Yes, it’s rather bold of me to presume you have an issue when it comes to retirement savings (and planning). But check out these stats:
- According to the Bureau of Labor Statistics, just 53% of American workers participate in any type of retirement plan at work.
- A recent TIAA-CREF survey found that 57% of workers did not increase their plan contribution after their last raise. (Millennials were the exception.)
- The Federal Reserve’s Report on Economic Well-Being of U.S. Households in 2013 reports that nearly half of all Americans haven’t planned for retirement and that 31% have no retirement savings or pension.
Given these numbers, I feel pretty confident in my ascertion. Especially when you also tack on the finding from the financial research firm, Hearts and Wallets, that Americans rate retirement planning as the most difficult of financial tasks to do.
You’re probably not getting as much as you could from your retirement account.
A Little History
Today, in general, and at this time of year, in particular, there’s so much talk about 401ks and retirement planning that it is easy to forget that this part of the financial services industry is young – as in approximately 30 years old.
For a variety of business and regulatory reasons, companies started migrating from defined-benefit plans to defined contribution plans in the 1970s. The former guaranteed you a certain income in retirement, but how your money was invested in the pension plan was wholly controlled by your employer. With the latter, you control everything – from how much of your current income you contribute to how you invest/allocate your contribution. That also means, the amount of income you’ll receive in retirement from your 401k rests entirely on your shoulders.
And more often that not, that responsibility comes with very little personalized guidance. Hence, the sobering stats above.
But I believe there are other reasons for these jaw-dropping percentages:
- Retirement planning doesn’t feel urgent
If you have 20, 30, 40 years until you plan to retire, it can seem like you have all the time in the world because 65 (or 70) seem so far away. So, you get that retirement savings and planning are necessary. But it just doesn’t feel urgent.
- Economic realities are not factored in…on a personal level
You very well may be one of the people whom hasn’t seen a raise in five years (or more!). Yet, your cost of living certainly hasn’t stayed stagnant. So, your challenge is being able to *see* how the heck you can save against the backdrop of flat wages and rising expenses.
- Forecasting the future is overwhelming
“How can I know how much income I’ll need when I retire?” “How can I know how long I’ll need that income to last?” “Will my retirement expenses really go down?” “What about healthcare costs?” The premise of retirement planning is based on a variety of uncontrollable unknowables. And if making decisions amidst so much ambuguity seems futile, the alternative of sticking your head in the sand actually seems more feasible
There’s An Alternative
Think about how you currently manage your retirement account?
What would be different if you considered it necessary and urgent?
If you’re in the 47%, what would be different if you started with just 1% of your income?
If you’re in the 43%, what would happen if you made the commitment to save your next raise by assigning some or all of it to your retirement account?
What would happen if you were shown a clear cut process for investing in your retirement account?
Can you now imagine retirement savings (and planning) being easier? Can you now imagine having more confidence about your decision-making?
I can…and it is what I want for you.
There’s still time to join us for the investment training series, “What the Hell Should I Do With My 401k?”
The next live class is Monday, 3 November at 8pm ET.
p.s. when you register, you’ll automatically get the replay link for the session held on Monday, 27 October.
p.p.s. this series is applicable if you have a 403b, IRA, Roth-IRA, SIMPLE-401k or SEP, too.
On the day that I write this, the stock market is up (as measured by the S&P500 and Dow Jones Industrial Average). The S&P is on track for a fifth straight session of gains. Yesterday, the Dow closed up, over 200 points and it is currently up another 35 points.
That wasn’t the case about two weeks ago.
All the major indices were down and many pundits were forecasting a pending market correction.
As a result, Kate* got spooked and did what I describe as the unthinkable. Fearful of losing money in her 401k, she sold ALL her mutual fund holdings and parked her proceeds in a money market fund (i.e., cash).
She made a classic 401k investing mistake, one I’ve seen many people make going as far back as the market crash of 1987 and more recently in 2008. The market goes down, some people panic, and the way they react is to sell. They have temporary amnesia and forget that going up and down is what the market does – it’s how it naturally behaves.
Jess took one of my courses and followed my 401k investing instructions almost to a “T.” She made sure she diversified her portfolio, she just went a wee-bit overboard. When she and I started working together 1:1 and I presented my analysis of her portfolio, she was surprised to discover that most of the twenty mutual funds she owned were investing in the exact same companies.
She made another classic mistake when it comes to 401k investing: confusing having many with being properly diversified.
Angela, now in her fifth year at her current employer, hadn’t been paying much attention to the 401ks she left at previous employers. A combination of disinterest and not really knowing what to do, coupled with the fact that her investments were performing pretty well, she just left them where they were – always with the intent of, “I’ll get to it eventually.”
