Buried Emotions around Money were Revealed When…

Because I often host money workshops, I do not have the experience that my workshop attendees (mostly intergenerational members of families) have. It was a delight to be able to participate in a workshop hosted by a therapist.

 

In this money workshop, we all pretended to be a family. Although none of us were related, it did not take long for emotional dynamics to come into play between us.  

 

The first direction was to take the bills out of our wallets and give these bills to the host. Immediately questions of trust were unearthed. Would the money be returned? Should I hold back any bills? Who cares, it’s just money, right? were just some of the dynamics that came up.

 

Next, the host asked for a volunteer to count the money the host was holding. That brought comments like: “How can we trust the counter?” “Are they going to keep the money?” “Can I count the money too to be sure they counted it correctly?”

 

Next, the host asked for a volunteer to divide the pile of money into seven uneven piles (matching the number of participants.) The host then picked up a pile, gave it to the first person, picked up the next, gave it to the second person and continued to distribute the piles like this until all the piles were distributed.  As you can imagine, this created quite a stream of comments as some felt short changed while others felt like they got a good deal from the initial amount they had given the host. One person felt like a weight had been taken off his shoulders as the pile he got was more than what he had borrowed from another player to give to the host (he did not have any bills in his wallet.) One person left the game frustrated that this was “going nowhere. You’re just moving money here and some of it was my money that I no longer have.”

 

The host then told us to put any money that we had above the smallest amount a player had in their hand, in a pile on the floor. Each participant now had the same amount of money in their possession. Tension turned to relief and awkward laughter.

 

The host asked everyone to talk about their favorite charities which we did, one at a time. The host then had us talk about what should be done with the money in the pile on the floor. Should it be returned to the participants or should it be given to one of the charities mentioned by us? We had seven minutes to reach consensus. We did not reach consensus. The host then had everyone pick a number from a hat. He called out a number and the person holding that number was identified. The host then told us we had another five minutes to reach a consensus about what to do with that money or it would go to the person holding the number he called. Still no consensus so the host gave the money in the middle of the floor to the person whose number he had announced.

 

Two people were okay with the outcome; two people were outraged that their money had been “taken from them”; one person asked what the person who was awarded the money was going to do with their new money? The person with the money said they would either give it to the charity they had defended or they would return it to each participant so they could be made whole. But the group had to come to a consensus on which choice to make. The decision was to give it to the organization that the person holding the money had talked about.

 

We then debriefed on the exercise, paying close attention to the emotions we exhibited and the feelings we had during the various sections of the money exercise. I found myself noting reactive behaviors triggered by feelings I had as a child around money.

 

Money exercises are a wonderful way to experience beliefs and emotions around money. You can identify patterns of behaviors that are unproductive and introduce new patterns of behaviors that encourage productive habits and behaviors around your money. Often, we hide and bury these feelings but they can come up in the oddest places.  

 

If you would like to explore a money exercise with your family or group, let me know. I would be delighted to develop a money workshop for you.

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Consumer Debt Gnaws at the Fabric of Freedom and Self-Worth

Debt is back, big time. The tightening that occurred after the crash of 2008 has been replaced by debt approaching $1 trillion dollars. And it shows no signs of abating.

 

Student loans and credit cards may be good for the issuers who capture more revenue through high interest loans and late fees but they are creating a pool of consumers sinking deeper and deeper into debt.

 

Credit card debt has already surpassed the pre-2008 crash levels, per WalletHub. Thirty-four billion dollars was added to credit cards in the last quarter of 2016 alone WalletHub found. To add to that increase, in the same period there was a record low payback of debt.

 

In my conversations with Millennials, I hear a range of concern about their debt. Some do all they can to avoid debt by delaying college until they can afford to pay for it or work for companies that will pay for their college education. I know one Millennial who has $300,000 in student loans. She told me that it is the price she has had to pay to attain her law degree. Although the debt does add stress to her life, she does not want it to confine her life to just working. She figures she will have this debt all her life and hopes that the government will one day forgive it.  

 

What have we done, where we have created a society saddled with debt as a way of life? Is this a sustainable model? I do not think so. It may seem to work for a generation but it is not a sustainable model for financial strength. Ongoing and mounting debt gnaws at the edges of the fabric of freedom, independence and self-worth. Debt is a burden. It may not direct all our actions but it directs our thoughts on how we think of ourselves.

 

Tell me your thoughts and how you deal with debt in your own life. I would love to hear your thoughts on this mighty subject.

