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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 SpectrumTM” 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).

Taking the time to understand where you are on the The Financial Health SpectrumTM may well be one of the most productive things you can do to stop and assess your level of financial health. What is your next step to strengthen your financial foundation? Is there a financial task you’ve wanted to handle for a while and haven’t yet taken care of…perhaps because you don’t know the next step to take? Do you know which financial professional would serve you best to take that next step forward?

If you’re ready for a solid resource to support you on assessing your financial health, The Financial Health Telesummit may well be the answer — and the best news is that for a limited time, I’m sharing this valuable information with you for an investment of just $97! CLICK HERE to learn more about how some of my favorite colleagues and financial experts can help you decide on the next steps to take in improving your financial health and to determine whether this resource supports you in powerfully paving your path to financial freedom.

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Facing Your Financial Fears

Just the other day, one of life’s lovely ironies came and sat in my lap. Want to know what it was?

I came down with a pretty decent case of what I like to affectionately call the “financial grungies.” Pretty ironic given that I teach money management and proactive finances for a living, right?

So what are the “financial grungies” exactly? For me this time, it felt like not wanting to honestly take a look at something related to my finances (more about that below), a knot in my stomach, a racing mind, and my blood felt like it was coursing through my veins at an extra-quick pace. Oh, and all of that was wrapped up in a nice big bow of FEAR and SCARCITY. Yuck, yuck, yuck. It was so clear that financial fear had come to pay me an unwelcome visit.

Yup, the teacher and healer got to use her own tools to heal herself. Gotta love it.
And here’s what I reminded myself of when I got to diagnosing the situation at hand and whipping out my financial toolbox:

  • BREATHE! This may be the most important suggestion I’ll make in this entire article. Living in the knot-in-your-stomach-blood-coursing sense of panic won’t ever serve you, since it’s highly unlikely that you’ll be able to think or operate from a clear space. So this is exactly what I did when I felt the fear kick in – I stopped what I was doing (or should I say what I was pretending to try to do….and I was doing it very ineffectively I might add), and I moved to the nearest chair and started to breathe deeply, in and out. The sense of panic and fear within me slowly died down after a few minutes.
  • Raise your vibration – Breathing normally is only really the starting point and it’s intended to try to restore you back to an equilibrium point (and out of the “grungies”). Once you’re feeling somewhat stable, you’ll want to do something to jump start your energy again – think of it like a car battery where you want to give yourself an electric charge. Depending on what gets you going, you’ll have a different way of raising your energy. Some people dance or exercise, yet for me I find it soothing to listen to a guided meditation that’s specifically wired to reset my brain waves. When I did this the other day, on the other side of 15 minutes I was already feeling much better and was ready to take on the next step. This step is important and the intention is to put you in a positive frame of mind before you move forward to see what’s at the root of the financial fear you’re feeling.
  • Get clear on what gets to be handled – I’ve said for years that financial clarity leads to choice, which leads to the ability to contribute in a bigger way, which results in a higher sense of connectedness. Without clarity, you’re often left feeling disconnected (from yourself and from others) which only enhances the sense of fear in the current situation. For me, I knew that over the last few months I had been investing quite a bit of money into my business and myself (as the business owner). After breathing and meditating, I got clear that the task ahead of me was to update my list of business investments. I knew that the investments I made were wise ones (and ones I would make over and over again), and so I knew it was time to briefly summarize the dollar value of those investments.
  • Break down the task (or tasks) to small, manageable steps – In my example, the tasks to be completed were relatively simple in the sense that it involved consulting transactions and balances on various bank and credit card statements. In your case, it might be a bit more complex, in which case you’ll want to think first about the end result you want. From there, think about the first step you would take, then the second, then the third, etc., continuing until you have a solid flow of steps mapped out to get you the end result you desire. As examples, if your task is to work on getting out of debt you’ll want to understand the total amount of debt you have along with interest rates and minimum payments. If your task is to be saving more money, you’ll want to get clear on what you want to save for and how much you want to save.
  • Take one step (and repeat until complete) – It’s as simple as it sounds – take your first step as soon as humanly possible to build positive momentum and start shaking off those grungies once and for all. I know that the minute I sat down at my computer and started a brand new business investment summary that I instantly felt much better…and it only got better from there!

The outcome of taking each of these steps is that you are able to accept the situation as it is, and in a grounded way work through whatever financial challenge is contributing to the fear at hand. As a bonus step, it may also support you to confide in someone you trust what it is that you’re working through (both the fear and the steps you’re committed to taking), so that they can hold you accountable to the steps that you want to take as well as support you in moving through the fear in whatever way they are able to.

In the end, the lesson here is that no matter how proactive you try to be (and I’m very proactive!), sometimes financial fear secretly slips into the picture without you even realizing it. And if you ignore the fear, you may end up significantly altering your road to financial freedom by inadvertently sabotaging your financial plan.

So don’t let financial fear hold you back from standing fully in your power – begin clearing away the fear and start healing and transforming your relationship with money today!