Leaving 401ks with former employers is another classic 401k investing mistake that people make.
I’ll admit: of the three above noted mistakes, Kate’s is the one that most horrifies me.
Selling when the market is down is often considered a way of controlling loses. It’s an action that eases people’s fears the most. Yet, it’s also the one that tends to be the costliest, in the short and long term – especially in a 401k plan.
Because she sold when she did, she did the opposite of one of the primary rules of investing: buy low/sell high. And her initial action to sell and subsequent action of not immediately getting back in the market implies she’s trying to time the market; she’s waiting for an all-clear signal. Truth is, no one can time the market and if a financial professional tells you they can, run in the opposite direction as fast as you can!
All three of the 401k investing mistakes I’ve showcased are examples of you not winning when it comes to investing.
Having more mutual funds than you need results in you being over-exposed to the risk you were attempting to mitigate.
When you leave 401ks with old employers, you usually give up control because you typically can’t make any changes as to how that money is invested.
These three mistakes are reflections of emotions driving money decisions – whether those emotions are fear, over-confidence, or apathy. And when that happens being rational goes out the window and you unwittingly bet against yourself – even though, on the surface, it may look like what you’ve done is in your best interest.
Winning at investing isn’t about what happens during trading hours, it’s the culmination of choices made before, during, and after trading hours. It’s the result of a disciplined approach – one that is personal and rational.
On Monday, 27 October, I’m kicking off a four-part investment training tele-class series, What the Hell Should I Do With My 401k? The goal: to ensure you don’t bet against yourself and make irrational investing decisions that end up costing you big money.
The first session, “To Win at Investing, Don’t Let Your Emotions Get the Best of You,” is also being offered as a free, stand-alone tele-class.
It’s open enrollment season, which is the perfect time to take a look at your 401k retirement account.
If you don’t know how to select mutual funds or put together a portfolio of funds;
If you don’t know how much to contribute to your retirement account and the funds you select;
If you didn’t get around to enrolling; or
If you’ve been treating your retirement account like you’re a day-trader, I hope you’ll join us for this investment training series.
We start Monday, 27 October. Here’s the link, again, to learn more.
p.s. *all the names are pseudonyms.
p.p.s. if you have an IRA, SIMPLE-401k or SEP, this series is applicable for you, too.
I read somewhere that if you could achieve your financial goals by simply putting your money away in the bank you wouldn’t need a plan.
That’s silly to me. That’s like saying as long as you have gas in a car you don’t need directions to drive to a place you’ve never been to before.
Yet, this way of thinking represents a common mindset when it comes to managing money and preparing a financial plan. And, in my opinion, it is why so many people don’t get as much as they could from their money.
Today is the last day of Financial Planning Week – the 13th Annual one no less! Granted, this factoid may not make your heart stir and go pitter-patter. But, I thought today would be as good a time as any to share what I believe financial planning is really all about. I suspect if more people adopted this perspective, more people would get excited about preparing and editing a financial plan. Imagine that!
Besides b.o.r.i.n.g., what usually comes to mind when you hear or read the words “financial planning?”
In no particular order, I bet you think about some if not all of what’s listed below:
- Your lifestyle
- Your career and current & future earnings
- Children and their education
- Parents and their well-being
- Your own well-being
You may even wonder if and at what point the help of a financial professional makes sense.
I also bet for each of the above bullet-points (and others I may have overlooked), your focus has been on the numbers – the numbers you know and the numbers you forecast. It all comes back to the numbers because the presence or absence of money is what typically drives your decisions.
Financial Planning: The Movie?
But what if instead of looking at financial planning as an exercise in making the numbers work, you thought of financial planning as the telling of a story through a collection of vignettes? Vignettes that when woven together resemble a long-format television series, with many seasons, about your life – the one you have and the one you want.
Not only are you the star of the series, but you also play the role of producer, writer and director. And you become a quadruple threat for the small screen the likes of George Clooney for the big screen. Much more exciting, right?!
You may be rolling your eyes right about now. But hear me out…
There are a number of benefits to viewing financial planning through the lens of making a critically-acclaimed and successful series. To start, you begin to recognize that even if everyone follows the exact same steps (think of all the long- format shows on HBO), the results won’t be precisely the same.
Thus, the reason I say financial planning isn’t supposed to mean the same thing to everyone.
By thinking “story” over the numbers, you’re invited to connect the dots that represent the pieces of your life in a more profound way. The result: You have to bridge the gap between your vision for the future and your present-day reality and consider the tools, resources, and people that will help you close the gap between here and there. That includes:
- Using money as a tool, but not the only tool!
