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Financial Planner Radio Middle Class

Written by John D. Buerger, CFP®.

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Check out the Wealth Coach on the Radio!

Air Date 04-15-2014 - Help for the Middle Class

John D. Buerger, CFP, MSFS, Financial Planner and Wealth Coach appeared on the Dave Congalton Show on April 15, 2014 to discuss the economy, the plight of the middle class and what you can do to improve your wealth health regardless of your income.

Segment 1 - Introduction / The Economy and Middle Class Debt
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Segment 2 - Best Practices for Better Wealth Health
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Segment 3 - Calls - Listeners Offer Their Ideas on What to Do
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Segment 4 - Final Thoughts - Be More Mindful, Accepting, Intentional and Strategic
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What's Your Money Story?

Written by John D. Buerger, CFP®.

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John Buerger

What's your money story?

Spring is here and with it (at least around my house) come several weeks of what I call "garden recapture" - taking back what the winter rains, the cold and the weeds have taken over. That means carving out dozens of hours to engage in tedious, mindless, back-breaking work (not to mention being tired and sore the next morning when I crawl out of bed).

I wouldn't do this day in and day out (nobody in their right mind would inflict that kind of pain on themselves) if it weren't for the "story" I tell myself about it.

THE STORY

For me, Garden Recapture is part therapy and partly an investment.

How can something so painful be therapy? Good question. If my 25-year-old self were to look at my today self (suffice it to say I'm a few years older now), he would think I've completely lost it.

Overall, I DO feel better, though - more alive, less on edge and more balanced. The investment piece is realized in the summer and fall as fresh-picked veggies stack up on the counter and I can sit outside and take in the fragrance and beauty of carefully cultivated flowers and herbs. By then, those creaky, painful mornings are long forgotten.

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IT'S EMOTIONAL

In a recent post Joe Boyd, founder of Rebel Pilgrim Productions, points out:

"There is no such thing as a decision purely based in logic. Those who think so are just emotionally attached to being logical. So if you want someone to take action... you have to create an emotion."

Emotions are most easily stirred with a story.

MONEY IS EMOTIONAL, TOO

The same thing applies to your money.

If you frame your spending decisions with a good story - aligned with what's most important to you, you will accomplish more with the same amount of cash flow as anyone who uses the more traditional techniques of pain, sacrifice and self-discipline (a budget).

The end result will be a better quality of life just as my Garden Recapture efforts now lead to a kitchen counter abundantly covered with fresh veggies and the tranquility of sitting in the garden this summer.

WHAT'S YOUR STORY?

The case with your money is even easier, though.

Paying attention to your cash flow and spending every day (one of the BASICS of good wealth health) isn't even painful when you do it right (by thinking in terms of substitution rather than sacrifice). It's mindful, not mindless. It isn't tedious and you won't wake up sore and tired tomorrow.

Most of the financial issues people have come from the money story they are currently telling themselves. That story is often focused on scarcity ("I only have an income of $X but I want $YYY."), sacrifice ("I can't have what I want.") and self-discipline ("I need to use willpower to resist having what I want.").

Change that story ... and you will change all your financial decisions for the better.

When it comes to your money ... what's YOUR story?

John

We have the tools you can use to change your story and get control over your money.
Learn more. Schedule a Free, no-obligation 20-minute consult today!

Call 805-476-0333 or use the "Book Appointment Now" tab on the bottom right of your screen.

Doing It Wrong

Written by John D. Buerger, CFP®.

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John Buerger

"If you're spending all your time scrubbing corners with a toothbrush, you're kind of missing the point." ~ Sandra Lee

We've been doing it all wrong.

A cursory look at personal finances in America is all you need to understand that most people still struggle with managing their money. Low savings rates, massive debt, excess consumerism, folks working past age 70 because they have to in order to pay their basic bills; these are all telltale signs of a fundamental problem.

Some folks believe that we just need to teach financial literacy and that will fix the problem ... but financial literacy training is ineffective (at best). James Kwak calls it a fallacy. I'd tend to agree. Just because you know what's "right" and it makes sense doesn't mean you'll actually do the "right" thing.

MORE DISCIPLINE?

Many others come from the camp that believes that folks just need to suck it up, create a budget, make sacrifices and start saving (a lot of) money. "Do it because you have to. There is no other way."

These are good ideas in theory, but in practice they are problematic for most people because the human brain is wired to seek pleasure and avoid pain in the here and now. Budgets are like diets. They almost always fail because they involve pain, sacrifice and self discipline - none of which are attributes that are attractive to that part of your brain making almost all of your financial decisions.

It's trying to AVOID pain, not have more of it.

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POOR PLANNING

Financial planning as a profession has tried to address this issue, but we're doing it all wrong, too. 

Financial planners are by nature analytical, linear thinkers. We are trained to look at problems rationally and strategically. We have learned the best way to address every financial issue you can imagine (and I've seen a lot of them in my 12 years as a planner). 

But we can only make suggestions. In the end, you (the client) and only you must follow through and take action. You make dozens if not hundreds of financial choices every day. Without a serious shift in HOW you frame those decisions and your basic subconscious habits around money ... you're going to keep on doing the same things that got you into trouble in the first place, whether or not those were the "right" things to do.

Is it any wonder that most folks don't work with a real financial planner. The process feels a lot like going to the dentist. More pain.

INEFFECTIVE TOOLS

Even the most basic of personal finance management (PFM) tools are built on a mis-guided foundation.

The most important feature of a PFM tool is that be used every day. Again, you make dozens if not hundreds of financial decisions every day. The tool you are using to guide those decisions should also be front and center in your mind every day.

From our own experience with a PFM tool that we released two years ago (the Cash Flow Hydrant), the vast majority of users that signed up did not continue to access it after the first few days: 10% are currently "active" and only 3% check in on close to a daily basis. I can't confirm it with a link but I've heard the same story of lackluster engagement with all the PFM tools out there, including the big daddy of them all - mint.com.

A DIFFERENT APPROACH

For most people, these tools don't work because they are based on traditional budgets ... and budgets don't work well for most people because they start with pain, sacrifice and self-discipline.

Interaction with the tools can be improved through gamification - making them more fun to use. This needs to be done but even there, the basic construct - what I call the "framework" - behind what you're doing with your money has to change in order for you to get different results.

Getting control over your money SHOULD BE about getting control over your money, not focused on what you have to give up. Being in control feels good. It is empowering. What little pain might be a part of that process is overshadowed by the positives. Control only happens, though, when there isn't fear in looking at the numbers / raw data. 

MINDFUL AND ACCEPTING

The most important and toughest hurdle is to change how you think about your money choices.

That starts with clearly understanding your current situation - what I call "Being Mindful." As Peter Drucker said, “What gets measured, gets managed.” The corrolary to that is you cannot manage what is not measured. Measuring your current situation is part of the role of the Personal Financial Management (PFM) tool ... and frankly, it only will work if you use it every day.

The second part is to be "Accepting" of your situation. Those spending decisions you made yesterday weren't "bad" and they weren't "good," they just were spending decisions. You CAN always improve upon them no matter how good they were and it is that mindset that will start you on the path of improving your Wealth Health.

If you can't be both Mindful and Accepting with your money, all the strategic thinking and self-disciplined, consistent intentions will more than likely wind up leaving you exactly where you find yourself today.

I think we're all better than that.

John

We are working on a new version of our Cash Flow Hydrant tool - contact me today if you're interested in learning more.

Schedule a Free, no-obligation 20-minute consult today!
Call 805-476-0333 or use the "Book Appointment Now" tab on the bottom right of your screen.

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