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How to Inspire Honest & Authentic Money Conversations in Your Relationship

As I concluded a program recently with an amazing couple, it reminded me just how much can be at stake when you’ve got 2 people (and sometimes more if children are involved) in a money conversation.

Most people aren’t necessarily familiar with what it is that gets in the way of having effective money conversations in a relationship (click here for prior post on this topic), let alone how to proactively build a mutual foundation for authenticity, honesty, and trust.

In working with couples, there is always the initial space that we create where they get to hear each other out. We get to understand how each partner grew up around money and how that impacts them, and the “baggage” that they bring into the relationship without even realizing it. There’s also an appreciation gained of each other’s “money type” and how that plays out in their lives (both individually and together as a couple).

And once we clear through the past, we’re ready to get started on building an amazing financial future – as a couple! In order to do that, I recommend 3 key steps to get started on building a strong, joint financial foundation:

  1. Approach money with a spirit of partnership – One of the biggest mistakes I see couples making is that one or the other of them is right about how to handle money. For the couples I work with who thrive, they make a concerted effort to explore what each of them has to offer regarding managing money, and each of them gets to be heard and contribute. As a couple, it’s a team game – and while not all team players are created with equal strengths and abilities, each player deserves to be part of the team and contribute to the financial partnership. So allow yourself to be friendly, fun, curious and inquisitive when it comes to how your partner interacts with money…not only is money a divine tool to support you in your life, it’s also an excellent teaching tool for you to learn about your loved ones and why they say and do what they do!
  2. Appreciate other dynamics at play in your relationship – While money is indeed its own unique entity, there are very often other social dynamics at play when it comes to building an authentic and honest financial partnership. While this may not apply to all couples (and in some couples it can be reversed, which is ok too), very often men are wired as “providers” and women are wired as “hunters/gatherers.” What does this mean exactly? In a nutshell and as it relates to money, men are generally wired to “bring home the bacon” and provide for their families. In today’s day and age, many women are often wired this way as they are committed to their careers and professional excellence. Unfortunately, while women’s liberation has been an incredibly important shift, sometimes it can lead to confusion as to who the provider is in a relationship (the man or the woman?). This confusion can then seep into who is accountable for the different aspects of managing the finances – who is the primary earner (or are both key earners for the household)? Who gets to manage the day-to-day finances – the primary earner or the one who works less hours or stays at home? Is one partner responsible for planning for the longer-term future (i.e. retirement)? Understanding up front the financial roles that each partner will accept responsibility for in the relationship is a key component to building a financially peaceful life as a couple.
  3. Align and plan how you will use your money with what matters to you both – Now that you’ve created a space of partnership and taken some time to determine the roles each of you will play in your financial lives, it’s time to put “pen to paper” as they say and develop a financial plan. Your mutual situation may require a plan that involves handling the day-to-day expenditures while getting out of debt and saving money. The key to any financial plan that supports a couple is that there is room in the plan for the unique needs and wants of both parties. And yes, this means that if your significant other spends money on something you just cannot understand, you may get to be quiet about it (provided that it’s not putting you in a place of financial hardship)! An effective financial plan will use money in a way that’s first and foremost aligned with the mutual goals of the couple (i.e. saving for a house, a new baby, college funds for children) while also incorporating a solid balance of fun and self-care for each partner.

With a spirit of partnership and mutual respect, designing a mutually beneficial financial future is an amazingly creative and loving process that can set a couple up for incredible success. Simply remember to be curious and inquisitive whenever your partner does something with money that you don’t understand – you’ll often be surprised what you can learn about your partner and they may have important input to contribute to an even more solid financial foundation for the both of you!

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Distinguishing Net Worth from Self-Worth

You are NOT the balance in your bank account.
You are NOT how much money you earn.
You are NOT your debt balances.

On a regular basis, I work with clients to support them in learning a scientific approach to money management which includes systemizing their use of cash flow to maximize the amount of freedom and choice that they have in their lives. As part of that process, we review what they earn, what they spend, and their account balances (i.e. bank accounts, credit cards, etc.).

And it always amazes me how often when I’m reviewing income, expenses, and balances (both bank accounts and debt), how often the client will feel such tremendous guilt and shame if they happen to be in a situation where they aren’t doing as well as they would like to be. It’s as if they take the information we’ve compiled and interpret it as a direct reflection of themselves.

So let me let you in on a little secret…your net worth is not your self-worth. So don’t confuse the two.

Your net worth is simply a calculation of what you own (assets) minus what you owe (liabilities). That’s it. It’s intended to be a benchmark at a point of time to evaluate your financial health. Think of it like a scorecard, if you will. Once you have your initial benchmark, the name of the game is to increase your net worth over time, primarily by saving money (increasing assets) and getting out of debt (decreasing liabilities). At any given time, your net worth is simply a data point that you can use to make future decisions about how to use your money.