- Remembering that emotions are not black-n-white. And neither are numbers. True, the numbers may be negative or positive, but the “story” behind the numbers is rarely as black-n-white as you might think (or wish).
- Viewing financial planning as less about planning for retirement and more about planning out your entire lifestyle cycle (the on you have, the one you want, and the one that will help you bridge the gap).
- Embracing ambiguity and the practice of scenario planning via story-boarding.
- Using scenario planning to help you identify the likely obstacles you’ll encounter and manage the ones you’ll actually face.
- Learning to objectively observe your patterns, habits, and anomalies.
- Learning to objectively see the relationship you have with money, and how and where you need to work on it.
- Remembering you never do it alone.
There’s a term in the film industry called the “cutting room floor.” It pertains to what’s been omitted from the final footage. The way I connect this to financial planning is how the results you see reflects a lot of the intangible choices and decisions you’ve made but others can’t “see.”
If you’re like most people I know and clients (before they became clients), you’re really much more interested in being with family and friends; focusing on your career; and enjoying your leisure time and a lot less interested in managing your money and creating a financial plan. As a result, you either don’t have a plan or you have a one that was haphazardly put together and may not be current.
However, when you don’t have a plan (or a current one), you don’t know what you need to do consistently and you don’t know when and where you need to evolve in order to achieve your financial goals.
So, in honor of financial planning week, I ask: do you have a viable and or current financial plan? If not, what are you waiting for? And, how might thinking of it as a tool for making a critically-acclaimed and successful long-running series about your life help you get started?
I received an email asking if I do one-off consultations, to which I immediately replied, “Yes!”. When I followed-up with her a few weeks later, here’s an abstract of what she said in return:
“I decided against financial counseling at the moment just because I don’t think I’d listen to any advice and rather think I’d really only want to hear ‘you’re doing great!'”
Ha! I love her transparency and honesty, and I told her so.
Her degree of self-awareness is priceless. It took guts for her to disclose what she wrote. And I really appreciate it because, in truth, she likely (and bravely) expressed what many people feel but rarely admit to anyone but themselves.
And, I don’t blame her.
So much of what is touted as financial advice today (or information as advice) puts people on a guilt/shame trip. Even if you’re doing great, you still feel like you’re not doing enough. Even if the proffered suggestions are for your benefit, you just don’t want to hear you need to tweak anything.
Can you relate? I know I sure can.
You and I have an intriguing relationship with feedback. On one had, we want and we know we need it. Yet, as this member of our online community exemplifies we prefer a certain kind of feedback. We want to hear the Tony-the-Tiger version of “you’re doing great!” To hear anything otherwise is akin to hearing you’re wrong.
Don’t Disturb This Groove
Indeed, the need to be right may be holding her back. But I credit this reader with listening to herself and making changes at a pace that feels comfortable. And I have every confidence that she’ll know when she’s ready to hear my perspective and will reach out, again, when the time is right for her.
That said, here’s something I know for sure:
While the pop/R&B song from the late 80s would have you believe otherwise, you need to disturb some aspect of your groove for progress to happen.
The sentiment expressed in her response is another example that illustrates just how connected emotions are to your actions and behavior…and how they can also be connected to your net worth. For you and me, her revelation provides both priceless and relevant lessons and reminders that reach far beyond money, though:
- Some changes in your life only happen when you’re ready.
- Other changes happen regardless of your readiness, but your acceptance of those changes only happen when you’re ready.
- Feedback works best when you are open and your curiosity about what you don’t know exceeds your comfort zone with what you do know.
- The possibilities of the unknown must excite you more than your current set of circumstances.
- The discovery process of moving from the unknown to the known must affirm + inflate your ego and sense of self-worth more than what you’re currently experiencing.
- The conflict between wanting to be right and wanting to avoid being wrong must be low on the spectrum of low to high.
The sentiment behind – “I’d really only want to hear, ‘you’re doing great!'” – brings to mind the very unscientific survey I conducted last year. I randomly asked total strangers on the streets of Brooklyn what came to mind for them when they thought of love and money. One of the respondents said, “We don’t talk about it…I don’t want to talk about it because then I’d feel like I have to do something.”
How fascinating that both the reader and survey respondent made the assumption that what will be discovered will somehow be less than desirable.
How fascinating that in both instances what’s implied is the notion that your freedom, independence, and ability to choose will somehow be diminished.
The need to be right; the need to feel accepted; the desire to feel affirmed are all natural and understandable. After all, emotions are the undercurrent of your actions and behavior. You filter every decision, including those concerning money, through the lens of your emotions.
