Change the Narrative to Connect in Money Conversations Part 1

Money conversations are not always easy. Surveys by the Certified Divorce Financial Analysts show that money is one of the top causes of divorce while Think Health Magazine finds it to be one of the top two causes of divorce.

 

Dr. Brad Klontz a financial psychologist and associate professor at Kansas State University has found that money anxieties are fostered because people are not generally used to talking about money in a substantive manner. Too often it can “seem like a mind field that can easily go wrong, Brad says.

 

Couples can find that there disparate upbringing, experiences and expectations around their money spill into their expectations and judgments of their partner’s habits and behaviors. Of course, their partner had their own set of money experiences growing up that they bring into the relationship. Because “much of their beliefs around money are held in their unconscious,” Brad continues, “they really don’t come out to play until you are in a relationship.” These money stories and scripts can play havoc on primary relationships when the current money habits and behaviors play out.

 

Allianz’s LoveFamilyMoney Study, conducted in 2014 with over four thousand adults, found that financial issues causing the most stress in spouses were: planning for future needs at 76%, covering current financial expenses at 62%, and getting out of debt at 56%. Allianz’s study further revealed that 28% felt they spent too much on unnecessary things, 29% said their financial baggage was difficult to overcome and 23% were not saving enough money.

 

Resentments can build when the right conversations are not held. It is important for couples who are arguing over money to take a moment to change the narrative. Instead of rehashing the perceived problem expressed by “the other person,” engage in a different conversation about money. Asking the right questions, which we will delve into in the next blog, make a big difference to feeling like you have a strong financial partnership.

 

How are money conversations in your home? Let me know. If they are precarious, our next blog will introduce conversation tips to transform your home money anxieties to understanding and resolutions.

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It’s Time to Alter the Traditional Financial Security Model

People are living longer lives. More years are being spent post work. And the current model of financial security funded by 401ks and social security is cracking.  Three out of five boomers, according to a recent report from Transamerica Center for Retirement Studies, are forced to retire due to “layoffs, organizational changes, health concerns and family responsibilities.” Only one in six can retire early, with a secure financial net to carry them through their golden years.  The 2008 “Great Recession” hit the boomers hard as many found their retirement savings severely reduced, were laid off, or could not find increasing salaries above inflation adjustments to fund their lifestyles.

 

Boomers are not alone.  The Generation Xers, born between the mid-1960s and the early 1980s, are concerned about their financial security. According to the Transamerica 17th annual Retirement Survey, only 12% of Xers are confident they will be able to retire comfortably, 30% have taken a loan or an early withdrawal from their retirement accounts an 86% are concerned that social security will not be there for them when they retire. Their median retirement savings is: $69,000.

 

It is time for a change to the financial model we have in place.

 

I think it is odd that people can work and then find themselves without enough money in their sunset years, after they provided great benefit to companies they worked for. I find it egregious that companies skating on the thin line of ethical standards, can jeopardize the financial security of their employees, while the founders or CEOs raid the company to line their own pockets. I think it is not right that so many retirees do not have a secure financial base at a time of life when they are more prone to disease, increasing costs, and shrinking opportunities. Dementia and Cancer are potentially major financial requirements that can reduce a couple’s assets to almost nothing. I think it is terrible that very capable workers are unable to find jobs due to efficiencies of businesses and now find themselves falling further and further behind financially. These stresses do not help people live productive lives.  

 

It is time for a change.

 

Some countries are looking at alternatives. Canada and Finland and Switzerland, for instance, are looking at a base universal income. Switzerland is talking about a guaranteed income of 30,000 Swiss francs for its citizens. Here in the U.S., Alaska has been paying its residents a dividend since the 1980s. This dividend is based on the oil revenue it produces.

 

What are you experiencing in your community as it examines its own economic security? Let me know. I would love to hear what you experience.