Money is a tool to be used to support your life, not as a representation of your value in this world. You were born whole, perfect, and complete and even if your financial life isn’t going as well as you would like it to be, you are still that whole, perfect, and complete person. Yet money is indeed an emotional topic, and it’s very much one of the final “taboo” topics of our time…because as my client told me just this morning, “I felt this hole inside of me before because I was embarrassed about my financial situation. Now I know that I am not my money and my money is not me – it’s just a tool that I can use to support my goals and dreams!”

Building a strong financial foundation starts with understanding that you are separate from money. Money is simply a means of exchange used in today’s society. When you take the time to understand how your money can support you, you are able to empower yourself in your life!

So if today your financial situation isn’t quite what you’d like it to be – perhaps you’ve got more debt than you’d like or you don’t have much in savings – remind yourself that you are not your financial results, and that where you stand right now is simply information that may allow you to begin to more proactively strengthen and build a financial foundation fit to support you in your amazing future!

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How to Realign Your Finances in the New Year

It’s everyone’s favorite time of year to talk about resolutions, and one of the biggest ones is typically in the area of money and finance.

But there’s a problem with resolutions from the way that I see it – the energy of the word “resolutions” is just so damn HEAVY.  In fact, I really dislike the word “resolutions” (and I would actually say that I hate it if my 3-year old nephew wouldn’t tell me not to say “hate” because it’s a bad word…Auntie Beth has been humbled a few times on her vocabulary lately by her favorite young men.)

Don’t get me wrong – I fully encourage anyone to make a commitment to learning more about proactive money management and to gain clarity about how they’re using their money on a day-to-day basis, while saving money and getting out of debt.

It’s simply that I prefer to think about new possibilities instead of resolutions. Inspire yourself instead of feeling heavy about making what can sometimes be a scary change if you’ve never learned how to manage your money.  Ask yourself this question – what would life be like IF I knew how to intentionally, authentically, and proactively manage my money?  My guess is that this question will get you thinking in a more positive manner about why you want to improve your financial knowledge (instead of simply feeling like you “should”).

Also, be realistic – I find that people are often looking for a one-trick-does-it-all solution.  I’m here to tell you sadly that it’s not there…sometimes it took you a while to get into the situation you’re in, and so the reality is that it might take you a while to get yourself out of it.

So if you’re looking for a way to begin connecting with and realigning with your finances in a more powerful way, here are 3 steps to help you get started on improving the state of your personal finances:

 

1)    Assess the level of your financial health – Depending on whether you’re looking to build, protect, or grow your financial assets, you may require a different level of expertise or support.  While the majority of people I meet (i.e. 70% of people living paycheck to paycheck) often need help with learning the systems and structures of an effective money management system so that they can build a stronger financial foundation, sometimes people may need help with protecting what they already have (i.e. insurance, estate planning, etc.) or growing what they have (i.e. financial planning).

If you’re looking to protect or grow what you have, the best bet is to ask colleagues, friends or family members for a referral to a trusted professional.  However, if like most people you’re at the beginning phase (building) of understanding your financial situation, then the next 2 steps will help you to get the information you need.

2)    ASK: Where am I now? – When I’m trying to share with clients and people I meet how they can get started on improving their finances, the first thing I explain is the concept of using a “financial GPS.”  It’s similar to the GPS that we use in our cars, it’s just for finances – and without this you are forever trying to get to a destination that you can’t efficiently get to (remember how the shortest distance between two points is a straight line?)!  When you’re programming a GPS, you need to type in a “point A” – for your finances, this means that you need to understand where you currently stand before you can really make any impactful decisions about how you can get where you want to go.

In order to determine your financial “snapshot” (or point A, if you will), there are 2 main steps to take: 1) understand your Net Worth (Assets minus Liabilities) and 2) understand your monthly cash flow.  For the cash flow, I recommend summarizing at least 3 months of recent cash flow in order to have a solid base of information about your money map (i.e. income and expense details).  (PS – I know that pulling together this information can seem scary sometimes, but take it one small step at a time…and keep breathing, it will be worth it in the end!)

3)    ASK: Where do I want to go?  As you know, the next part of programming a GPS is to set your destination…or point “B,” if you will.  What are your goals (financial and otherwise) in the next year, 5 years, 10 years, or beyond?  Do you want to focus on eliminating debt?  Saving more?  Taking a trip?  Starting a college fund for your child?  Deciding how you want to consciously use your money as a tool to achieve your goals is a really important part of designing a financial plan that works for you and your life.

 

With these 3 steps, you’ll be able to better understand what I like to call your level of financial alignment.  In other words, are you using money in a way that truly supports what you want in your life? Or, are you doing as many people do and spending unconsciously without thinking about whether you’re spending on things that matter to you (what I like to call being “financially authentic”)?  Being financially aligned and authentic can have a tremendous positive impact on eliminating financial struggle and strengthening your financial foundation as quickly as possible.

In the end, while the steps are simple they will take some time, however I promise that by understanding the “point A” and “point B” of your personal financial GPS that you’ll move more efficiently (in a straight line!) toward your goals.  As I always say, money is a tool that when used powerfully and to your advantage can provide you with more choice and the ability to contribute in a bigger way…is 2014 your big year?

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