The challenge, always, is to make sure your emotions are working for you…not against you delaying or blocking you from getting even more from your money and for your life than you could ever imagine!
In the end, the key is to remember that excellent financial advice doesn’t need to put you on a guilt or shame trip to be valuable and effective. It is absolutely possible to get feedback that may differ than what you’d expect AND hear, “you’re doing great!”.
Financial advice can be constructive and satisfy your need to be right and to feel accepted and affirmed.
p.s. Given that the question that inspired today’s post came from a long-time reader, it’s clear I need to do a better job of marketing. So on the off-chance you’re wondering if I provide one-off consultations, you can click here to learn more about how to work with me.
p.p.s. The realm of love + money is a perfect playground for working out and working on the sentiments of wanting to be right and wanting to hear, ‘you’re doing great!’. I got a chance to address these themes with Monique Brown, host of The Total Woman Summit and founder of the Feminine Allure Academy. My interview went live last week (sorry for the delayed announcement), but click here to check it out the replay. The response has been tremendous!
“How strange that the nature of life is change, yet the nature of human beings is to resist change.” Elizabeth Lesser
With the recent death of my mother, my life as I knew it has been completely upended. I feel slightly adrift and a bit unsettled as I negotiate an awkward emotional space and navigate the unfamiliar gray zone that comes with any transition.
I’m dealing with:
- a sizeable dose of uncertainty about new responsibilities and new choices;
- a little bit of overwhelm about the multitude of decisions to be made and actions to be taken;
- some identity adjustments that are afoot.
Talk about having my comfort zone interrupted!
But let’s face it, the “symptoms” of my life change aren’t unique to me or to circumstances of death. They accompany almost any major transition whether it’s been willfully initiated or unwilling imposed – whether it’s of a sad or happy nature.
In truth, the symptoms I’ve described could equally apply to you. So, the question isn’t so much if you’ll experience a major change over the course of your life. It’s not even really a matter of “when.” It is…
How will you manage the impact of the life change on your emotions and your finances – especially when your comfort zone has been dramatically altered?
To begin to answer this question, the definition of what triggers a transition needs to be expanded beyond the usual culprits of death, birth, divorce, and marriage to encompass a multitude of life-stage and life-style changes. Similarly, you need to acknowledge what’s really happening when a life change event occurs: you’re recalibrating your journey. That means you need to adjust your life + financial road and role maps.
Editing these maps will help you (and me) manage the questions that arise during the temporary state between what was, what is and what will be. It’ll help us address the anxiety, indecision, and fear that bubbles up. It’ll provide some structure and guidance to help us re-boot.
In March of this year, I asked Valerie Coleman Morris (former business anchor for CNN) to be my guest for this month’s Financial Intimacy Hour and we agreed that we’d focus on the theme of transitions. At the time, I had no idea the topic would hit so close to home. There’s a part of me that would rather stay in my cocoon and skip this topic. But that wouldn’t be honoring my mother and how she lived and faced disappointments and challenges.
So, on Wednesday, September 17th at 8pm EDT, the Financial Intimacy Hour is coming off of summer break. And I hope you’ll join me and my guest for, “Comfort Zone, Interrupted! How to Thrive In and Through Your Next Major Life Change.”
You’ll learn how to:
- re-gain your focus even as things remain unsettled. A cloudy mind makes poor choices.
- re-prioritize the decisions you make and the actions you take. When you’re in the throes of a transition, managing your energy becomes critically important!
- redesign your road + role maps so that your money supports you as you shift from where you are to where you want to be.
Life doesn’t come with a nicely-bound operating manual. Which is primarily why the problem with change is how change disrupts your comfort zone. Transitions prompt a realignment of expectations, emotions and personal finances. This is true whether your life change causes you to celebrate – like a new job, new client, new relationship, marriage, birth/adoption – or it’s something that causes you to mourn – like death, divorce, lost client, lost friendship, failed business.
I’m excited for the big-picture conversation we’ll have next week about how to manage your money as your life evolves and flows from stage to stage. Likewise, I’m looking forward to sharing with you practical resources aimed at helping you move into your next phase with as much grace and ease as possible.
I want for you what I desire for myself: to feel more sure-footed, confident and clear-headed, and to be more at peace with the unknown.
Even if you’re not in the midst of a major life change, I invite you to join us…you’ll learn how to survive and thrive the next one when it comes.
Unless you follow me on social media or are on my e-list, you may not have heard: my beloved mother, Fontilla A. Timmons, died peacefully on Monday, August 4th.
