Probing Questions

Here are some questions that will help you identify and determine your internal set of financial values:

  • What is important to me about money?  (or… when I think about money, what does it mean to me?)
  • What would I like my situation to look like in five years time?
  • What would I like to pass on to my children or grandchildren with regards to money?
  • What do you find most irritating/unsettling about how you are using your finances now?
  • If you had to give up a number of things in your budget, what would you defend the most from being crossed off?
  • What spending does your partner do that annoys you the most?  Why?
  • What does your bank statement reveal?

 

Once you have completed the exercise here, plus the Revealing Your Financial Future worksheet, take time to complete the following.  (Remember, chocolate helps with inspiration!)

In my future the following Priorities will guide my financial planning:  (create a list)

Posted in Family, Financial Education Tagged with:

Does your money disappear?

One of the most common mistakes people make with their finances is not keeping track of money in and money out. I met a lady one time who was in desperate need of help with her finances. We sat together at her kitchen table with a cup of tea and I asked a series of questions to help me to understand the scope of the problems she was facing. Her main issue was “disappearing money”, as she so eloquently described it. I asked if she was able to see any obvious problems on her bank statements and suggested we have a look together. “Oh no”, she said, “I never open those envelopes. They’re only ever bad news!”

How can you expect to know if your finances are in a healthy space if you don’t keep an eye on what is happening?

Ignorance is not an acceptable position to adopt when it comes to managing your money. Taking this stance will mean that you are subject to circumstances, not in control of them. Life will happen to you and it will never be enjoyable for you if you continue to try to survive in ignorance.

Every week I’m asked if there is a “right way” to manage finances and keep track of what is happening. The answer to this question is that there is a “right way” for you. Each person is so different it would be futile to try and develop a one-system-to-fix-all solution.

One of my friends has developed a spreadsheet to help plan and track their family spending. This spreadsheet is so complex with formulae and tables that I suggested NASA might want to speak to her the next time they send someone to the moon.

Last week another friend told me they had adopted Xero Personal and were loving the simplicity of the online system. This service is no longer available to new customers but, if you’re this way inclined, you may like to trial Pocketsmith.

If you’re not so technical you may be encouraged to hear about the system my wife and I developed when we were newly married. We used a schoolbook, a pencil, an eraser and some chocolate. Why chocolate? I have learned that chocolate covers a multitude of sins!

The advantage of using a system to track your money is you can pick up bad habits when they appear. How can you ever expect to identify the problem you’re having if you don’t inspect your current spending behaviour? One way to do this is to take to your spending record with a highlighter. (Use bank statements or printed records from online). See what comes up repeatedly and then look deeper to see if it is causing you a problem.

When investigating there are two potential issues you may find; the first is repeated overspending in a particular area. You may discover you are at the supermarket seventeen times a week. This will undoubtedly result in a financial blowout. Secondly, the most common cause of disappearing money is lots of little items often – like coffee. You may find the cause of your financial problem is a $4.50 item that appears on the statement too many times.

Keeping track of your spending can be easy and will provide you feedback that will help you to fix the problem when money disappears.

Posted in Family, Financial Education

Who’s the Boss – your money or you?

When I ask people who the Boss is most guys just grunt and point an elbow towards their wife. When it comes to money, many blokes abdicate the responsibility of day-to-day money management and “leave it to the missus.” Whilst this abdication is common practice that doesn’t make it right. I prefer to call it for what it is – wimpy. Not being part of the financial leadership in your relationship by checking out and hoping things work out is not manly at all. Relationships are best when they operate in partnership. If you’re currently being a wimp in this area it is time to “Man Up” and step up to fulfil your role in your partnership at home.

However, accepting the co-leadership responsibility in your finances does not necessarily make you the Boss. The sad truth is many people are dictated to by their money; it says “go here, do this, pay that, no, no ,no…”

How many times have you caught yourself saying “We can’t afford that” or “I wish we had more money to do something fun”? You may even find yourself in the all too common position where your money is only spent on things you have done in the past. Be honest, is your bank balance telling you loud and clear that because you had too much fun last year there’s no chance of any fun this year? The most common symptom of this is watching most of your money disappear to pay for debt. This is what it looks like when your money is the Boss – it is your Master and you have no choice but to obey what it dictates.