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Statistics Show We are not Raising Financially Literate Kids

Kids, ages 10-14 scored a 54%, ages 15-18 scored a 60% on a 30 question national financial literacy test. This test measured their ability to save, earn and grow money.

 

Kids have access to money but do they understand how to use money? According to this financial literacy test, no. Of course, they know how to spend but can they count the change they have received? Is it the correct amount?  Next time you have a transaction where you give a $20 bill for an item costing less than $10 watch the change making ability of the cashier. How easy or hard is it for your child to determine if the cashier gave them right change when the register does not tell them what the correct change should be?

 

Do kids check their receipts to make sure they were charged correctly?  Research conducted in 2012 by uSwitch found that 70% of consumers were overcharged on a bill in the last year…and did not know it until it was pointed out to them.

 

Just how familiar are kids with making change, with being charged correctly, or with being overcharged? When they see these habits in adults who show them how to model behaviors, it is easier for them to do the same. When kids do not see a model to imitate, checking receipts or counting change can be embarrassing. They feel uncomfortable not trusting or believing the cashier. They have not been taught how to properly deal with this.

 

It’s time to teach kids about money. After all they use it every day and checking their receipts and counting their change is a good habit to learn. You might even decide to reward them for discrepancies they find.  This will go a long way to raising health financially literate kids.

 

Leave a comment and tell me what you do to encourage and build your kids’ healthy money habits? Let me know if you need help with this endeavor. We can help.

Sometimes a Quote Can Say It All

I was reading some quotes I have and wanted to share with you a few of the money quotes. I find them to be thought provoking. I offer them to you in the same spirit in which I have read them:

 

Money, it takes a lifetime to build it, an instant to lose it. What are you doing to safeguard your money?

 

Money, it is easier to make money than it is to keep it. With the marketing machine constantly reaching out to us, we have to know the purpose of our money or we will most likely part with it too easily.

 

The secret to money is knowing what yours is for. Yes, yes and yes to this one! You make good choices because of the heroes, models, mentors and experiences who guide your thinking in the proper way. Who are your money and financial role models?

 

Money without meaning is like candy without a wrapper. It’s too easy to devour without restraint.

 

This year, money and I will be friends, and not part company as easily and as often as last year. Put the processes in place and use the tools to make this so. Measure your behaviors so you can tweak your progress.

 

Let me know which quote resonates with you. If you have another money quote you like, let me know that too.

Pay Yourself Second, You Will Come Out Ahead

Everywhere you go there seems to be a line whether you are buying your coffee or tea, getting through airport security, waiting for a table at a restaurant, there is always a line.

 

It may not be as visible, but your money has a line forming for it also. Who is always first in line for it? Why, your favorite uncle, Uncle Sam. Uncle Sam demands to get paid and does what he can to stay #1 in line for his portion. Taxes always come out first in a financial transaction. Uncle Sam demands immediate compensation from a deal. But who is second in line for your money?

 

It depends. For many it is the merchant like the grocery or retail store. For some it is the account that you have agreed to pay second like a settlement, alimony, or a collection payout. I want you to reconsider who should be second in line and if this person is not already there, I want you to put them second in line.

 

I want you to place yourself second in line, after that demanding Uncle.  I want you to be as adamant about being second as Uncle Sam is about being first in line.  And be as adamant about that as Uncle Sam is about being first. I want you to take your position seriously and responsibly by having a plan and manifesting that plan so the money you have for yourself builds and supports the life you want.

 

Think of the 5 S.I.D.E.S. of Money© and determine how you are going to allocate the money you will have by paying yourself second to Saving, Investing, Donating, Earning, and Spending. When the money comes you then are ready to allocate it as you planned to those five S.I.D.E.S. of your financial life.

 

Be fanatical about putting money into those 5 S.I.D.E.S every time you have money pass through your hands-without exception and you will become a steward of your own money. You will come out ahead.

 

Leave a comment on how you make sure you pay yourself second.

The Financial Crisis…in my Head or Did the Alarm Go Off and I Didn’t Hear it?

Oil plummets, stocks plummet. Are we where we were in 2000 and 2008 or is Chicken Little at it again, screaming to anyone who will listen that the sky is falling? Are we there, with another financial meltdown which will take a 2-3 years to recover? I don’t know. I do see the effects of the media shouts. I do note how I react.

Unlike March of 2000, when I took all investments off the table right before the crash, I am still in the market. Unlike Sept of 2008 when analysts and pundits were continuing to assure the public that everything was fine, and I decided to listen to them instead of myself, and only took some money off the table, I listen much more to what I need from my own money.