Sometimes, Money is Hard to Talk About. But…

When money can be talked about without the added emotions of hidden blame or unrelenting shame, money conversations can become like other productive conversations: meaningful and connective.  When money conversations become supportive rather than decisive, money conversations can be engaging and powerful. Instead of blaming others for their behaviors or shaming ourselves for behaviors and habits we are exhibiting, we become supportive of another’s and our own objectives with money. We become engaged in conversations as we understand others and our own motives and intentions with their and our own money. We can then put in play powerful actions to attain our common objectives. What makes this transformation from feeling divided to feeling unified around money?

When we understand each other’s views and stories about money, we become more engaged with their struggles and triumphs with money. When we take money “out of the closet” of isolation, blame, or shame, and bring it into our shared lives, as partners and as a family, money becomes a productive tool.

What restrains you from talking about money? Is it lack of confidence on your ability to make consistently good decisions about money? Is it an inability to engage your partner in conversations you think are important with your money?   Is it an inability to know how to approach planning your financial goals? Is it an inability find time to spend on financial matters and if you had the time, not knowing how to frame a conversation on financial matters? Is it a fear that conversations about money will lead to tension or disinterest from your partner? These can be dealt with productively and effectively.

The first question you can ask someone you share finances with is:  What is important about money to you? And let them response without interruption from you. You can learn a lot by asking this one question.

When you find out what is important about money to yourself and to those with whom you share financial interests, money will transform from being hard to talk about to being a welcomed subject of conversation in your house.

Let me know what keeps you isolated with your money or, how you have created a bridge from isolation around your money to it being a productive tool in your and your family’s life.

 

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Saving Money Is Easier When You Do This

Saving money is difficult for some people. It’s just too easy to part with those bills taking up space in your wallet. Plus, those bills are worn and small denominations. Why keep them when you can just get rid of them on a mindless transaction.

 

There have been several studies, and a recent one, found in the Journal of Consumer Research, stated that: “The physical appearance of money can alter spending behavior. Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others,” concluded authors Fabrizio Di Muro an Theodore j. Noseworthy.

 

Participants in several studies were given worn or new bills and their behaviors were observed as they went shopping. The participants favored the newer and crisper bills and they favored larger bills. By favoring, the participants were less eager to part with the crisper bills and would exchange worn bills for goods even if a crisper bill was of a smaller and more appropriate denomination.

 

So, if you want to save money, give yourself crisper bills. If you want someone else to save the money you give them, give them crisper bills as well.

 

Look at how you use your worn versus crisper bills and if you do not have crisp bills, ask the cashier for them when requesting change or ask your bank teller for crisp bills when they give you cash. Tell me your experience with your worn and crisp bills. Which do you favor?   img_5829

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.

Is the Financial Retirement Model Broken?

A recent article from Motley Fool revealed startling numbers about retirement savings. While ten percent of 55-64 year olds have a nest egg of $730,405 or more, the vast majority have $305,302 or less in their retirement nest egg. The Government Accountability Office released a report last year ( http://www.gao.gov/assets/680/670153.pdf ) which, in part, spoke to the financial status of people ages 55-64. They found that 41% of households had no retirement savings while an additional 20% had up to $100,000 saved.

Rather than lash out at potential consequences to this today, I am going to look at it from another point of view.

We are now looking at the third generation of retiree’s preparedness for retirement and finding it the same as the last two: not enough in savings….by a long shot. Why?

I think this is so because I think that the financial retirement model is primarily geared for three paradigms: the rare individual who saves like crazy, the individual who is lucky in the company they keep (stock grants) and those individuals who either inherit or have a career, winnings, pension, or golden parachute that ensures their financial security.

I am going to go out on a limb and say saving for retirement is not within reach of most people. Our culture, while promoting saving does little to encourage it. Instead, our culture invests a lot of effort to help and guide people to part with their money.

We have tried to “make” and encourage people to save. They are not or cannot do it There is something broken here.

I’m just sayin’. What about you? Leave me a comment on your reaction to this.

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?