“What’s it like to work with a financial planner?”
It’s a question I get asked all the time. When most people think about a stereotypical “financial planner”, they tend to immediately think of an investment manager. The conversations focus solely on investment management strategies, how to “beat the market”, and sometimes life insurance sales.
While any good financial planner will touch on investments and insurance as part of a comprehensive financial strategy, this isn’t what working with a (good) financial planner is like, at all.
How do I describe what I do as a financial planner? Quite simply: I work with my clients and their finances the same way a personal trainer works with someone at the gym. While we work with different subject areas – trust me, you don’t want me giving you physical fitness advice – personal training and financial planning have the same three key job requirements:
Help you get clarity on what you want to achieve. In the gym (and in everyday life), it is important to define exactly what you are looking to get out of the experience. One of the most important steps in creating a financial plan is taking a step back to reflect on what’s most important to you in your life, and defining specific financial goals to help you realize that vision. A personal trainer can’t help you improve your race time unless he or she knows whether you’re trying to run a 3k or a marathon. The same applies to your finances!
Develop and implement an effective way to get from Point A to Point B. Just like with physical growth, this process is different for everyone. It is important to ensure that the methods you establish to help you save money, pay off debt, or make other financial changes are effective for your life in a way you can consistently stick to. It’s vital to follow the most efficient path from where your finances are now to where you want them to be in the future.
Hold you accountable to your best intentions. This is the tactic I find MOST important, as I see it to be the biggest deal-breaker in whether or not you find success in the financial plans you make. Individuals who invest in personal trainers at the gym often see more consistent and continued progress than those who do not. Why? Because they make a commitment to the personal trainer that they will show up to the gym regularly, and because the trainer will be able to tell if they haven’t been making progress. I want to spark that same level of motivation in my clients when it comes to financial responsibility. I do what I do because I want to make sure that they show up for themselves and can move things forward at the pace they want to see.
If you want to learn more about the benefits of having a financial “personal trainer” and how I can help you get on track with your financial goals, contact me and we can set up a free introductory phone call!
Now, in order to stay true to my word and hold you accountable, I’ve got to ask…
How are your New Year’s Resolutions going?
If they’re still going strong, congratulations! It is not an easy feat, and you’re one of the few who have successfully carried their New Year’s transformations beyond January. But if you are like most people, your resolutions probably haven’t been top of mind for a few weeks now. In this post, we talk about why New Year’s Resolutions, particularly financial ones, do not work for most people and what you can do to make sure you actually make financial progress in 2019.
Why Most New Year’s Resolutions Fail
Statistically, over 75% of people give up on their New Year’s Resolutions by February 1 — and that is for ALL resolutions. Resolutions specifically relating to money are often the hardest ones to keep. Aspiring to make improvements to your financial situation is a great goal, but unfortunately New Year’s resolutions are typically an ineffective way of doing so. Why?
Financially, January (and December) tend to be the toughest months of the year.
Coming out of the holiday season, many individuals are stuck with large bills to pay from all of their gift-giving and travelling. If you can relate to this feeling, know that this is 100% normal. But if you start preparing now, next year can be much more manageable! Starting to make changes in your finances before you’ve paid off your holiday credit card bill can be disheartening. What’s more demoralizing than starting new financial habits, making some improvements, and then logging into the computer later that month to pay a massive credit card bill? You’re much more likely to stick to a goal if you can see a few “quick wins” early on.
To add to that, if we simply look at basic human psychology, we see that people tend to stress over financial losses much more than celebrating gains. Case in point: when I talk to clients about their investments, they often quote investment gains as a percentage – “My account is up 6% this month” – and they quote discussions about investment losses in dollars – “My account is down $600 this month”. The reason? The losses feel more real to us. Psychology tells us that we often need to gain $2 to emotionally recover from a $1 loss. Because of this, those post-holiday spending bills can make it harder to see the positive progress and can dampen the motivation to continue towards your goal.
January 1 is really just another random date.
If we look at it logistically, there is no difference between January 1 and any other date on the calendar. We often feel more motivated to makes changes at the beginning of the year because we feel like we are “supposed” to, but this self-motivation doesn’t last. Once a few days go by, we often lose the motivation brought on by the start of the calendar year, and January 7th feels more like December 7th than January 1st. At the end of the day, your self-motivation to make changes at the New Year is probably the same as at any other point in time.. There’s nothing wrong with starting on New Years if you’re ready, but if you’re not, don’t feel pressured to!
January is a difficult month in general
In the days and weeks following New Years, many people are still coming off of their “holiday high” of time spent celebrating and relaxing. Getting back into work and the stresses of regular life can often put a strain on individuals that greatly decreases the motivation to stick to resolutions. Lots of people tend to cave and give in to guilty pleasures (I can’t say I haven’t done this as well), which can throw you off track or cause you to stop altogether.
How to Set Financial Goals that Actually Work
Because of these things, many people procrastinate, become frustrated, or completely give up on their financial resolutions by this time of the year. However, this doesn’t have to be the case! Here are some strategies to set financial goals that actually stick.
- Set your goals NOW. The beginning of the year (or month, or week) is an arbitrary start time. Why wait when you can act on your best intentions now?
- Be specific. Understand what is really important to you, and why. When speaking to clients about this, I love to dive deep into the “why” behind the changes they want to make; it exposes the motivations and can create a driving force for that individual. Once you think you’ve figured it out, ask yourself “why” one more time. You might be surprised and what you’ll learn about yourself. Ultimately, this is important because the reasons behind the goals you set will be what compels you to stick with them. “Self-motivation” doesn’t always work in the long term, but focusing on why you want to make a change works incredibly well.
- Break down your goal into small, manageable steps (and focus on the first step!) For example, if your goal is to buy a home, break it down into subgoals: figure out how much you can afford, review credit reports, talk to multiple mortgage lenders, etc. By doing this you can create a timeline that is actually doable; and not only that, but by focusing on one small step at a time, you can make a daunting challenge seem much more manageable. Simply focusing on the first step along the way makes your goal much more realistically achievable and can get you excited about tackling that task.
- Set SHORT deadlines. After you break down your goal into steps, set deadlines that encourage you to act now! Whether that be a week or a month (no more than that), setting short deadlines will keep you focused on the task at hand and actually accomplish what you have set out to do. Oftentimes, setting a deadline too far in the future, or not setting one at all, can lead to procrastination and avoidance. And when that happens, you’re back to facing the same problem you had when you set your New Year’s Resolution.
The Biggest Motivator
All these steps will help, but perhaps the biggest piece of advice for those of you out there struggling to stick to your financial goals is to find an accountability partner.
Whether that be a friend, family member, or coworker, having someone else to check in on you consistently and ensure you’re on track is the best way to keep motivated. Remember, while some people have a lot of success keeping up an exercise program on their own, it’s the people who hire personal trainers who see the best results. Part of this has to do with the plan they help you develop, but personal trainers keep you accountable and make sure you’re doing the work week in and week out.
The same is true for finances. I am here to help guide, support, and keep you on track – but it doesn’t necessarily need to be a planner, either. Our friends, coworkers, and family members can be great accountability partners as well. Now go find that person in your life, and set your goals together!
If you would like help refining and setting your goals to start NOW, and getting started on making real changes today, I am more than happy to set up a free introductory call with you. If you’ve already got a few, let me know what your goals are in the comments below!