I miss my mother terribly and am still mad at cancer for what it did to her body, for taking her away, way too soon. In the world according to me, she had so much still to give; she had more years of singing ahead of her; she had more years of volunteering ahead of her; she had more years of playing xbox (something I don’t even know how to do!); she had more years of fussing at her cat, Ella, or giving the Yankees a talking to when they played poorly; she and I were to simply have more years together; she was to walk me down the aisle should I ever get married.
In case you can’t tell, I love my mother tremendously. I was very, very fortunate to have been born to and raised by her – to have been loved so deeply and unconditionally by her. She was an awesome woman and a great mother, and that isn’t a blessing I take for granted.
A petite woman (5’2″) with a BIG personality, my mother was a pioneer in many ways – not at all concerned about trying to fit in. A necessary trait for a woman whom for many years was the only female softball umpire in Western New York!
Her mantra was “love and accept yourself.” Do this, and you can love and accept others just as they are; do this, and you won’t need to seek other people’s approval to live your life. This is how she rolled; this is what she exposed me to as a young child; but it is only as an adult did I recognize her example as such AND as an invaluable lesson and life-skill to have.
To say that my heart remains heavy is an understatement. I may be back in NYC and I may have resumed my work schedule as of this week, but I am walking around in a bit of a daze, still trying to adjust to my new reality.
My mother had been sick for several years, and every day she fought cancer valiantly. I marveled at her grace and gratitude every step of the way – especially the last two weeks of her life, which were a particularly sweet time for us. And, I am forever grateful that when she took her last breath, it was just as when I took my first — we were together.
The celebration of my mother’s life was held on Friday, August 8th. It was precisely how I wanted it to be…how I wanted to honor her.
Every decision I made about her day was filtered through these three words: meaningful, beautiful, and intimate.
- It’s why her services were held at St. Bonaventure’s University Chapel.
- It’s why we opened her celebration with one of her songs, her rendition of “You and I.” (Mommy’s first career was as a professional singer.)
- It’s why the processional was Father Francis walking me down the aisle with me carrying my mother’s urn, with African drumming in the background.
- It’s why one of my dearest friends, Toni Booker, sang my mother and I’s favorite song “His Eye Is On the Sparrow” and “Precious Lord.”
- It’s why every speaker preceded their comments by reading a verse from my mother’s favorite scriptures.
- It’s why “Ave Maria” came after Father Francis’ sermonic reflection but before I read the poem, “A Child Loaned” and shared my “Loving Memories.”
- It’s why all who gathered held hands and prayed “Our Father Who Art in Heaven” in unison.
- It’s why the closing prayer was ecumenical.
- It’s why the recessional music was “Happy” by Pharrell Williams.
- It’s why the repast was a fish-fry dinner…at the Elks Club.
During a moment of quiet reflection, I would realize that the same three words that guided how I designed my mother’s celebration also described the relationship my mother had with me and her/our countless friends. These words also exemplified how my mother handled her affairs.
Talk about having it together…
- Mommy died without a mortgage – her house may be modest but it is paid in full.
- Her consumer debt is negligible.
- I am a single child, yet she still made certain all her legal paperwork was in order: Will, Power of Attorney, Health Care Proxy, Insurance. Likewise, we held certain accounts in joint-name so that I could easily pay her bills when such a time as this came to fruition.
In other words, my mother made certain that my grieving wouldn’t be interrupted by unresolved financial concerns or unaddressed financial matters. Unlike some who fall prey to poor planning, short-sightedness, and fear, my mother had the foresight, discipline, and desire to plan ahead.
Even in death, she continues to nurture me. Even in death, she continues to shape how I show up in the world and provide an example of how to live…how to rock it out! For this and soooo many other things, my gratitude is beyond measure.
Mommy, I miss you and love you!! And, just as you refused to let cancer steal your spirit and love and joy for life and living, I promise not to let grief steal mine.
p.s. to learn more about my mother – aka the woman who means the world to me – click here to read what I wrote the day of her death (you don’t need Facebook) and click here for her obituary.
p.p.s. It also means the world to me that you read my tribute to my mother. Now, I hope you’ll take action! Please make sure your financial affairs are in order – get your documents together; have the awkward conversations with family members and close friends; schedule the uncomfortable but necessary meetings. Grieving unencumbered is a truly a wonderful gift to get and to give. And if you’re not sure where to begin, start with my interview of Lori Anne Douglass, Esq. Click here to download the mp3.
We are officially mid-way through 2014. True, this isn’t a newsflash. But did you know this a perfect time to do a financial review?
I know, I know, your mind is set on relaxing and having “hot fun in the summertime!” Who wants to (strategically) think about their money right now?