The inaction I took in 2008 taught me a valuable lesson. Regardless of what analysts think or say that may turn out to be right or wrong, first listen to yourself. In this case, about money and the markets, it was and is today: what do I want from investing? Am I trying to turn $100,000 into $1,000,000 in 10 years? Am I trying to preserve what I have? Am I trying to do both? What do I want from investing? Am I trying to make some “educated bets” knowing only a few, if any, will actually succeed? Why am I investing? This question is not asking for the quick, knee jerk response like “I am investing for retirement.” Because that statement does not have enough substance to it. What retirement? When? On how much? Doing what? For how long? Am I willing to question my advisor’s strategy during tough financial times; questions like: What is your strategy during tough financial times? How do you define tough times? What have you done in the past during tough time? How will we build a strategy for me? How will you monitor it?

Sometimes you can’t know what you need until you know what you want.

Once you know why you are investing, you can begin to forge a system of how to invest. Let’s say you have $50,000 which you want to grow to $100,000 in 10 years. When you talk to your investment advisor, build a strategy to take you there. As there are no guarantees in the financial markets, be sure to include accountable measures and milestones so you can readjust your portfolio, take “winnings” off the table, and help guide your portfolio to its mark rather than rely the passive ups and downs of the market. Have a strategy to take money off the table in the event a downturn occurs so you feel safe and your money is protected.

Don’t wait for the firefighter to let you know your house is burning. Install an alarm in the house that is set to go off when certain events happen to warn you to do something.

Leave me a note about how you deal with your own financial head talk, especially in financially tough times.

When Roles Are Reversed and the Kids Pay…Cool, Right?!

When asked about what impact their money would have on the lives of their heirs, a recent study found that 65% of the responders said there would be too much focus on material things, 55% said their heirs would not understand the value of money, 52% said their heirs would spend beyond their means, and 50% said that their heirs’ initiative would be ruined by money.  It looks like money does carry emotional baggage with it.

How do you teach your children about money when it can be a source of contention within your own homes or even worse, you hardly talk about it because you and your partners’ views on money are so different?

We use the 5 S.I.D.E.S. of Money© concept (save, invest, donate, earn and spend) to build strong and productive habits with money. Because money comes with so many emotional charges, it is important to know what money means to you. As money is a resource, it is important that there be conversations about the impact to the 5 S.I.D.E.S. of Money© can have in your life.  In learning how you view, succeed at, are challenged by these “sides” you learn a lot about your stories and sustainable behaviors around money.

To illustrate this, here is an example of an exercise a family devised for themselves. The parents were frustrated with their children’s casual view of money. They decided to reverse roles with their children for one night. One evening, the parents told their two children that the next allowance was going to be treated differently. Rather than give an allowance outright for whatever the kids wanted to use it for, this time the allowance was going to be used to treat the family to a night out with dinner and a movie.  “Cool”, the kids thought, until they were reminded their chore money was being used for this.

As their parents explained, this was going to be a “see how the other half lives” experience. “Cool”, the kids again thought as they felt a generous splurge washing over them as they decided where to eat and what movie to see. Cool, right?!

At dinner the children ordered their usual meals. Their parents, instead of ordering their usual fare, decided to order like their children did when the meal was paid for by the parents. In addition to the entrée, the parents each ordered appetizers and dessert.  Once they got to the theater, the parents said they wanted more food and ordered large popcorn, large drinks and extra candy, just like their kids would.

Like their children, the parents did not eat everything. They left most of their entrée on the plate while eating all the dessert. They spilled the drinks at the theater. They tossed some of the candy and popcorn out too…just like their kids. Cool, right?!

Their children were shocked that their parents left food on their plates, food they ordered but didn’t want to eat. The kids couldn’t believe their parents wanted more to eat at the theater. When they saw how much had been spent that evening, the kids were blown away at the total they, the kids had to spend. 

This turned out to be a life lesson for the kids on the value of money to them. It changed their perspective and behaviors with money. Sometimes all it takes is a new perspective. Cool, right?!

Your children want guidance on how to best deal with their own money. Give them experiences with built in lessons for them.

 

How do you teach the 5 S.I.D.E.S. of Money© with your kids?

Are You Allocating Your Money to all 5 S.I.D.E.S.?

What S.I.D.E.S. of money are you favoring? In the second of three levels of our Money Focus program, we ask the question: “What sides of money do you use and which do you favor?”  We ask this so people can determine how they currently attend to what we call The 5 S.I.D.E.S. of Money©. Theses 5 S.I.D.E.S. are:

Saving

Investing

Donating

Earning

Spending

 

Most people find that the sides they use the most are spend and earn. A big drop off occurs before I see either saving or investing as the next sides people attend to with investing and saving last.

