When it comes to money, are you: (a) a financial wiz; (b) your own worst enemy; or (c) somewhere in between?
In my 30+ years as a financial advisor, I’ve observed that by adulthood most people have developed a “financial self-image.”
Maybe you’re one of those few souls who see yourself as good with money, naturally frugal and disciplined. Maybe you actually enjoy budgets and spreadsheets.
Or you may see yourself as just getting by and hoping to catch a break that might one day help you succeed. You’ve got a steady job. You put a few bucks each paycheck into the company retirement plan. But you’re skittish about taking a detailed look at where you are financially and how far you’ve got to go.
Maybe you tell yourself, “I’ll always be working. I can never retire,” as if working is a prison sentence and retirement is parole. (Secretly you hope you’ll get a little time off for good behavior!)
If you’re someone who looks in the financial mirror and frowns, let me give you three ways to improve your financial self-image.
1. Know yourself. The first step is to be honest about who you are, where you are and what kind of help you need.
If you’re in that small group of people who feel great about where they are financially, your problem may be overconfidence. I see this most often in do-it-yourself investors. I never try to talk a DIY investor into any other method. (Talk about banging your head against the wall!) I just try to help them see that investing isn’t the only aspect of a wise financial plan.
For example, since insurance can be a big line item in the budget, DIY investors often see these dollars as competing with, rather than augmenting, their investments. DIY investors need to understand there are significant dangers when one ignores the protection aspect of a comprehensive financial plan.
On the other hand, those who are discouraged financially need to understand they will have a tendency to put off planning altogether. “I’m so far behind…what’s the use?”
2. “No” yourself. Whether you’re overconfident or under-confident, my second piece of advice is to “no” yourself. That is, say “no” to first impulses that may blind you to deeper opportunities.
The overconfident needs to say “no” to that knee-jerk tendency to dismiss not-yet-considered financial realities. The under-confident needs to say “no” to that suggestion that “You’ve waited too long.”
3. Grow yourself. The process of first “knowing” and then “no-ing” yourself opens you to grow in new ways.
This is true even if you already are financially successful. In fact, your very success requires that you grow in new ways. If you’ve amassed a large retirement account, fantastic! Now, do you have a well-conceived strategy for creating an efficient retirement income stream from those assets? If you’re set for retirement, do you have a plan to protect your assets from the financial impact of long-term care expenses? Do you want your assets to efficiently pass to your heirs, or are you okay if most of your wealth goes to the government and big corporations?
And what if you’re not doing so well financially (yet)? Not only do you need to grow…you CAN grow. You may not get to “Easy Street” overnight (I can promise you won’t!), but you can make progress. Given the right plan and enough time, you can be like so many who made more progress than they ever dreamed possible.
One great way for anyone to get started in this three-part “Know, No, Grow” process is to read my newest e-book titled “How to Put Financial Worries in Your Rear View Mirror.” It’s for anyone who feels lost when it comes to finances (which, let’s be honest, is some people all the time, and all people some of the time). The e-book is free to anyone who emails me at firstname.lastname@example.org.
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