Yet, this half-way point represents a perfect time to do a review of your money and money-based goals. The slower pace is an invitation to pause, evaluate, reflect and perhaps press “reset.” Something you’re likely doing professionally, anyway.
Even if you’re not steeped in a traditional “corporate” work environment, you might be engaged in a mid-year performance review process of some sort. So, why not do the same when it comes to your finances? Why not take a pulse check and compare where you are vs. where you thought you’d be by now – six months into the year?
This makes July the perfect time to apply the concept and exercise of a mid-year workplace performance review to your finances.
A financial review allows you to identify opportunities you may have overlooked up to this point and/or to identify tweaks that will enable you to course-correct for the six months ahead.
Here’s a three-phase “looking” process, along with questions, that will:
- ensure you stay conscious about what’s going on with your money, and
- also potentially set you up to experience (even more) financial success and finish the year strong.
Looking at Now
- Pull your banking, investment and credit card statements – what are your current balances?
- What habits are you practicing daily, weekly, monthly?
- How do you feel – excited, energized, lethargic, dismayed, or something else?
- What goals did you set at the beginning of the year?
- What habits did you commit to changing or developing?
- How do these measure up to where you are now? Are you on/off track?
- What mistakes (in action or judgment) did you make?
- What did you accomplish?
- How proud do you feel about the progress you’ve made? How disappointed do you feel about where you’ve fallen short?
- As a result of the two phases above, do you need to change any goals or any of the parameters you’ve established for achieving them – in other words, is a “reset” in order?
- What new goals or habits would you add to your plate for the next six months?
- If distractions and unexpected commitments threw you off-course, what do you intend to do to minimize how these may negatively impact you moving forward?
- What would make you feel most satisfied when 12/31 arrives?
Performing a financial review is not only helpful for confirming what has happened and shedding light as to why your results are what they are, but it can also serve as a preview for what’s to come.
This exercise can help you objectively assess and adjust the choices you’re making and provide insight as to the ones you’d benefit from making. Additionally, it can highlight if the systems, processes and framework you have in place are as supportive of your efforts as you think they are and need them to be.
Are you dreading doing this financial review because it’s summer; because you don’t want to face what you’ll discover; or both?
Well, remember this: it’s perfectly fine for you to be in vacation mode…your money, not so much! Your money should be working for you 24/7/365.
Second, if you’re concerned about how long this will take, then break it down – carve out three (3) 30-minute windows – maybe during lunch – to address each phase noted above.
Finally, focus on the power you’ll gain from the insight you’ll discover as a result of having a meaningful conversation “with” your money.
Need another incentive to perform a mid-year financial review? Just like any other relationship, your money won’t grow as much as it could without your purposeful attention, direction, and action.
p.s. you’ve completed your mid-year financial review…need help? Join the Financial Intimacy Lounge and let your membership help you finish the year stronger! Click here to learn more to begin your membership, now.
p.p.s. mark your calendar for the next Financial Intimacy Hour session – “The Digital Revolution of Personal Finance: Do Your Apps Know You Better Than You Know Yourself?” Wednesday, 16 July at 1:15pm. Invite available soon.
“My husband lost $100 million.”
Nope that isn’t a typo. Yes, my jaw dropped, too!
This was told to me by the wife of a couple who will appear on “Untying the Knot” – a new reality series on Bravo featuring Vikki Ziegler-Payne as the host and mediator. Vikki is a divorce attorney, a dear friend of mine, and a guest teacher in the Master the Language of Love + Money program.
It’s been several weeks since the premiere party and yet I am still dumbfounded. $100 million…lost…I can’t relate.
Risk creates wealth
I was relaying the story to a friend and expressed my curiosity about wanting to know “the story.” After all, there must be a story, right?!
Very matter-of-factly, he said: “He lost it the same way he earned it.” (I gave him my Scooby Do Huh? look.)
My friend went on further to say this person’s husband was a risk-taker and explained how anyone who has created wealth of any means – but especially to the tune of $100 million – didn’t do it without taking some risks.
Then, he punctuated his point with this:
“Not everyone can be broke.”
In a flash, the gossipy side of my curiosity was replaced by an immense interest in wanting to understand more about how this woman’s husband thought about risk. Specifically, I wanted to know:
- what decisions did he consider “normal” that others viewed as risky and vice versa;
- did he rely on data, instincts or a combination to make decisions;
- when did he realize things were about to go awry;
- what was he feeling and thinking as things were unraveling; and
- how (and when) did get he break the news to his wife. (From my conversation with her at the premiere party, I got a sense of how she reacted…)
When it comes to risk, a common tendency of our culture is to just focus on the two opposite ends of the spectrum, much like a see-saw, where one end represents being conservative (or risk-averse) and the other being speculative (or risk-friendly).
