Do you – like many people – fear making investments, managing your money, or teaching your kids about debt or credit card management? These tips for facing financial fears from money expert Tom Duffy will help!
First, a quip about money from a financial powerhouse:
“Money was never a big motivation for me, except as a way to keep score,” says Donald Trump. “The real excitement is playing the game.”
If excitement is the last thing you feel when thinking about investments, budgets, or debt, check out these tips for facing financial fears. They could be the first step to achieving your financial goals! And for more in-depth info, click on Make Money, Not Excuses: Wake Up, Take Charge, and Overcome Your Financial Fears Forever by Jean Chatzky.
Many people have financial fears because they’re anxious about the enormity of the job. For instance, financial experts often recommend that people plan on needing about 2/3 to ¾ of their annual pre-retirement income to live in a manner similar to the current lifestyle. Here’s an easy example of a retirement calculation: I need 67% of $60,000, which is $40,000 per year for every year of retirement, which might last 20 years. So simple math is $40,000 x 20 years equals a required nest egg of at least $800,000 just to live two thirds of my current lifestyle! Factor in inflation during retirement, and we’re talking over a million bucks for even a modest retirement.
No wonder people don’t start saving for college or pay down debt – and have financial fears! The job is enormous. It’s far easier to just keep struggling along in familiar (yet uncomfortable) territory, hoping for a miracle. This is classic “its out of my control, therefore I’m not responsible” thinking.
4 Tips for Facing Financial Fears
1. Take small steps towards your financial goals. Develop a spending plan by recording all planned expenses, no matter how large or small, in a spreadsheet, on ledger paper, in a plain old notebook or even personal finance software. Spending less is a choice each person must make, and it’s a form of control. Budgeting is too restrictive of a term – for many, it means someone else has control, which they don’t like. Decide how much you’re going to spend, then compare your actual expenses to the plan…and then you’ll be in control (which can help you achieve your financial goals).
2. Describe what financial success is – not in dollar terms, but in how you will feel, what you’ll be able to do for yourself, for your family and for your community.
3. Describe the feelings you will experience if you are successful. Picture yourself facing your financial fears – and succeeding in achieving your financial goals.
4. Recognize that failing to address your financial fears WILL end in failure. However, addressing your fears MIGHT end in failure. The harder you work at dealing with your financial fears, the more likely you’ll be successful however you describe it.
Do you have any questions or comments about facing your financial fears? Please use the form below.
Tom Duffy founded Jersey Shore Financial Advisors LLC to help bring financial peace of mind to you and your family. They provide comprehensive financial planning services for individuals, families and business owners.