I always like to go to the gym during the first week of January just to see how many new people are there. The results are never disappointing; you can count on a surge of new committed people, dedicated to their physical fitness. By the third week of January, the gym has cleared out, which I actually appreciate because I don’t have to wait for a machine. So much for New Year’s Resolutions. If there were just a pill or a quick fix that could take off the pounds forever, wouldn’t life be lovely? When it comes to one’s financial situation, it appears the same phenomenon occurs. Couples get together over the holidays and set goals, many deciding they are going to get more intentional about their finances. They are going to save more, invest more, spend less or just understand what they have. The question is: how long is it before their good intentions evaporate into thin air? Can they set goals and make financial commitments that last more than a few weeks or a few months? How do you make sure the financial goals you set in January begin an overall financial fitness transformation?
The key to keeping your financial resolutions has more to do with psychology than anything else. In order to change a behavior, whether it is saving more money or sticking to a diet, you have to answer the question WHY? No one changes or sacrifices or chooses to experience the discomfort of change unless they have a big enough reason to do so. It’s just human nature. For instance, why would you want to start saving, when you have the ability to spend today? Why would you want to learn more about your finances when your husband does such a great job with his advisor? Why would you want to have a financial plan for tomorrow when things are clearly going well today? Without a really strong and compelling answer to the question WHY, the chances of changing behaviors that last more than a few weeks is virtually nil.
As a proponent for women taking charge of their finances, a big reason I am passionate about this topic is that statistics show 90% of women will end up managing their own finances, whether they like it or not. To me, that statistic alone should be a big enough “why” to motivate proactive behavior for all women to be an active participant in the decision making and goal setting activities around their finances. Instead, 49% of women fear they will end up broke and homeless! What an awful feeling that must be. It’s one of the reasons I wrote my best-selling book: The Big Retirement Risk: Running out of Money Before You Run out of Time. While the book is gender neutral, the concepts were purposefully written so they could easily be understood by anyone. It outlines the exact steps you should take to make sure you are a well-informed decision maker.
If I could encourage you to do ONE thing this year, it would be to take the following steps:
- Write out your financial goals – where do you want to be, financially when you are 90? You really need to look out that far because you’re going to live that long. Truthfully, all you need to know is how much it takes to live your current lifestyle NOW and assuming you want to keep that lifestyle a professional can extrapolate how much that will be when you are 90.
- Go to my website – botsfordfinancial.com and download the ‘House of Security™’ worksheet. Fill it out – it will help you determine what you are actually spending to support your lifestyle.
- Set a goal to read one book/quarter this year on personal finances. As painful as that might sound, the pain of running out of money when you are 90 is worse; you REALLY don’t want to risk that outcome. Start with my book – it’s easy and it will give you an initial set of questions to ask. Tony Robbins has a new book out and its fairly good; it’s a bit long but it has a lot of good psychology in it.
- Once you have filled out your House of Security™ worksheet and have read at least one book, make an appointment with a financial advisor and see if he/she can help you create a plan to make sure you don’t run out of money before you run out of time. Make sure they share your philosophy of money and your concerns. Be of like mind.
- Pay for a financial plan – trying to come up with your own financial plan is a little like doing brain surgery on yourself. It just doesn’t work. Even I work with an advisor in my firm to help me with my overall planning. All of us are too emotional about our own money.
Time marches on; years come and go. Make sure next year at this time you have a new sense of confidence about your financial future because YOU were proactive in your goal setting, learning to be an informed decision maker actively decided to create a plan. Don’t leave things to chance; it’s just not worth it.
Securities offered through LPL Financial, Member FINRA/SIPC. Financial Planning offered through Lifestyle Planning Solutions, a registered investment advisor. Investment advice offered through Stratos Wealth Partners, a registered investment advisor. Botsford Financial Group, Lifestyle Planning Solutions and Stratos Wealth Partners are separate entities from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
For a list of states in which I am registered to do business, please visit www.botsfordfinancial.com.
