Nike has perhaps its greatest campaign ever running right now. It’s the one where several women are embarking on their individual fitness journeys for the first time, and they’re each experiencing that beginning stage of getting started – the dreaded “climb”.
What is the climb you ask? It’s that first step that you take on the treadmill, the wobbly tree pose you do in your first yoga class, or the first mile that you complete in that marathon that looks and feels so overwhelming, it makes you want to quit before you even really begin. Everybody hates the “climb”, because let’s face it, it’s hard. It’s unfamiliar ground and your body is just not use to toning those specific muscles yet. But the more you stay dedicated to your goal, the easier the exercises get, and you will begin to feel better.
The same is true about personal finance. I encounter essentially two kinds of people when I introduce myself as a financial professional. The first is the person who leans in, perks up and is ready to talk “finance” with me without becoming intimidated. They’ve already started they’re own financial fitness journey, or they’re at least thinking about it.
Then there is the other person. The one whose eyes immediately become downcast, or they step away and grow oddly uncomfortable because they know that, like the gym, they need to be doing more regular workouts with their financial portfolios. They know that they need to become more financially fit, but they’re terrified of the “climb”.
Like most fitness routines, there truly isn’t anything to fear. We hate the pain, or that “burn” we may feel when we know that our muscles are being exercised in new ways, but ultimately we always feel much better when we are able to fit into that little black dress, do everyday tasks without feeling run down too quickly, or basically feel whatever health benefit we were targeting when we started. In the end, we are ultimately better for having gotten started and staying the course.
So why not take a similar approach with your personal finances? As opposed to wishing that we had emergency cash when a crisis hits or disposable funds to take a vacation, let’s consider viewing our journey to financial wealth like starting a new fitness routine with our own specific wealth goals in mind. We need to ask ourselves what tools, routines, and support we need to put in place in order to achieve financial success.
Financial success involves setting clear goals, identifying the routines that you will need to implement to help you accomplish your goals, enlisting the right support, and staying the course during the climb and through the burn while staying focused on the end goal.
First and foremost, it’s about mindset. You have to make a conscious decision to begin. For many, those first few stages can be challenging because you don’t know what to expect, or if it will even work. It is new territory for you when you start changing your habits and implementing new disciplines. But, what most people don’t realize is that moving at a moderate pace, facing your transition in phases, and staying the course will eventually get you to your end goal. You’ll feel so good in the end because, ultimately, not having to worry about money only adds to your peace of mind and your mental health overall. In fact, for those who are unsure about where and how to start when getting your financial portfolios and routines together, begin with the simplest adjustments that don’t insight massive change to your current routine, and therefore, your sense of comfort. Establish your goal, break it down into manageable steps, implement them in a way and at a pace that’s comfortable for you, and stay committed to your plan. This will prove rewarding in the end. If you still need support in understanding what that should look like then seek the help of a professional, but no matter what – the first step is to get started.
When we hear financial advisors and other financial professionals talk about retirement, it can be daunting. You may feel like you’re not in a position to save, or that you’re not knowledgeable when it comes to the market. If you’re just out of college, getting the right job and finding your own apartment are usually top of mind. So while planning for retirement should absolutely be something that you keep on your short list, think about planning for your one, three, or five-year goal.
When beginning your financial “workout”, you must first identify what you want to accomplish specifically. Even though the bigger picture means that you will attain overall security, you can begin with a short term goal such as, saving for an upcoming event like a wedding or a trip, planning to make your first big purchase like your own home, or go on a really fun shopping spree.
If you identify your purpose, which truly reflects who you are, your wants, needs, habits and other lifestyle choices, then you’re on the right track.
Look at your daily spending. These are the things that you do with your money every day to meet your daily and weekly needs. Start paying attention to what you’re doing with your money on a daily basis. Many financial professionals recommend keeping a spending journal, which is an excellent idea. When you see exactly what you’re doing written down on paper, you become more conscious about it and it often causes you to implement more strategic thinking before you make that next purchase.
