Have you ever thought about how money makes you feel? Unfortunately, for a lot of people, money makes them feel lots of negative emotions – stress, frustration, confusion, etc. When talking about personal wealth planning one of the most important parts is the behavioral side of finance, not just the numbers.
Sure, we can crunch the numbers and tell you your likelihood of meeting your goals. Or the expected return on an investment, or exactly how much to save from each paycheck. But if these things don’t make you feel empowered, it’s hard to stick to the plan no matter how straightforward it may be. So how can we improve our relationship with money to go from stressed and frustrated to empowered and motivated?
Start by defining your goals. Some people want to pass on with the biggest egg nest, but many do not. Many want to live a comfortable life, meet goals such as spending time with loved ones, traveling a bit, and passing some money onto the next generation, and they want to do it without having to count pennies. Putting those people in high-risk allocations and extreme savings targets won’t make them any more likely to hit their goals, instead they might just get frustrated and stop investing all together.
Once your goals are defined, the next step is to come up with a personalized and realistic plan that you can stick to. This typically doesn’t involve upheaving your entire lifestyle, but rather looking at what is possible while making minor changes to move in the right direction with your finances. This way working towards your goals isn’t an added stressor but rather motivating. Once you find yourself making progress in terms of your finances you may even be more motivated to keep going.
Finally, work with a professional. Someone who knows you, understands what you’re attempting to pursue your goals and can guide you along the way. Equally as important is someone who can take all of that confusing financial jargon and put it in layman’s terms so you leave your meetings informed rather than confused. This will help you understand what’s truly going on behind the scenes and the path forward.
Personal finance can be confusing. From understanding when to save vs. invest, what types of accounts to invest in, and how to manage corporate benefits it can be overwhelming and often put on the backburner. A lot of people find themselves feeling puzzled when it comes to their money. Rather than going down this road, take some time to put together well defined goals, come up with a personal financial plan and work with an experienced professional to better improve your relationship with money.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.