“I don’t know how this finance stuff works! I’ve never dealt with it before! It was always my husband who handled our finances. I feel I am not competent enough to manage my finances.” Do these statements sound familiar to you? Do you actually say that to yourself when thinking about your finances? If so, you are not alone. Many people have these same thoughts and the good news is that there are some easy ways to build our confidence and explore our potential financial success.
Meet our emotional hurdles
First of all, we’d need to address our fears. Franklin D. Roosevelt once said, “The only thing we have to fear is fear itself.” To break our fear pattern, learning the subject is a good beginning. What is personal finance? It includes several basic topics such as budgeting and saving, investing, tax, estate planning, retirement planning, risk management, and debt management. In other words, it is basically anything you can think of that is related to your money on a daily basis. Not as scary as you’d thought it was, right?
After acknowledging our fears, we’ve taken the first step to overcome them proactively. What’s important is not trying to gain all this knowledge at once. By taking small steps, learning a bit at a time, we can meet this challenge effectively and efficiently.
Invest in our most important assets: Ourselves
Financial confidence is a reflection of our overall self-confidence. You might expect that the more money a person has, the more financially confident he or she will be. Studies in behavioral finance have proven that the amount of money a person has does not ensure his or her confidence in financial matters, however. It is not uncommon that a millionaire, for example, may still feel poor because he may have some insecurities stemming from his or her childhood years. Having said that, to build our financial confidence is quite a fair game for everybody.
Since the mainstream media has been over-emphasizing the importance of our monetary assets, it is very easy for us to omit our most important assets — our ability to invest in experiences and self-enrichment that contribute so much to our well-being. Regardless of age, we shall continuously be passionate about exploring new adventures, developing new hobbies, making new friends, and learning something new every day. Read a book, watch a video, listen to a podcast, download a new app, take a trip, etc. Research has shown that to start a day with a positive attitude will help us to become more confident in tackling our daily challenges. Try it out for yourself!
Specific steps we can take
- Track our expenses and budget
“Budgeting” may sound quite uncomfortable to some of us. However, what I’d like to highlight here is to know where our money goes. This is a critical starting point because we can categorize our expenses and set up goals for each category. This cannot be done without knowing how we spend. While we can use old-fashioned ways such as writing down our expenses, there is an automated app called Mint that is quite popular and intuitive to use. It not only aggregates all your bank accounts and credit cards in one place, but also automatically categorizes your card transactions based on merchants. Additionally, you can view the progress in your summary report whenever and wherever you want.
- Be committed to achieving our goals
Real happiness does not come easily. Hence, it takes our commitment to achieve our goals that we set up for taking charge of our own finances. For example, I had a goal to travel to Alaska on a budget of $3,000 with about 10 months to fund it. Each month, I committed myself to set aside $300 for 10 consecutive months without any exceptions. Words cannot describe how fulfilled I felt in September this year when I finally accomplished this goal. Needless to say, I had a great time in Alaska. It was not all that easy, though. I remember there were months that I had to temporarily cut other expense categories to be able to come up with the $300 per month to which I committed myself.
- Be open to taking on challenges
Once you become more comfortable in taking charge of your finances after practicing for a while, you might want to challenge yourself to learn about your investments, your taxes, and your insurance, and to read your estate documents, etc. You don’t need to become an expert, but it’s a good idea for you to become well-informed when it comes to your own finances. Talk to your financial advisors, your tax professionals, your insurance agents, and your estate attorneys. Don’t be afraid to ask questions. We always say there are no dumb questions, only questions that haven’t been asked.
Lastly but not least, I’d like to conclude with a quote from John Burroughs. “If you think you can do it, you can.” It’s never too late to take charge of your financial life.
Feel free to contact Danqin (Kristin) Fang with any questions by phone 305.448.8882 ext. 222 or email: KFang@ek-ff.com