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The premium time to review your premiums

When it comes to financial planning, risk planning, estate planning and investing, many of us like to “set and forget”. Our lives are full of things to remember, for work, family and the communities in which we’re involved – often, the last thing we want to review is our financial portfolio.

As a result, it’s easy to forget why we have some of these financial products in the first place. The complexity of financial planning and investing (and the very reason why having a financial adviser helps) means that keeping tabs on changes and updates is nearly impossible for those who don’t work in the industry.

When it comes to short-term insurance, the different product providers are highly competitive and frequently update their rewards or affiliate partners and benefits. This means that comparing one premium with another is not as simple as comparing apples with apples. It also means that if you haven’t checked in on your short-term insurance recently, you could be overpaying, underpaying (and receiving less cover than you need) or simply be paying for a product that is no longer suitable for you.

Whichever situation you find yourself in of these three, it means that your financial portfolio is no longer optimised in your interest. It’s like going to a tailor in your thirties and having your clothes cut and fitted to your measurements, and then thinking those clothes will fit you perfectly for the next thirty years.

We all know that “a penny saved is a penny earned”, and this applies perfectly to the situation of paying insurance premiums that are either too high or not suited to your needs any more. Either – you will be able to save on premiums and invest more now or allocate those saved pennies elsewhere, or – you will be miss-insured and have to pay out more pennies in the event of a claim.

A sure way to reduce the strain on your financial plan is to check in on your short-term insurance at least once a year or whenever there has been a significant global event (like a pandemic or stock-market crash). At these times, changes are made to policies that could affect both the cost and the outcome of your cover. Reviewing them will either free up unnecessary expenses or lock in the benefits that you genuinely need.

Shopping around for better quotes, keeping your credit score in the positive and updating a list of your household items and assets are all good ways to keeping yourself in a stronger financial position. You can easily do this all yourself, but as mentioned above, the complexity of financial planning and related products means that having a financial adviser who can give you independent advice could save you in the long run.

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Our oft-told money stories

Money isn’t real. It’s just an agreed-upon system of exchange.

Have you ever heard that? 

This is the realisation that many reach when feeling frustrated with tax systems, witnessing social injustice or experiencing the unfairness of life. While money and currency systems may not be real, they represent value and help us form and communicate meaning.

Money is interwoven with our stories of life and meaning.

“We tell ourselves a story about how we got that money, what it says about us, what we’re going to do with it and how other people judge us.” – Seth Godin

These stories are valuable and help us attach meaning, but they can also keep us stuck in an unhealthy relationship with our money. They reveal deeper beliefs that we have about money but don’t always say out loud. They are foundational to our choices and the way we perceive ourselves and others.

Some of these beliefs include thoughts like “I will be happier if I have more money”, “It’s not polite to talk about money with others”, and “Money corrupts people”.

A team of researchers from Kansas State University interviewed hundreds of people to find out what kinds of stories are common to most of us and compiled a list of four stories (they called them scripts) that help us identify our money mindset. According to a blog on careerattraction.com, they go a little like this:

  1. Avoidance

Individuals with an avoidance mindset assume a “head in the sand” approach to managing money — all things being equal, they’d rather not deal with it.

For the avoider, money stirs up feelings of fear, anxiety and disgust. They often don’t know what’s in their accounts and may not open their credit card statements when they come in the mail.

People with an avoidance mindset may think and say things like:

  • “I don’t deserve a lot of money when others have less than me.”
  • “If I’m rich, I’ll never know what people really want from me.”
  • “There is virtue in living with less money.”
  • “As long as I keep working hard, I won’t ever have to worry about money”

 

  1. Worship

The worship mindset is most commonly associated with the belief that “things would be better if one had more money.”

Has that thought ever crossed your mind? If so, you’re not alone. According to the research, this is the single most common belief. People with a worship mindset tend to attribute current unhappiness or dissatisfaction with a lack of money and, accordingly, believe that a higher salary or financial windfall would solve their current problems.

People with a worship mindset may think and say things like:

  • “You can never have enough money.”
  • “Money is power.”
  • “Things would get better if I had more money.”

 

  1. Status

Those with a status mindset tend to believe self-worth is linked with net worth. In the context of our core needs, people with this mindset equate money with significance — they use it as a proxy for importance in society. Often, the status mindset manifests as a competitive stance to acquire goods and material possessions, often referred to as a “keeping up with the Joneses.”

People with a status mindset say and think things like:

  • “Look at that expensive car… he must be successful.”
  • “If someone asked, I would probably tell them that I earn more than I actually do.”
  • “Poor people are lazy.”