I bump up against this notion often with coaching clients and workshop attendees, and I frequently need to remind people that the prospect of losing money isn’t the only risk with which you must contend. You also need to consider risk in the form of any opportunity costs – and when it pertains to money that is the cost of being so conservative you don’t keep pace with inflation.
But a) there’s a broad spectrum of risk-takers, and b) there’s a lot of space in the middle. And, in my opinion, where you fall on the continuum is in direct proportion to the degree you feel comfortable wading in the water of uncertainty – whether that is about money, career choices or matters of the heart…
Traits of a risk-taker
Choosing to create your own business typically means you’re a risk-taker.
This kind of risk-taker usually has a higher threshold for uncertainty, and is slightly more comfortable with the prospect of going or being broke – relative to someone who hasn’t chosen the entrepreneurial path.
“If money is your hope for independence, you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience and ability.” Henry Ford
But, being a risk-taker doesn’t have to mean being reckless and/or impulsive.
Nor does it mean you’re unafraid – it just means you have the fortitude to do it (whatever “it” is) anyway.
Likewise, being a risk-taker in one domain of your life doesn’t mean that you are such in all areas of your life.
In much the same way you may view and approach money monolithically, you may discover you do the same with risk. And just as it is beneficial to peel away the layers of money, the same is true when it comes to risk. So, with this in mind…
- How do you define risk – and not just with regards to money? Is your definition holding you back, or helping to propel you forward?
- What does being a risk-taker mean to you?
- How comfortable are you with uncertainty – with the unknown?
- What role does comfort play in moving you from one end of the spectrum to the other?
- Where in your life do you play it safe (aka “playing not to lose); where in your life are you a risk-taker (aka “playing to win)?
I bet your answers will reflect what is true for our culture at large: you and I have an interesting (and complicated) relationship with risk.
There’s the infinite list of and excitement about what could go right if the risk pays off.
But there’s also the matter of failure, which many attempt to avoid at almost all costs – often forgetting that some of the best lessons come from failures.
Closely related is the fear of embarrassment – shame, guilt, and the preoccupation with what others may think – often prevent us from taking calculated leaps.
For some, the mere thought of going broke (or losing it all) is unfathomable. Actually experiencing it is really unimaginable!
“To dare is to lose one’s footing momentarily. To not dare is to lose oneself.” Soren Kirkegaard.
I certainly know what it feels like to be broke and wonder, “How the hell am I going to pay my rent?” But I’ve never lost it all; I’ve never gone bankrupt; and I’ve never gone hungry or without basic necessities – even during the leanest of times.
Admittedly, I have no idea how much was left over after this couple lost $100 million. But, it’s a dollar amount I can’t imagine losing. So, does that mean I don’t have what it takes to earn $100 million?
Here’s the existential question I’m wrestling with: What, if anything, is the relationship between what you’re willing to lose to what you have or can have?
I’ve been ruminating on this for the past few days – wondering if I would have made different choices if, when things got tight, I would have been able to withstand wading in the waters of uncertainty a bit longer — could I have stood on the edge of brokenness a bit longer…
Granted, none of us can re-write the history of our choices and the consequences thereof. But it’s kinda of enlightening to use takeaways from real-life experiences like this couple’s to learn how to make smart, risky decisions. Especially if they are decisions you won’t regret – regardless of the outcome.
When clients come to me, it is always because they have a question they haven’t been able to answer satisfactorily on their own. The question either begins with, “How do I…?” or “Why do I…?” or “What should I…?”
Their question is usually about an aspect of their money they don’t understand or that they dislike. And, usually there’s more to their question than what meets the eye.
That’s why I thought a recent Charles Schwab ad was awesome. The commercial features a little boy, who with childlike wonder, peppers his father with a series of questions after a visit to their investment broker. The son stops his father in his tracks with this question: “Why not?”
The commercial ends with the father having a quizzical look on his face (because he can’t answer his son) and a voice-over saying, “Are you asking enough questions…?”
I love this commercial for several reasons:
- It challenges the notion of what is considered passive behavior when it comes to money and who is likely to be passive
- It highlights what you don’t know you don’t know
- It reminds us that wisdom can come through unlikely channels (like children)
- It makes a case for how curiosity can unleash your financial power
Money is the trigger
I use my curiosity to help my clients tap into theirs.
It’s how I get them more engaged with their money; it’s how I get them to embrace what they don’t understand or what they dislike.
It’s how I get them to go beyond first base and to see that most money questions are less about the money (in an absolute sense) and more about money in terms of what it will enable them to do.
