds to your savings account).

In the end, this may seem like a simple money management process on the outside (and in many ways, it is), but the key hurdle is taking the time to sit down and actually decide which of your dreams are going to absorb your intention and which will become goals that require financial resources.  Like the quote mentioned at the beginning, “given commitment, clear goals, and action, it’s just a matter of time.”

 

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
Comments { 0 }

How to Financially Simplify Your Life

By on July 10, 2013 in Financial Simplicity

I feel it fairly ironic that I’m about to share what is a relatively simple process to financially simplify your life. However, I suppose it makes sense too that simplifying should be simple, yes? There are so many tips out there about how to get out of debt, how to save money, and even how to create a budget (what I prefer to call a “savings and spending plan” or a “financial plan” since I hate the icky “b” word) that even to me it often feels overwhelming. Which tip should you implement first? Which one is a “magic bullet” to wealth? How the heck are you going to get it all straight and keep it straight?

Answer: START WITH SIMPLIFYING.

When I talk with people about their biggest money concern, it typically is around the fact that finances feels like such a BIG topic and they don’t even know where to start addressing the challenge. They feel reactive to anything and everything financial in their life and they feel financially overwhelmed by it all. What if just by asking yourself a few questions you could get started on being more financially proactive and empowered?

For me, it begins with getting back to simplicity. Not just in your finances, but also in your life as well. If you’re anything like me before I really started to intentionally focus on building my life on purpose just a few short years ago, you’re running around like some version of a chicken with your head cut off on most days and you can barely catch a breath. You might have a hectic job or career, you might have 10,000 activities to shuttle your kids back and forth to, or you might be busy helping everyone else and their mother with different things while neglecting to take care of yourself and/or your loved ones. Do any of these resonate with you? I know I used to resemble this picture myself (minus the kid shuttling since I don’t yet have any adorable rugrats of my own!).

So how do you begin to simplify so that you can really begin the work of simplifying and designing your life on purpose which eventually leads to strengthening your money management skills and building your financial foundation? I’d suggest 3 steps to begin shifting yourself out of financial overwhelm and moving toward financial empowerment:

1) Choose your attitude

When thinking about simplifying your life or your finances, the most important place to start is with setting a positive intention and if necessary, adjusting your attitude. I see many people try to start addressing their financial challenges with thoughts of “this is so hard, I don’t know how I’m going to figure this out” or “I’m no good at money and I never will be.” There are numerous versions of these self-fulfilling prophecies and if you don’t acknowledge them from the start money and life will always feel hard like you’re always charging uphill, and never simple. I love this quote from Jim Rohn, a well-known motivational business mentor:

“It’s our attitude at the beginning of a difficult task which, more than anything else, will affect its successful outcome.”

So choose your attitude wisely, and take the time to become aware of any self-limiting beliefs that you may have about money and your finances. I suggest that you set the intention that you will create your life purposefully and intentionally (instead of by default and just grunting it out through each day, reacting to everything), and perhaps this becomes your new money mantra instead: I can more proactively and easily handle money in my life with the right amount of time dedicated to learning what I was never taught about money.

2) Find out what IS working well and what IS NOT working well

Sometimes when we’re impersonating the busy chicken with his/her head cut off we forget to slow down enough to hear ourselves think, and we almost always forget to stop and consciously look at what is going on. Honestly, sometimes doing this can be painful because we realize there are a lot of things that aren’t going as planned or as well as we would like. In my experience, being relentlessly aware and present to what is going on in your life is key to anyone’s recipe for a happy life and it’s also an important part of stabilizing your financial life as well.

Start by taking time to appreciate the positive things in your life and notice what is going well – a job you love (if that’s true for you), family, friends, hobbies that fulfill you, a cause that matters to you, etc. etc. The list of things for which you can be grateful is endless, you just need to take the time to notice!

After you’ve reflected on what’s going well, only then should you take a good and honest look at what isn’t going well. This is where a lot of shame and guilt is likely to show up, whether specifically about your finances and money or perhaps about another area of your life. It’s ok, keep breathing – to paraphrase a famous quote “the only way out is through” and in order to improve something in your life you must first become aware of it. It’s only after gaining awareness that you can work to understand what the issue is and move forward into taking steps to shifting toward more of what you want (and less of what you don’t want). It can be helpful to focus these small steps on simplifying and streamlining.

3) Systemize, Systemize, Systemize!!

While I enjoy spontaneity and “going with the flow,” I swear by the fact that my life is most productive when I have systems in place. I typically have systems in place for 2 things: 1) things that are going well in my life that I’ve figured out and want to replicate and simplify (i.e. getting up early to have some quiet time; working out before the day starts (it almost never happens later in the day); Friday afternoons off to run errands and get personal stuff done so I don’t have to wait in lines on weekends); and 2) any new habit that I’m trying to adapt to that needs some structure around it so that it actually becomes a habit that stays.

You can use this approach for your life in general, of course, however with respect to your finances I would suggest the following systems to start off with if you don’t already have them in place:

  • Weekly “money date” –Establish a weekly appointment to pay your bills, transfer funds (if applicable), and call to address any other financial matters (i.e. unusual charges on bills; banking matters; legal matters). It’s amazing what just this one habit can do for simplifying your financial life and calming the typical chaos that most people have around money.
  • Monthly review of actual cash flow vs. planned cash flow – If you understand your monthly cash inflow and outflow (i.e. you have a budget or a cash flow plan), it’s always good to track your actual activity each month and then compare how you did versus what you planned. This will help you to identify how good your plan is and whether there are any areas where you tend to spend more that perhaps you’d like to spend less (or vice versa – perhaps you need to increase spending to make you happy).
  • Bonus for couples: Schedule regular time to discuss money – Most couples think that it’s not sexy to talk about money, however I find time and time again that it is truly the #1 reason for arguments in relationships (and ultimately sometimes divorce). So do yourself a favor and just set aside 15-20 minutes a week to meet about financial matters, and if there’s nothing specific to discuss then simply use the time to get on the same page about your goals and dreams and whether you’ll need financial resources to support those goals and dreams. At the end of the month, you’ll want to do the monthly review of actual to planned cash flow together (see item above) so you can make sure you’re on the same page as to how you want money to work for both of you.

Quite obviously, the steps above aren’t everything that you will need to do in order to systematically simplify your financial life. However, these are the steps that I always work through with clients so that they can get a solid start in understanding their financial opportunities and challenges. If you settle down long enough to set a positive intention, gain awareness on what’s going well and what could be improved, and then focus on streamlining good habits and new habits then you’re well on your way to establishing a solid foundation for future financial success!

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
Comments { 1 }