 

  1. Vigilance

Those with a vigilant mindset pay very close attention to how much money is coming in and how much money is going out each month. They likely wear labels such as “cheap,” “tight”, and “frugal” with pride.

Those with a vigilant mindset commonly live well below their means – struggling, at times, to get comfortable with spending money on themselves even when they can afford to. Lastly, the money-vigilant are often secretive about their personal finances and may distrust financial institutions.

People with a vigilant mindset say and think things like:

  • “It’s not polite to talk about money.”
  • “Money should be saved, not spent.”
  • “It is extravagant to spend money on myself.”

When we can identify the stories that we tell ourselves, we can choose to tell ourselves different stories that are more accommodating, generous, inclusive and kind – first to ourselves and then to those we care for and are in our extended communities.

Let’s start telling and sharing stories that are unifying, accepting and encouraging.

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Win back your weekend

“Where did our weekend go?” Have you ever found yourself asking this question on a Sunday night or a few minutes after hitting snooze for the third time on a Monday morning?

If you do – you’re not alone! Studies show that many people struggle with Weekend Anxiety Syndrome (WAS) or the Sunday Scaries… there are a couple of reasons that can contribute to our stress and anxiety over weekends, and these are generally linked to two key areas: too much sleep and lack of activity.

Yes… that’s right – TOO MUCH sleep and TOO LITTLE activity. It sounds counterintuitive, but as you page through the google search results for WAS, you will find a bounty of research articles that encourage consistency of sleep patterns and positive, restorative activities.

As we slide into Friday, it’s easy to think about all the things we’d like to accomplish on the weekend or deliberately plan to do as little as possible. But as Sunday evening arrives, if we haven’t achieved Friday’s aspirations, we are left with a knot in our tummies and a pervasive sense of failure.

Dr Luke Martin, clinical psychologist and project manager at Beyondblue, says that WAS may be a side effect of modern life. “We’re so time poor, there’s a lot of pressure to get our weekends right,” he says. “On social media, everyone lives the perfect, busy life, so it’s easy to think there’s something wrong if your life doesn’t measure up. On Monday, when everyone’s comparing notes from the weekend, and you feel like yours doesn’t measure up, then your body doesn’t like that, which can cause anxiety.” (dailytelegraph.com.au)

It’s not like our weekends aren’t busy. We complete one task after another (cleaning, laundry, grocery shopping, cooking) and then poof, Monday is here! Chores expand to fill the available space, especially if we’re trying to catch a lie-in, an afternoon snooze or binge that series that everyone keeps telling us to watch.

Having read through a few blogs and articles, a few practical ideas can help us reduce our Sunday Scaries and win back our weekend.

  1. Create a weekend bucket list. Chat with those in your home and family and ask them what types of activities they’d like to do over the weekend. These could be hikes, neighbourhood walks, visits to the beach or a local nature reserve. Perhaps it’s to start learning a skill like painting or music, or maybe it’s focussed on things like gardening and crafting. Once you have this list of ideas, plan to achieve one or two every second weekend.
  2. Regulate your sleep patterns. This practice applies to both the weekend and weekdays too. Some research refers to our change in sleeping over the weekends as Social Jet Lag, likening the exhaustion that we feel on a Monday morning to a long-distance flight through several time zones. If we go to bed later and wake up later over the weekend, we will feel tired on a Monday.
  3. Stay off social media. Much of this has to do with the psychological impact of seeing what other people are busy doing. This feed of photos and emotionally engaging content makes us feel like we’re not doing as much as everyone else. It also saps precious time and energy that we could be engaging in those awesome ideas in our weekend bucket list.
  4. Plan ‘weekend’ activities for the week too. In every strategy to get more out of life, we find that balance is a crucial element. If we think that ‘fun stuff’ can only happen over the weekend, we will constantly struggle with WAS. Planning a midweek movie night, dinner with friends, an early evening walk can all fit into our weekly schedules and help us realise that we don’t have to live from Monday to Thursday, wishing it was Friday already.

We can have all the money in the world, but if our life is not fulfilling, our money will mean nothing. When it comes to financial planning, we have to include life planning so that we can make the most of what we have instead of falling into the trap of simply trying to ‘make more’.

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Protecting your income for a better outcome

A few short decades ago, we lived in a world that seemed to have far more security and certainty. The rate of change was slower, and many assumed that if you stuck to the system, the system would look after you.

Social security, income security and good health were taken for granted in developed countries. The chance of losing one or all of the above didn’t feature too highly in financial plans. As you’re reading this, you are most likely already acutely aware that this is no longer the world in which we live.

