Commitment. It’s a word that can scare even the bravest of us all. But in almost everything we do in life, it has the power to drive success. Commitment to a relationship creates a stronger marriage. Commitment to a workout routine creates a stronger body. And (you guessed it), commitment to your financial health is the key to building and strengthening your financial future.
Assuming financial security is something you really want in life (and who doesn’t?), I urge you to ask yourself two questions:
- Am I 100% committed to improving my financial health?
- Do my actions prove it?
I recently came across this quote from John C. Maxwell: “Small disciplines, repeated with consistency every day, lead to great achievements gained slowly over time.” For the following week, I couldn’t stop thinking about how this truth about the power of commitment fits into the world of wealth management and investing. How? First, investing is a long-term goal. Sure, there are lots of people out there who claim to have a method for achieving instant wealth, but other than a million-to-one shot at winning the lottery, I’ve yet to see any of them pan out. Second, what I see holding many people back from meeting their goals isn’t the economy or the market, but a lack of genuine commitment to their personal success that is supported with repeated and consistent action.
If you’re 100% committed to improving your financial health, here are 5 actions you can take to turn that commitment into action:
1. Spend at least as much time planning your finances as you do on your next vacation.
It sounds like a joke, but most people really do commit more to vacation planning than to financial planning. All too often, I’ll meet with a couple who clearly has the desire to improve their finances, but they can’t seem to find the time to complete the follow-up items from our discussion. Yes, they may both be busy professionals, so doing the homework may be a challenge, but as a financial coach, I know what damage that lack of attention has on potential growth. Life is full, but your financial health is too important to push it to the back burner. Put it off and you may face serious consequences down the road—including the potential for a less-than-adequate savings to fund those dream vacations you’d hoped to take in retirement.
2. Hire someone you trust to assign your homework.
Even with the best intentions, it’s tough to get on top of your finances unless you know what you need to tackle, and when. An experienced financial planner who is mutually committed to your success can help you identify all the pieces of your financial puzzle, figure out what’s missing from the equation, and give you a clear set of homework assignments to help get you on the right path. And once you get the homework done? He or she can review what’s there and offer you the insights and guidance you need to make smart, educated financial decisions moving forward.
3. Schedule regular financial reviews.
To be sure all the pieces of your financial life are current and positioned to do their job—whether that’s managing your cash-flow, growing your nest egg, or protecting your family and your assets—set a firm, unchangeable schedule for financial reviews. You see your dentist every six months without fail, and that’s just to take care of your teeth (which, by the way, can be replaced even if they get knocked out)! Your nest egg can’t be fixed as easily. Plan to review your financial plan at least once a year. If your finances are more complex—or life is changing at lightning speed—consider meeting more frequently. No matter what, schedule the meeting and make it mandatory.
4. Assume change is inevitable.
The best laid plans are just that: plans. Change will happen—to the economy, the market, your job, your family, your health—which means your needs and goals change too. To keep up, it’s vital to revisit and rethink your investment strategy, insurance policies and estate documents regularly. Remember that every one of these is a living, breathing part of your financial plan. Let them collect dust, and you set yourself up for potential problems. On the insurance side, keeping everything up to date and ensuring you have the life insurance coverage you need to protect your family should be a top priority. Why? Once a major medical diagnosis is in, the opportunity to increase coverage is gone. On the investment side, a shifting market can send shock waves to a static portfolio. Few predicted the market crash of 2008, and few guessed the market would rally in the wake of a Donald Trump win, yet here we are. Assume change is inevitable and you’ll be more prepared for that change when (not if) it happens.
5. Don’t delegate—collaborate.
Even if you are certain your advisor is mutually committed to your success and providing all the tools and guidance you need, acting as your own financial fiduciary is critical. An advisor’s job is to crunch the numbers and give you the data that supports your best possible outcome. The data may suggest that you invest 60% in stocks and 40% in bonds. But that’s just the numbers talking. What if you still have nightmares about the market crash in 2008? What if investing is brand new to you, and the idea of losing even $100 of your hard-earned savings keeps you up at night? To come to the right decision for you, it’s important to balance the data and guidance from your advisor with your own emotions. Trust the guidance you receive, but trusting your gut at the same time will not only boost your financial confidence, but also help you settle in and get a great night’s sleep.
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Still not sure how to turn your commitment into an actionable plan? Email me to schedule a time to chat. I’m here to help.
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