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It’s no secret that life is complicated.
The strain of being in the workforce, a parent, or a spouse is enough to deal with. But when you add in other family pressures, finding time to exercise, tending to matters concerning your home, your community, your health, and maybe some “me time,” life may sometimes feel out of control.
And we haven’t even added in the burden of dealing with financial matters. Financial pressures can be the cherry on top of a sundae of problems, pressures, and confusion. It could be enough to leave anyone a quivering mass of dissatisfaction curled up in the corner.
These challenges stem from a combination of trying to juggle all the disparate needs of both others and yourself, and your competency to handle it all.
Here are a few key thoughts that can hopefully make things work just a little bit better:
Tip #1: Go BIG first.
Start with the broadest possible concepts. It’s important to begin with what you value most; such as safety and security, like Abraham Maslow’s Hierarchy of Needs teaches. Think health, family, stability, and financial security.
Without establishing the basics and the big-picture items, you might be building on an unstable foundation. In the financial arena, you need to understand these basics:
1. What you earn
2. What you spend
3. What you owe
Once you have a handle on these numbers, you want to establish safety in the form of debt reduction, a liquid emergency fund (readily accessible funds in savings/certificate of deposit, etc.), the appropriate amount of protection (insurance) and appropriate estate planning documents (Will, Power of Attorney, health care directive).
While you might not make every decision perfectly, your intention to make a meaningful move in the right direction is all that matters. If you don’t know where or how to start, work with an expert who you know has your best interest in mind; like a fee-only planner who will assist you in making wise and strategic choices. This will alleviate the pressure of either doing nothing or making poor decisions that will follow you and undoubtedly get worse.
Establishing these foundational items provides you with the ability to move forward with confidence and clear the way to tackle more complex issues.
Tip #2: Act on Your Goals ACTIVELY.
It’s one thing to plan, and it’s another to do. You might want to save money for retirement, put money away for a new car, vacation, loans, or prefund your children’s college, but until you change from thought to action, nothing will happen. A surefire way to make things happen is to automate your plans. Take the “thinking” out of the process. Set up automatic savings or payments through your payroll or bank. The more work it takes to send in a payment, the less likely you are to do it. Keep it simple and put it on autopilot.
Tip #3: Check your progress.
It is vital that you evaluate your progress. I am referring to the velocity of inflows towards your most important goals. Yes, it is important that your asset allocation is effectively diversified. Your time horizon and risk tolerance should match your investment choices with your objectives. Together, you and your planner can establish sensible guidelines for where best to you put your money.
Tip #4: Prepare for Life Transitions.
Life transitions are the times that challenge us most. There are wonderfully joyful transitions, like the birth of a child, marriage, or retirement. Then there are those that are bone-crushingly terrible, like the death of a spouse, divorce, disability, or job loss, to name a few. While transitions are normal and should be considered in your planning, they can be a hurdle. The tough times help us become more resilient and the earlier we acknowledge and plan for their potential existence, the more likely we are to come through it successfully.
The more you are able to navigate the basics of money and your financial boundaries, the more time and clarity you will have to focus on the other areas of your life that bring you the greatest satisfaction and joy.
After all, life is not about how much money you acquire, but how you live your life and obtain happiness while living your values. I wish you all the joy you can create.