It’s how I help them to feel more confident and powerful about their financial choices and results.
What is curiosity, really – other than a) an optimism that you’ll get your question answered, coupled with b) just enough skepticism to never stop at the first answer.
Ironically, when you use curiosity as a tool for managing your money, you’re protecting yourself.
Curiosity will ensure you’ll never go too far astray as you navigate financial challenges and opportunities and as you convert ideas and dreams into a plan of action.
Think about the financial choices you’ve made to date. Now imagine if you had applied a tad bit more curiosity to your process. What might be different?
Or, consider a current financial question or challenge you have and imagine how curiosity could help you produce even better results than you currently envision – whether that’s saving or earning more; investing with greater confidence; spending strategically; being on the same financial page as your sweetie. How do you feel?
Hopefully you feel more confident and powerful. Not because you got immediate answers, but because you asked more (and different) questions than you would normally!
On the off-chance you actually feel more tense than powerful, don’t resist it. It just means you need to ask even more questions – like the fictional character in the Charles Schwab commercial.
Questions coupled with a healthy dose of optimism and skepticism can help you unlock your full financial power – and, thus, positively influence your financial choices and results.
So, if I were on the Charles Schwab ad team, I’d make a complementary commercial with the father and son going back to the broker to get answers to the questions the son asked!
p.s. how might being a member of the Financial Intimacy Lounge help you unlock your full financial power? Click here to learn more and to join.
What happens when you find something boring – even when you know it is good for you? You typically avoid it, right?
For many people, managing their money fits this bill. It is akin to watching paint dry – that is how painfully b.o.r.i.n.g. it is for them. Does this describe you, too? Sure, you might enjoy earning money (who doesn’t?), but when it comes to all the other aspects of it…well, that’s another story.
However, has it ever occurred to you that the reason you find money boring has little to do with money?
Money isn’t boring; you just need to be more curious!
Curiosity as a tool
Heidi Johnson, of FridayPrize.com, advocates following your curiosity over following your passion to discover “work worth doing.” During a recent conversation with her, not only did I think she was onto something with her message, I realized that the practice of curiosity is probably one of the most under-utilized skills for making and having more money.
Think about it: how much of your success, personally and professionally, is because you had the mindset of curiosity. You wanted to go beneath the surface and discover more; you were open to new experiences and decisions?
With this in mind, here’s me taking a stab at illustrating how dialing-up your curiosity can actually get you excited about all aspects of money in ways you may not have imagined before. Why does this matter? Because excited and open is a useful combo that will make sure you:
- are less haphazard in your approach to money
- position yourself to make better choices
- ask for help when you need it
- miss fewer opportunities to grow your money
- amplify your efforts to experience life more on your own terms
When you practice more curiosity, you…
1) Listen more. When you’re a great listener, you pay attention both to what is said as well as what isn’t said. You hone in on clues of all types.
When it comes to money, “listening” takes the form of paying attention to the feedback money is giving you about the quality of the choices you’re making.
2) Are comfortable admitting you don’t know it all; in fact, you see asking questions and asking for help as signs of strength. The process of and then getting answers is what fuels you!
When it comes to money, this means reading articles, blogs and books; taking classes and courses; speaking with family, friends and colleagues; and working with professionals to get help closing your knowledge gaps, or to get guidance you didn’t know you needed.
3) Think like a scientist. Curiosity is at the core of what a scientist does, right? Inquiry, research, find some answers, dig a bit deeper. Repeat. This is the spirit of experimentation.
When it comes to money thinking like a scientist means creating a process to develop the results you desire and honoring this process just as much as you do the results.
4) Have a plan; you have a strategy; but you are fluid about your tactics.
When it comes to money, this means not freaking out when the market drops or when you make a choice that turns out to be a mistake. Why? Because you a) prepared for the unexpected, b) know growth and success are not linear, and c) you have a plan and a strategy – aka a map – for rebounding with as much ease as possible.
5) Peel away the layers until you see the real problem; not just what’s obvious.
When it comes to money, especially when you’re struggling with debt, this means figuring out if what you really have is an earnings problem.
The problem with thinking money is boring is that you unwittingly succumb to one of the biggest financial handicaps you can have. It is a sentiment that locks you in and can cause you to forget that life is about stages and with each stage comes new challenges and new issues.
In my opinion, one of the biggest appeals to using the mindset of curiosity as a tool to manage your money is that it invites you to live more by-design (rather than by-default).
To me, curiosity is inherent. But it can also be developed with intention. And, I have come to the conclusion that it is a skill your money needs you to have!
Curiosity…use it more and let me know if your financial results improve as I suspect they will.