Wednesday, February 03, 2010

Trust Starts Here

Trust Starts Here

I recently met with a group of investors who had one nagging thing in common: they no longer trusted anyone to help them invest their money. Their former trusted advisors, in their minds, were not objective enough, didn’t deliver satisfactory service nor understood how to meet their expectations. Their complaints sounded something like “I don’t trust anyone these days”; “I’m not crazy about the guy I’m working with but I don’t think I’m going to find anyone different—they all have their own biases and act on them”; “I’m keeping my money in cash and at least I’m sleeping at night. Of course, it is a hassle having multiple bank accounts to manage”.

This scenario is quite common as I’ve heard on the news and read in surveys. Bottom line is that we don’t trust our institutions whom we’ve entrusted with our financial well-being—our government, our banks, our money managers and our employers.

We’d all agree it’s not healthy to be fearful of our security and well-being, but that’s where the agreement and clarity ends. When we have to figure out how to change the situation, we tend to ignore any meaningful personal feedback of what led us into the current situation—greed, unrealistic expectations, irrational exuberance for starters. In addition, most lamenters share in a passive approach to mastering their own financial and personal affairs.

If I’ve learned anything about the psychology of money management all of these years, I’ve learned that greater self-trust is projected unconsciously onto others and leads to greater trust of others. We know that we’ll do everything in our power to act in our own best self-interest, control what we can and then do our best with what we can’t. So, it’s clear we need greater trust in our own capabilities and efforts to protect ourselves and act in our best interest. We have to spend the time and do our own work—whatever it takes to bring back a greater sense of certainty and control. If I don’t trust myself because of mistakes I’ve made then I can’t really trust others. I have to see and own part of the responsibility.

So we talked about this concept in the group and waded through a lot of resistance to really perceiving the role that each one of us played. I must say we all left feeling more empowered and motivated to push ahead. Sometimes it takes making peace with a dreaded situation and finding a way to deal and cope as best we can.

Tuesday, January 05, 2010

New Year's Money Resolutions: How to Succeed in Keeping Yours

Over the many decades of giving advice on how to succeed in keeping New Year’s resolutions, I think about how I can make the advice unique in some way so that more people heed the advice and succeed in keeping their resolutions. But I ultimately come back to the advice that I know works when we take ourselves and our desires for change more seriously, so we walk our talk so to speak.

I’ve found three guiding principles that are easy to remember and quite easy to execute if kept conscious and actionable in our daily lives. So heeding the three R’s will work for you, also, if your resolutions are:

1) Reasonable, 2) Realistic and 3) Rewarding.

Your resolution(s) should be based on an attainable goal rather than wishful thinking and on a whim. They should be what you could reasonably and realistically achieve otherwise you’ll set yourself up to fail. Most of us set goals so that we can be rewarded by achieving them, so make sure the resolutions are going to pay off for you.

If one of your goals is to getter a greater sense of control over your money management in 2010, put systems in place in your daily life so that you have a sense of whether you are really achieving and will achieve that sense of control. Tracking money coming in and going out is just the beginning. Monitoring if you’re making the best use of your money will assure that this new system for achieving greater control actually becomes rewarding. If you don’t know what it is that you want your money to satisfy, it will never be able to bring you that sense of fulfillment. That’s where the “rewarding” factor comes in, so that you can sustain the new goal you set. Set up the goal for the new sense of money mastery and make it concrete and measurable so you know when you achieve it.

Most resolutions fail because old habits are tough to break and new ones hard to form without consistency, conscious effort and a sense of motivation to sustain this new behavior. An important part of maintaining our resolutions is being able to emotionally and financially support our goals and challenges. So, it’s not enough to focus on the finances. We must also focus on a plan to assure that our emotions don’t trip us up along the way. One way to do this is in keeping the actions required simple and small at first.

Small steps can lead to big gains if made consistently over time. Small steps are easier to make and easier to commit to in our already crowded lives. The small steps must be part of a strategy and plan, however that consistently lead to our desired payoff. They must be recorded somewhere so we are aware and responsible for following through. We want these small steps to become habitual and reflexive so they become a natural part of our lives. They have to fit into our schedule—putting them into the calendar with cues to remind ourselves that we must take action—will assure that they aren’t forgotten.