We must learn to control our money so that it becomes our servant and not our master. When you can control your money so that it serves the things that are important to you, that’s how you become the Boss.

This is why operating in partnership is so vital when it comes to money management. To operate from a place of partnership you need to work hard (some harder than others) to get on the same page as each other. The most vital question to answer to achieve this is “What is important to us when it comes to money?” This question will move you from a place of abdication or friction to a place of partnership. Is this an easy conversation to have? Not usually. I always recommend you lubricate this conversation with a small amount of wine or chocolate!

The first key is to face this challenge together in partnership. When you stand together to make some positive changes it is so much easier than trying to do it on your own. (Just ask your spouse who has been struggling with this by themselves lately.) The second key is to take charge by determining what you truly believe to be important to you. Once you have a picture of this you can begin to direct your money to serve you. Is that easy? No. Is it possible? Yes it is.

Posted in Family, Financial Education

Always look for good fruit

I met a lady in Tokoroa recently who was somewhat excited to speak with me. She approached me at the conclusion of a Financial Health Check seminar to speak to me about my first book, Becoming Money Wise. She introduced me to her husband and then they began to both speak at the same time! They were excited to share with me how they had discovered my book four years ago and had followed every piece of advice to the letter. Why were they telling me this, I wondered. Well, they hoped I would be happy to hear that they were completely debt free as a result of following the advice laid out in my book – no credit card debt and no mortgage. I was happy to hear this news, very happy indeed.

There’s an old saying regarding fruit: “A good tree cannot produce bad fruit, and a bad tree cannot produce good fruit.” In the context of financial advice it’s worth saying that where you choose to take your advice from is going to determine the results you can hope to achieve. If you pick from a bad tree you’ll only get bad fruit, and if you pick from a good tree you can expect to get good fruit.

For me, personally, I’ve learned this lesson the hard way. There was a time I needed help in my business and I turned to someone who had appeared to do well in the past. But what you see on the outside isn’t always a true representation of what has happened out of sight. The short version of that story is that the end result for me was sour tasting fruit that was very bad for me.

One of the simple keys to wise living is to take advice from a wise person. It sounds so simple and yet not everyone is able to do this. I often say, “common sense is not that common.” The best thing you can choose to do is shun the advice of a fool, turn away from it and look to a different source for healthy fruit. A person will reveal whether they are wise or foolish by their words and their actions – you can see the difference clearly when you look closely.

I’ve found developing the discipline of self-assessment to be a valuable tool in determining a prosperous course for my life. As I review how things are going honestly I find that I can see the small errors of my ways and quickly correct them. This is something I do regularly to ensure I don’t get too far off track. But I also know that feedback is the breakfast of champions and so I seek input from my circle of wise counsel.

None of us are above taking advice and all of us should seek the wisdom of others to deepen our knowledge and strengthen our financial position. When we find a good tree to eat from we should enjoy what it offers.

Posted in Financial Education, Goal setting

That thing you need but don’t want

Insurance is one of those things most people just don’t like paying for. If you do have insurance, I bet it’s one of those things you hope you never need to use. But I’m certain it is the one thing you’re really glad you have when a need arises.

I had to use my insurance this past week and I can honestly say I’m glad I had the necessary cover to deal with the situation. A friend of mine defines insurance as “planned outcomes for unplanned events,” and that’s so true – this week I was able to arrange a specific solution to an event I certainly hadn’t planned.

When was the last time you carried out a complete assessment and review of your insurance solutions? This is a fundamental discipline of anyone who considers himself or herself wise when it comes to money matters. To choose to ignore or disregard this issue is completely foolish.

Insurance is a complex concept and the solutions offered and terms available are changing constantly. That means the insurance you may have organised many years ago that lies hidden in the bottom of a file may now be unsuitable for your current circumstances. Just because it appears as a regular payment on your bank statement doesn’t mean that it is up to date.

