I’m constantly trying to get better.
Living a happy and healthy life is a top priority, as is helping you do the same.
Solving the money problem is where I spend most of my time and attention. I recognize people need different things at different times of their lives.
Someone just starting out needs to learn how to budget and start saving. New families are interested in life insurance, home ownership and saving for college, and people getting closer to retirement need help designing retirement income.
Every new stage brings opportunity and challenges, which require new learning and support to position ourselves for success. That’s really what solving the money problem is all about. It’s about getting what you need, in order to get you where you want to go.
Over the course of my 20+ years working in personal finance, I’ve discovered there’s not a right or wrong way to help people. Most importantly, the key is to help people find solutions that ultimately lead them to peace of mind. Today, I own and operate a financial advisory firm as well as a financial wellness company. So, everything I’m going to talk about are things that I’m currently doing.
Today, I want to talk about how to get the input you need to solve your money problem, and get to where you want to go.
Here’s what we’ll cover:
Let’s get started.
The money problem
Daniel Kahneman is a psychologist who became fascinated by how humans make financial decisions. He immersed himself in it, and his research led to his wonderful book, Thinking Fast and Slow. It also led to him winning the Nobel prize in economics.
One of his key findings was that humans make 90% of the financial decisions based on emotions. Let that wash over you.
Is that true for you?
I remember reading that for the first time and thinking, “There’s no way that’s true for me.” When I thought about it some more, I realized it was probably the truth.
Think about the last time you heard the stock market was down. Did you get a sinking feeling, and want to sell your investments? That’s the emotional, and perfectly normal response.
The rational response is to remember that it’s wise to buy when things are low, and to sell when things are high. Selling your investments when the market is down goes against that logic.
What’s important about that is this, making emotional decisions about money and finances is not a good idea. It’s better for us to recognize our emotions, and then to think rationally and logically about the decision we’re faced with.
Once we become aware that our brains are wired to respond emotionally, we can overcome potentially bad decisions in favor of better, more logical decisions.
The value of input
Financial companies like Vanguard and Schwab are always conducting surveys in order to better serve their clients. Both companies have found providing one-on-one interaction with a human dramatically increases investing success. As investors, we benefit from the input of others.
They discovered outside input led to more appropriate asset allocation, or mix of investments. Meaning, people who were too conservative, or too aggressive, moved to more moderate investments. This approach led to better long-term outcomes.
Additionally, the vast majority of investors responded they received great emotional value from the ability to interact with someone. Money can be stressful. Being able to talk through things helps to alleviate those feelings.
Vanguard has also reported a 3% increase in net returns for investors who have access to input from a human. Over time, that’s a massive difference.
What keeps us from getting input
I’ve long known that too few of us will ever interact with a financial professional. I read two studies, one found that two-thirds of Americans will never meet with a professional, and the other said 85%. When it’s clear that input helps, why aren’t people getting it?
I think many people feel their situation isn’t complex enough to seek input, or that a financial professional wouldn’t be interested in helping them.
Many people feel the costs of working with someone are too high.
Others have too much shame around money, and that prevents them from engaging with someone. The majority of us are still not comfortable talking about money.
Whatever the reason(s), a big part of solving the money problem is getting outside input. So where and how can you get it?
Solving your money problem
Certainly, there are a lot of traditional financial advisors out there. While it’s true that many of them have minimum thresholds in order to work with new clients, there are plenty who do not. My advice on getting advice from a financial advisor is to work with a “fiduciary” advisor. That means someone who is legally obligated to act in your best interest.
There’s a newer and growing field called financial coaching. A financial coach focuses more on behaviors than on giving financial advice. I’ve found that many of us benefit from this because our brains do make so many emotional decisions. Most financial coaches charge flat fees, so it can be less expensive.
Finally, I believe a hybrid approach is also available. Gaining access to specific information based on your needs can be done via online courses. Professional-grade investment management is available through robo-advisors, and there are a lot of great apps and new fintech companies helping with everything from budgeting to estate planning. Bringing together all of those resources, and combining it with financial coaching could be your solution to the money problem.
This hybrid approach can be called financial wellness. This is another relatively new field which is helping more people reach their desired financial outcomes. Some examples of these new companies are SmartDollar, LearnLux, and my company Money Alignment Academy.
I believe financial wellness is the future of personal finance for the majority of Americans. Why? Because of the community element many platforms bring. The ability to consistently interact with others privately and confidentiality has a lot of advantages.
Closing and resources
We have different money problems and desires throughout our lives. The sooner you can start solving yours, the better off you’ll be. That’s because so many aspects of personal finance are time sensitive. The longer you wait, the harder it can be to find success.
Would love for you to check out Money Alignment Academy’s Coaching Program.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
We’ve got three free courses as well: Our Goals Course, Values Course, and our Get Out of Debt course.
Connect with one of our Certified Partners to get any question answered.
If you’d like help getting on the same page with your partner, check out our Same $ Page Course.
If you’d like to help your kids get good with money, check out our Teaching Kids about Money course.
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