Rewarding ourselves for accomplishing these small steps will assure that our emotions cooperate and keep us on top of our game for change. So, remember small steps taken over time will lead to big gains. Now, let’s all get going and assure that we beat the statistics this year and keep our resolutions.

Thursday, December 17, 2009


It may be easier if your styles of handling money are similar, but here, as with other characteristics, opposites attract. Ideally, couples should have a serious talk about their individual financial preferences before differences erupt. But in the era of romantic love (from the late nineteenth century on), we have felt that it somehow tarnished the purity of love to discuss it in the same context as money. As a result, the importance of money is generally ignored during courtship, yet it becomes a primary focus of contention during marriage.

In my years of counseling practice, the complaints I hear from married clients have changed little. A typical scenario might be: “My wife is an emotional spender. She’s not realistic about money.” “Money with him is a power struggle. My husband doesn’t hear me when I ask for things. He doesn’t know what it takes to run a family.” Some other classic mismatch combinations are: a serious money saver paired with a person who is admittedly ‘born to shop,’ a high roller/risk taker paired with a safety seeker afraid to take risks, and a materialistic status seeker paired with a bohemian. While these and other combinations all come with their own challenges and issues built in, there is hope.


Be involved and invest in your relationship. It is one of your greatest assets in life. Understand your differences and plan around them. Take equal responsibility for managing your money so both of you are informed. For example, if one person routinely pays the bills, the other should file the paid invoices.

Respect each other’s differences instead of judging them. Look for patterns and issues that continually crop up and then look at what attitudes and feelings about money and what emotions are creating those behavioral patterns. Next, discuss ways to avoid falling into those patterns in the future. You might want to schedule a monthly “money talk” as a forum for these discussions. Remember that good financial communication works both ways – listening as well as talking. The price of not communicating is to proceed to the point where differences appear irreconcilable.

Watch for telltale signs of financial compatibility while courting. Deal with these issues when they present themselves. Don’t think it will get better when you are married or living together.

If you don’t deal with issues up front, your differences may get blown out of proportion. The key is to try to understand your partner’s feelings about money before lashing out in response. One of the most reliable ways to work with your partner is to take Moneymax®. It’s positive, eliminates emotions getting in the way, it’s fast and easy, non-threatening and objective. It shows potential problem areas to be discussed and considered, and reveals ways to manage money more harmoniously as a couple and ultimately in a way that will satisfy the needs of both partners.

In every couple, no matter what your income level is, there are daily decisions to be made about the allocation of money. Among low-income families, money is a constant source of irritation because of its short supply, but it may also be a chief irritant among the more affluent. A shortage of money is not usually the real problem in a money fight. The problem may be differences in attitudes, preexisting grievances, or any number of factors. According to the Family Service Association, of marriages ostensibly threatened by money arguments, only 6 percent of the couples were actually short of money. The most ferocious marital money conflicts occur when there are irreconcilable differences in money personalities, such as when a saver marries a spender.

It doesn’t have to be that way. Even if you haven’t met your ideal financial match, you can learn to diffuse the money conflicts in your relationship by discovering, understanding and working with your financial personalities. So turn your much ado about money into much ado about nothing.

Wednesday, December 02, 2009


Three years ago, Jim and Laurie were on top of the world, rich in money and spirit. They had done well in the stock market with their 401k plan. They were so confident in their future that they decided it was time to plan for retirement.

They had been researching second homes in the Southeast, and settled on the west coast of Florida—a good value for a waterfront condo. They stretched themselves and spent more than their budget allowed. As a result, they had to refinance their principal residence and take much of the profit that had accumulated. They put more money down on their new vacation home so the monthly payments would be affordable with their current monthly cash flow.

Like so many other couples, they never dreamed the market would plummet and that they would experience the “Great Recession”. They never dreamed they would lose 60% of the wealth they had accumulated for retirement. Moreover, Jim never dreamed that his job would be eliminated—yet Laurie and Jim were indeed hit with this double whammy of financial challenges.

When I met him, Jim had found another job. However, his salary was two-thirds of his former salary and he had the same level of responsibility. He worked long hours, seven days a week.

Jim and Laurie are similar to other American couples who had to digest and adapt to significant losses—both financial and emotional—that they weren’t anticipating. They could no longer afford the lifestyles they were living.