Where you go for advice and who you choose to complete your review is really important. Please don’t take recommendations from a sports star who is advertising cheap premiums on the side of a bus stop! There are regulations in place now to ensure registration and qualification of Financial Advisers so make sure you work with one who is professional, proficient and prepared.

As much as I urge you to organise a review now I’m fully aware that very few of you will do it. Let’s be real, that’s as exciting as booking a dental examination, (or some other invasive check-up!)

What if I told you a recent review of our insurance on a group of properties saved us over seventy dollars a month? Are you interested in saving a bunch of money each year?

What if I told you that the coverage on your house has changed without you realising it? Since the shocking earthquakes of 2010 and 2011 the insurance industry has had to rewrite the rulebook when it comes to covering your property. But if you haven’t reviewed your cover since then you may find you are not fully covered. Obviously, claim time is not the time you want to find you have insufficient levels of insurance cover.

This doesn’t have to be scary. There are simple insurance solutions that will help you to protect your loved ones from the significant financial impact of terminal illness, disability or death. You can arrange surgical cover in case of an unplanned health event or be able to repair a broken window in the back yard. Whatever the possible need, I urge you to review your circumstances.

Posted in Financial Education Tagged with:

Dealing with financial roadblocks

When you have a financial plan it’s great when you’re making progress. If you happen to come across a bump in the road you can usually handle it; if it’s a speed bump it may slow you down a little. If it’s a pothole you didn’t see, it may cause some discomfort, possibly a flat tyre, but it’s not the end of the journey. What do you do when the bump in the road is too big to navigate and is more like a financial roadblock?

I’ll tell you what I’ve tried on more than one occasion. I’ve bashed into the roadblock trying everything I can to force my way through. Some would say that is persistent, and that may be partly true. But usually it’s more likely to be pig-headed stubbornness and a refusal to accept the need for a change! When this happens pride is the biggest risk, which results in not seeing the situation as it really is and refusing to take stock based on circumstances

This may look like being turned down for a loan to buy a car, then responding with desperation by signing up with a loan shark at an outrageous interest rate. This may look like fighting too hard for a Trade Me auction and paying an excessive price for the TV of your dreams. It may include buying a house, getting a new job or making plans to go overseas. Sometimes things don’t go the way we hope they would and this means we have come across a roadblock.

Instead of bashing and crashing your way forward an alternate solution may be to pause and have a rethink. This may be a perfect opportunity to regroup, rethink and make decisions on how you can move around the obstacle that is causing you a problem. Quite often a roadblock is there for safety, to prevent an accident. Is it possible that you have inadvertently planned to go in a direction that will lead to a financial accident? And, if so, perhaps this roadblock is there to save you rather than hinder you. Have a think about that for a minute.

A final suggested response when you bump into a roadblock on your financial journey would be to change the destination. You are allowed to change your mind and shift your vision to a new destination. Perhaps the goals you had set your course to achieve are not the best for you any longer. For whatever reason this is it takes a wise person with inner strength to admit it’s best to change course. As I said earlier, pride is often the reason people write themselves off.

Do not let the possibility of a roadblock trick you into thinking that there’s no need to develop a plan. The person with no plan is one who will be tossed to and fro by life. The person with a plan has the determination to make life happen they best way they can, even when the roadblock appears. The person with a plan creates their success by design.

Posted in Financial Education, Goal setting

Why repeat behaviour that leads to failure?

Repeated positive behaviour creates positive disciplines that lead to positive results. While this sounds nice the opposite is also true. Negative behaviour that is repeated creates negative patterns that lead to negative results. Why repeat behaviour that leads to failure when it is possible to train yourself for success?

Do you know someone who seems to be a walking magnet for success? You know the type I mean, don’t you? It would appear that everything they touch turns to gold. That’s known as a ‘Midas Touch’. One definition of this phrase is “the ability to effect successful outcomes.” I would like to propose that it is possible for you to become someone who has the Midas Touch.

You can most definitely train yourself to be successful. As part of what I do as a coach and mentor I get to see people train themselves to be successful on purpose all the time. But I also get to see this as a Dad to two amazing kids. My greatest joy as a parent is seeing my kids achieve their goals, and here we find the key for you.