Above all else, I strongly believe that even with note pad in hand, a critical next step toward financial fitness is to create a working budget. A budget will help you map out exactly what you’re bringing in on a monthly basis and match it against what’s going out. You’d be surprised when you actually see where the bulk of your money is going, and how much easier it becomes to re-direct it and save.
Working with people one on one and listening to their fears has definitely shown me that many people see the process of getting their finances in order as a life transforming event that they can’t begin to wrap their heads around. Only the strong survive.
However, I’m happy to reassure you that this doesn’t have to be the case at all. Altering your financial routine is in fact life changing, but the process of going through that change is very manageable. The first step is to open several accounts that will serve different purposes. Of these accounts, have a main checking to pay your monthly bills, and where it’s possible, set up automatic bill payments. In addition, establish a separate savings account and have a portion of your income from your monthly or bi-weekly check sweep automatically to your savings. This way, you’re relieved of the responsibility of doing it yourself. Likewise, brokerage accounts can often be set up to receive funds automatically from outside accounts. Moving comfortable amounts of cash into a brokerage account each month is a productive way to start investing and building wealth, as opposed to waiting until you come into a hefty lump sum of money. Let’s face it – the latter can be just as productive as waiting for your numbers to hit in the lottery.
This will also help you avoid that frustrating conversation that you have with yourself when you know that you should be putting more money away into your savings or investments as opposed making that unnecessary purchase on Gilt.com. Your money is being allocated automatically, and you don’t even think about it after awhile. The net deposit is what you actually learn to live off of, and you’d be so surprised to learn what you realistically need to live off of most times. I often encourage a lot of my clients to open a “recreational” account. This way, when they’re ready to do something fun they can see what’s in there and not worry about deducting funds from money that’s meant to be used for other purposes.
This brings us to investing. By far, the most fear that I witness on people’s faces comes when the conversation pivots to the market and investing. We know that the market can be a volatile environment, but it has also served to be very beneficial for those who have participated in investment vehicles that match their risk tolerance and investment objectives. The bottom line is that your money has a better opportunity to benefit from the power of compounding when it’s appropriately invested, as opposed to sitting as cash in your bank account. There are, in fact, a host of benefits that the right investment strategy can potentially reward you with, including tax advantages, but you have to do your due diligence and seek the right sources of guidance.
Much like having a personal trainer, having a financial professional, such as an advisor, to educate and guide you on the investment products that best suite your personal risk tolerance, as well as short and long-term goals, will be highly beneficial. A good advisor should be coaching and equipping you with the appropriate tools to manage your risk in order to improve your prospects for success.
In the end, the objective is to start sooner than later, set a goal, and stay as consistently engaged in your investment strategy as you can possibly be. There are also many online resources and tools that create good platforms for learning about investing. Ultimately, find an advisor to work with, who will provide consistent guidance about the market and the products that they recommend for you, in order to avoid the knee jerk tendency to pull out should things become a little unsteady.
Stay The Course
No person on a workout regime reaps the benefits of their work by quitting too soon. Likewise with your finances, I encourage you to stay the course. These initial life-altering habits will eventually start to reveal their positive future benefits. For example, automating your bill payments can reduce your debt and positively impact your credit score, as well as, your purchasing power. Continue to reduce stress by putting a little more toward those outstanding balances if you can, and pay the smaller balances off completely sooner than later.
Start investing and seek the right support in order to make the most strategic decisions that best reflect your goals and risk tolerance. Contribute regularly into your investment accounts and ensure that you’re well diversified. Above all else, seek professional guidance from an advisor you feel comfortable with and trust. They should be designing strategies and making recommendations based on your life objectives, and what they know you can tolerate in order to help you manage risk.
For many people, it often feels overwhelming to get started with their personal financial strategies. That beginning stage can feel very similar to the initial climb that we all find so hard, when starting a fitness routine. However, like a great fitness plan, the potential life changing benefits are just too great to not get started at all. And if I may share in the words of Nike’s campaign – you will most definitely be much better for it in the end!