They were faced with the very scary pressures of meeting monthly payments that they no longer could afford. They thought they might lose their home. They were also starting to borrow money on their credit cards and unable for the very first time to pay off their monthly balances. Throughout 18 years of marriage, they had always made a point of paying off monthly balances.

When I met Jim and Laurie earlier this year, they were living with a great deal of financial and emotional stress. Laurie was feeling the effects physically. Jim was just trying to make it through day-to-day with his heavy work schedule; but he, too, was feeling the effects in not sleeping well and not getting any exercise.

Jim and Laurie had options they hadn’t explored. For example, they hadn’t thought of renting their condo, which had the potential of being a great vacation rental. They also hadn’t thought of meeting with their bank and other creditors and asking them to modify their monthly payments so they better reflected their current monthly income..

Although Laurie was initially upset at the thought of strangers living in her home, she quickly adapted to the idea when she learned how much rent their beautiful condo would provide—it would practically pay for itself with just the high-season rent. They would use it themselves, off season, when they could afford to get away. They wouldn’t have to give it up at all.

Jim and Laurie were fortunate in having the focus and persistence to make their new circumstances pay off for them. They took a realistic look at their circumstances, reached out for help, and then applied themselves in achieving the goals that mattered most. Their open and flexible mindsets empowered them to regain control of their money and their lives.

Friday, November 13, 2009

On The Delicate Subject of Money

Money permeates every relationship in life, every interpersonal interaction: friendship and courtship, living together and marriage, divorce and death. Dealing with it, however, is still a major issue for couples today because it is not a comfortable issue to discuss. Even during these challenging economic times, partners avoid talking about money and dealing with the emotions it evokes. Money is certainly still a taboo in couple talk.

Money, of course, has always provided plenty of fodder for partnership discord. Many of the complaints I hear have changed little over the years. A typical husband’s lament: “My wife is an emotional spender. She’s not realistic about money.” His spouse’s refrain: “Money with him is a power struggle. He doesn’t hear me when I ask for things. He doesn’t know what it takes to run a family.”

What have changed are financial roles. It is an era of his, her and their checking accounts; a time when wives are likely to make as much as or more than their husbands and to have their own, often divergent ideas about handling money.

Money differences or incompatibilities are just a symptom of some underlying dynamic, not the cause. Money is a commodity which takes on other meanings and emotions. It becomes the emotional football that partners may use to throw back and forth at one another and never resolve their real issues. Family finances may be a forum for disputes over responsibility and commitment, need for attention, lack of trust in others.

Here are some suggestions for trying to work things out on your own. If money problems persist, you may want to seek professional help.

• Talk over financial matters regularly, at a time when money decisions are not pressing. You might consider setting up monthly “meetings” when you and your partner can discuss major goals, lifestyle issues, investment strategies as well as dreams and hopes for the future.
• Both partners should keep abreast of the financial situation. Some couples find it helps to trade off responsibility for paying bills; others delegate the job to the partner best suited to perform it. Each partner should feel he or she has access to money and knowledge of their financial status.
• Agree on at least a few financial goals over the next six months, talking over those things most important to you. Write down your decisions so both of you remember your goals and your top priorities for planning.

Above all, remember that arriving at a workable money strategy is a negotiation process. It’s very healthy to admit who you are when it comes to money and what you really value. The health and wealth of the partnership depends on both partners being aware, involved and committed to working together to achieve what’s most important to them individually as well as what works best for their relationship.

You can check out to learn more on this topic.

Wednesday, November 04, 2009

Are You Financially Fit? Three Ways to Boost Your Financial Fitness

With our psyches and portfolios in a state of flux, we'd all like a crystal ball to predict the financial future. We’re all obsessing on the question: Will I be okay? What should I be doing to make sure I will be okay?

We can no longer depend on a paternalistic society to assure we have a sound financial future, a long-term employment, or the ability to care for our health and wellness.

More than ever, we need the skills and knowledge to build appropriate financial plans to drive our career and lifestyle goals. It’s not enough to earn money, we have to know how to make the most of what we have. We can't even depend on asset allocation to be our mainstay as the experts are now predicting.

Less than 1 in 5 Americans have a financial plan in place . The majority of us (76%) would like to become more confident in making financial decisions about our financial futures.