Financial Goals are how you can get ahead, regardless of your income level. By applying focus and effort to a desired achievement you can prove to yourself that it is possible for you to be successful. Start small and learn what it feels like to be a winner. Then grow your targets and set higher goals. You’ll rise to meet the challenge and find higher levels of success. You’ll also find that your success becomes self-perpetuating as it grows momentum.

The truth is I have seen people from all walks of life achieve great things by harnessing the power of financial goals; including students, truck drivers, chefs, beneficiaries, CEO’s… the list is endless. If it’s possible for them, why not you?

I was asked recently if it is possible to attract success. I went out on a limb and answered, “Yes”. The audience then asked “How?” and I’m happy to share the answer with you also.

You attract financial success by becoming someone who has both the capability to pursue and the capacity to carry the things you desire. Cultivating your capability is simply developing who you are so that you have stronger skills and resilience to last the journey. The path to success is never easy and will require inner strength and bigger muscles than you have had in the past. Consider it possible that you don’t have all the right answers and seek wisdom from those who are further down the road to success than you are.

Maturing your capacity is about becoming a bigger person on the inside. This means leaving behind the old ways of thinking that tied you to your past failures and believing you are worthy of more than you have today. Put aside self-deprecation and adopt a healthy self-worth and you’ll be on the path to becoming a winner with a Midas Touch.

Posted in Financial Education, Goal setting

Steady Tortoise or Worn-Out Hare?

tortoise-hare-1-300x173The story of the tortoise and the hare is one of Aesop’s fables that can be simply summed up in the phrase “slow and steady wins the race”. When it comes to your financial journey towards retirement I’d like to point out that completing the race is more of a concern than striving to beat everyone else. If you’re one of the 87.5% of our population who reach retirement age you can choose whether you arrive well prepared or worn out.

Consider your own financial circumstances and complete a quick self-assessment. How much energy are you committing to long-term financial goals, like retirement? It is my observation from working with families all over New Zealand that most put all their effort into the goal that is immediately in front of them, with little focus on the longer term. (That is, if they focus on goals at all!

If you are the type of person who sets their sights on the next target and concentrates all available resources to its achievement then you are most like the hare in Aesop’s fable. You will sprint to your goal and reach it quicker than most. Tired from running, you will rest a while until you have the energy to sprint towards your next target. You tend to set your goals based on what you can achieve in the short term.

The other type of saver takes the tortoise approach and slowly and carefully takes diligent steps towards the destination, knowing with confidence they will get there on time. It is quite possible the tortoise has time to enjoy the journey along the way, as they are not expending all of their energy in the running of the race. Long-term vision is the strength of the tortoise.

The fable of the tortoise and the hare highlights the weakness of the speedy hare. His pace and early success created false confidence that became his downfall.

It is my opinion that positive, constructive discipline over a long and sustained period of time will yield greater results – without exception. How do you do this? Set long-term goals for retirement now and start the simple actions that will build sustained disciplines in your financial behaviour. Set long-term goals for debt repayment and action them; reducing the term of your mortgage is the simplest way to do this and, once it’s set up, you can be confident you are on track to achieve your target. Consider setting long-term goals to launch the next generation – think “legacy”!

The contrast between the tortoise and the hare comes down to design. The hare is designed for speed and is so focused on their pace they don’t care to enjoy the scenery along the way. The tortoise moves slowly with no desire to rush, happy to enjoy the journey.

The speedy hare has no time to stop to chat with anyone. The steady tortoise is moving slow enough to connect with those around them. Which would you prefer?

Posted in Financial Education, Goal setting

Stop Robbing Peter to Pay Paul

For most people money is a finite resource, which means there’s only so much money to go around. When this is your reality the biggest challenge you have is how to allocate the funds you have to cover all your spending. That is, of course, unless you’re like a few of my friends who seem to have a money tree…

Many households and businesses spend laborious hours pouring over their bills and juggling how much they owe in order to try and reallocate money to keep people happy. In this midst of this financial conjuring they often use slight of hand to rob Peter to pay Paul. What does this look like – taking money that was intended for a specific purpose to redirect it somewhere else. This is quite simply solving a problem in a way that makes another problem worse. The result is two headaches instead of one.