 

Where does donating fit? Surprisingly, it is not last. It comes before investing. The World Giving Index found, that as a percentage of population, the U.S. ranked ninth in 2014 among approximately 140 countries. This index found that about 68% of the U.S. population donates money. The Gallup Poll found that as of April 12, 2015, 55% of adults have money invested.   USA Today, in March of 2015, found that 66% of the population saves but 47% reporting that they only have enough to cover living expenses for 90 days or less.

That is important information which illustrates how fragile and tenuous people’s financial lives are.

How do you address money at home so these sides are attended to in ratios that sustain a healthy lifestyle? What S.I.D.E.S. do you attend to and in what percentages?

Research has found that many of the top earners have their money allocated to the 5 S.I.D.E.S but they don’t share healthy stories or teach their children or grandchildren about productive money habits. The next tier of earners, tend to allocate money to earning, investing, spending and donating, with only extra money, when it comes, allocated to saving. They don’t teach their children or grandchildren much about money either.

Below these thresholds, people skew their financial allocations towards spending, earning and donating only if there is extra. Saving is rarely attended to. This oversight can lead to lifestyle upheavals should a disability or loss of income occur.

When children are not exposed to all of these buckets early they tend to give them scant attention as adults. The cycle of poor financial habits is reinforced and passed on to another generation.  You can end this by mindfully allocating your money to each of the 5 S.I.D.E.S. of Money© deliberately, purposefully, and continually.

What S.I.D.E.S of Money© allocation do you exhibit and in what percentages? How is this compromising unforeseen financial challenge such as illness or loss of income?

Tell me how you allocate your finances to the 5 S.I.D.E.S. of Money© and what risks you are subjecting your financial wellbeing to.

 

I would love to hear from you.

Control the 5 S.I.D.E.S.© of Your Money

If I asked you what the purpose of your money was, what would you say?

 

I find that when I do ask that question, it is met with an abrupt silence or a quick what do you mean? My money is for me to do with as I want. And what is it you want to do with it? I ask. Give me the things I want. And as I ask them what they want, there response is usually fairly vague or focused merely on spending.

 

Money is a tool, a tool to benefit our lives. This tool benefits the areas of our lives I call The 5 S.I.D.E.S.© of Money: spending, investing, donating, earning and saving.

 

To help your money become a tool to benefit you, you must conscientiously apply and know how you will allocate your money to these five sides.”   You must control your money or you will be at risk of having your emotions drive your use of money.                                                                                                  

 

Are you in control over your 5 S.I.D.E.S.© of Money. Tell me what gets in the way for you. Tell me what works for you in this framework. I would love to read your comment.                                                                                        

This Elephant in the room is called Saving

Sometimes, when talking about money, I find there is an elephant or two in the room.  The first one that comes to mind is the ability to save: save for a car, a wedding, a vacation, college, updates on a house, retirement. When we broach the subject of saving, clients often feel uncomfortable. I see them suddenly swept by a wave of emotional angst.  They say they want to save BUT, they can’t. Life gets in the way or the money is already committed or….

I see young adults with financial commitments already stalking them…before they are even out of college. They have their car insurance, their games, their mobile devices, and more already demanding payment. How can they save?

And then the habits that this environment cultivates continues throughout the rest of their lives.

In the 20+ years I was a financial planner I found that many people had a difficult time saving. Their day to day bills, taxes and lifestyle funding took precedence. Many people saved in their retirement plans, up to the employers’ matching maximum, but not more.

I found that many people relied heavily on the genies in the room to “save” them: the stock awards, the inheritances, the winning lottery tickets, and the severance packages they negotiated with their employers. But this is not saving.

Saving is not easy. It requires discipline, long term discipline, the kind of discipline that becomes a habit. When we are bombarded by stories of those who are given high salaries and awards while others have no access to that, savings is seen as a losing proposition. Do you remember the 1990s when stock awards were making millionaires of people quickly while others were employed in the public sector or with private companies with only their salaries to live on? It showcased inequities and gave more fuel to the frustration of saving. After all who wants to be on a diet while others around you are enjoying the feast at the banquet table? But many lost their fortunes after the crash of 2000 or because when the stock value plummeted, their spending did not and awards were cashed in, at low prices, to fund lifestyles.

Saving money is a discipline. How do you discipline yourself to reward yourself later….much later for something you want today?

I think this is important to talk about.  Let me know your thoughts.