Today there are tens of thousands of investments and saving vehicles available to us. We have access to over 15 million web sites of information and research on the web to assist us to make appropriate decisions. There are hundreds of thousands of financial professionals to assist us in our planning--yet we still feel anxious and insecure about financial planning. It is not surprising that we also suffer further stress from information overload. Most of us are not certain that we are doing the best we can do with our money.

How Fit Are You?

Ask yourselves these questions and see how you stack up:
1) Do you feel confident you are making appropriate financial decisions?
_____Yes _____ No
2) Are you satisfied with the way that you are managing your money and investments? _____Yes _____ No
3) Do you know how to use investment information to identify appropriate investments to achieve your lifestyle goals? _____Yes _____ No
4) Do you avoid making the same financial mistakes over again?
_____Yes _____ No
5) Do you update your financial goals and plan on a regular basis?
_____Yes _____ No

If you answered “No” to more than two of the above questions, chances are you rank high on work ethic, and your focus is on earning an income more than accumulating wealth. The next step for you is to learn how to make your money work as hard for you as you work for it. You would benefit from boosting your financial fitness by taking more control over finances.

If you answered “Yes” to more than four questions, chances are you are getting value from your money management and are fiscally fit.

There are three key steps which will boost your financial fitness and put you on the road to greater financial confidence and success:

• Choose and prioritize your financial goals—One of the most common mistakes people make is not knowing what they want from their money. We often set career, holiday and lifestyle goals but do not set money goals.
• Pay yourself first—Paying yourself first is understanding how you want money to serve you best in your lifetime. Then take control of making it happen.
• Make your financial education pay off—Focus on acquiring new skills and then training with those skills so you feel confident that you are making the best use of your money.

Start your financial fitness regime with learning more about yourself and your unique needs and goals.

Monday, October 19, 2009

Money in A Marriage of Opposites

Joanne and Peter have been married for three years and have just started to deal with the reality of blending their money and making joint decisions. Planning to buy their first house has forced them to face the fact that there are conflicts they've been avoiding--conflicts because they have very different opinions and styles of approaching money.

Peter has no problem spending money he doesn't have. His parents lived beyond their means. They had what they wanted, when they wanted it. The stress of paying off debt was a familiar scenario in Peter's household.

Joanne's parents were just the opposite. They never spent money they didn't have. They saved for the new furniture and the new car. Likewise, she always earned her own spending money and never received an allowance for helping with family chores. She said she was not spoiled--like Peter whose parents never said "no" to him or his brother.

I met Joanne and Peter through Joanne's parents; instead of dealing with the crises in her marriage, she was running to her parents for advice. She was afraid of setting limits on her husband's spending and cowered in any conversations about his spending. Those conversations always turned into confrontations with resulted in her feeling guilty that she was being the money cop.

What I could offer as a third, objective party, was to help them in setting up a joint plan for "their" money. Even in marriages that work well with separate accounts, the partnership is an entity that has financial implications when planning a joint purchase, whether that be a vacation, car, house or for a child. If there is some agreement about mutual goals, couples can usually agree about the steps they will take to achieve those goals.

With their agreement in creating a 1, 3 and 5-year plan that they both felt satisfied them, there would be certain steps they would have to take to assure they would achieve them. It became a joint plan instead of Joanne's plan. They also were asked to include any barriers they perceived might prevent them from holding up their end of the commitment.

This was the part of the exercise that gave Peter the most challenge. It also changed his life, and saved his marriage. With a non-judgmental third party, Peter was able to discuss his style and habit of rewarding himself on a weekly and sometimes daily basis. Perhaps more importantly, in that discussion he was able to see what was previously a blind spot for him: the consequences of his free-spending style.

He had to admit that the thought of having their own home, his own garage and back yard would bring him much greater joy than buying the latest digital camera or stereo equipment. Once he saw the payoff for what he would have to change, he was willing to make that commitment. Once it was his decision and not just Joanne's, it became easier to do for him.

The last I heard, Joanne had very positive conversations about her marriage with her parents. She and Peter had bought their first home, and were already starting to save to landscape their yard.

From the outside looking in, perhaps the greatest payoff for their joint planning is a compatible marriage. Instead of dreading and doubting their future, they will be planning and achieving what is valuable and meaningful in their life together.