It’s believed the old saying “rob Peter to pay Paul” comes from pointless avoidance of the payment of taxes. Why pointless? Any avoidance of tax quickly catches up with you! As you may possibly relate, your avoidance of several bills in preference for others has consequences; the neglected party is never silent.

The cause of this problem is deeply rooted in deception. Just as telling lies leads to more lies, distortion of the truth to fabricate financial stability is forgery that pays ill dividends.

I’ve found in my own life that avoiding the truth (defined by reality) leads me to a place I refer to as ‘La-La Land’. This is a world where nothing I do ever makes sense, one bad decision leads to another, but most seriously, consequences escalate from bad to worse, often ending up at ugly. ‘La-La Land’ is a place where you think you can survive outside of normal operating principles, you think you’re above the rules everyone else has to play by and you deceive yourself that you are in control. Truth be told, when you’re in this space you’re riding a snowball down a steep slope picking up speed and heading towards a collision that will cause seismic tremors which will be felt far and wide.

If you’re living in ‘La-La Land’ you’ve got to get out of there as soon as you can. The longer you stay there the worse the consequences will be and the longer they will last.

To exit ‘La-La Land’ you have to face the honest truth. You need to be real about your circumstances and face up to the fiction. Take stock of your situation and get help to adjust your behaviour. Once behaviour is adjusted you’ll find yourself on a different path.

When you fudge numbers to rob Peter you’re only robbing yourself. A poorly prepared plan will lead you to frustration, broken dreams and endless disappointment. A carefully prepared plan that’s got sensible boundaries will allow you to pay both Peter and Paul, keeping everybody happy. Most importantly, you’ll feel like you have a money tree of your own.

Posted in Financial Education, Goal setting

Let Your Kids Spend Your Money

Many, many years ago one of my favourite things to do was run errands for my mum or my dad. They would often ask me to “hop on my bike” and fetch something from the local corner dairy. Sometimes it was a bottle of milk with a bonus of a bag of lollies. Other times it might have been fish and chips and a bottle of tomato sauce. Regularly, I was sent to buy a couple of packs of cigarettes! I know what you’re thinking, but in the old days that was a helpful thing to do for your parents. Actually, it was helpful for me, too.

You see, I meet a lot of young adults these days who are retarded when it comes to spending money. Before you get offended or defensive… by that I mean they are less advanced in their development than they should be. Most young adults these days have not had the privilege of buying their dad cigarettes so have never been trusted to spend money in line with instructions. How can they learn to be wise with their own money when they have never been trusted with someone else’s money?

I’m a big believer in teaching children from a young age to learn safe behaviour within safe boundaries that are relevant for their age and maturity. That could look like spending ten bucks at the store to help mum out. What’s the worst that could happen in this scenario? Maybe mum loses her ten bucks and the child gains a fantastic lesson in consequences. The total cost for this lesson would be ten bucks. But what if that child has to wait until they have to make a decision about how to spend five hundred dollars? The consequences are so much greater and the risk so much higher if there’s never been any opportunity to learn how to spend money wisely during formative years.

Sending kids on a trip to the supermarket with a shopping list is a fantastic way to help begin this learning process. (Make sure you don’t give them the credit card, though!) What about everyone being involved in planning a family holiday and all costs associated with the trip? As children get older you can involve them in the search for a new car and the costs involved in buying this kind of asset. Recently we involved our teenagers in the process of purchasing a property. Whilst they weren’t the ones making the final decision (this time) they were certainly included in the discussions about all the factors of our decision making process, including costs.

As their guides in life we have the greatest opportunity to build into our kids sound models for making choices when it comes to spending money wisely.

Let’s not allow our children to grow into babies in big bodies, rather, let’s develop healthy young adults who have learned how to make wise financial decisions in the freedom they have gained.

Posted in Family, Financial Education