From attacks on political structures that we assumed were unassailable to economic systems bending to the will and manipulation of the mega-wealthy or well-organised-online-communities – it’s harder and harder to protect our financial and life plans.

Planning for protection if you lose your income has simply become imperative.

There are financial products that can help with this, and there are financial planning strategies that can help with this.

When it comes to products, income protection is a popular option. These financial products are primarily designed to pay you a benefit if you cannot work for a while because of illness or injury. As needs evolve, the products evolve too, and some can be set up to provide an income due to retrenchment (not voluntary resignation).

When it comes to financial planning strategies, one can leverage or sell assets to cover a period of non-income or set up emergency funds that give you access to up to six months of income should you need it.

Unfortunately, many people take a head-in-sand approach when it comes to income protection, believing that they’ll never be inflicted with a disability, or assuming they can find a quick resolution if they are.

However, this doesn’t necessarily equate to positive thinking but rather naiveté. A more responsible approach would be to hope that disaster won’t strike while still having a back-up plan for when life has other ideas; because life will have other ideas.

If you’re going through an income crisis presently, then it’s hard to plan for the eventuality of another. You will now need professional financial advice more than ever to swim through the rough waters to solid ground. Only once you have regained an income, and are in an income-secure space, can you begin to protect your income for a better outcome.

If you are currently income-secure, make sure you have a strategy in place to build up resilience and protection for one of your greatest assets – your income!

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Plan to fail

It doesn’t make sense, but we need to have a plan for when things go wrong. 

People love to say that Benjamin Franklin once said that if you fail to plan, then you plan to fail. It’s not a bad quote, but as the world experiences some of the most significant disruptions in recent history, we know it’s only part of the picture.

This means: we need to plan to fail. Or rather, we need to consider the eventuality of things not going according to plan.

Grounded aeroplanes and harboured cruise liners, stopped conventions and elective medical procedures have left industry behemoths searching for bailouts and financial support. Once financially and emotionally secure, families are struggling to pay increasing bills, some facing retrenchment and unemployment. On top of all of this, we have stressed and strained relationships that no one could have planned for. 

Because we always hope our plans will work out. It’s not nice to think about our plans not working out. The more we learn about our behavioural psychology, the more we learn about planning and managing situations that send our emotions spiralling. 

Sunél Veldtman, founder and CEO of Foundation Family Wealth, recently wrote this:

“Although the four-decade career has been endangered for a while, it is now becoming extinct. The idea of choosing a career in your teens, studying towards that career, and then making progress towards the top of that career ladder, must be shelved.

We should anticipate that these events become the norm, not the exception. We should accept that retrenchments and continuous learning will become part of most careers. We should change the way we plan. There is too little ‘what if’ planning. Too many plans still span four decades of uninterrupted change. If we don’t change the way we plan and think about career trajectories, we are already planning to fail. We should encourage bigger savings pools for the ‘what ifs’ right from the start, discourage straight-line thinking in the midlife and reassure fresh starts after mid-life. We should learn how to contract our spending quickly, and carefully consider commitments with long-term implications like private school education or expensive debt. Change management, continuous learning and resilience are skills that will become as key to our financial wellbeing as it is for our physical and mental health.”

Underlying all of these thoughts, we need to help each other develop a deeper sense of self-worth. Before we lose our business, we need to ask: “Who would I be if I didn’t run this company?”. Before we lose our income, we need to ask: “Who would I be if I didn’t enjoy the bank balance that I currently have?”. 

If our identity is too closely linked to one aspect of our life, we will lose everything if we lose that one thing.

We need to explore what a balanced life truly looks like in our personal context so that we can say:

“I’m not my job, and I’m not my income. I’m not my partner, my kids or my business. I’m not my house, my car or my overseas holidays. I’m all of these things and so much more.”

We’re here to help you manage your financial health, but we know that it’s not separate from your physical, emotional, relational, spiritual and mental health. If you need to have a deeper conversation and plan for when things go pear-shaped, then let’s get in touch soon.

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Offshore shouldn’t be off-putting

“… your money deserves to go places,” Ninety One (dual-listed on both the South African and London Stock Exchanges).

Many people who choose to stay in a country feel a sense of pride and patriotism for their local residence. Whether it’s a native birth-right or an adopted sense of nationalism, buying, supporting and investing local is an important priority. 

So much so that the thought of moving money offshore can be off-putting. 

But when it comes to sound investment strategy, an offshore investment will give you access to opportunities across different countries, industries, companies and currencies, exposing your portfolio to more possibilities while diversifying your risk. As Ninety One says on their website: you enjoy life in the country you love, whilst your money discovers a world of investment opportunity.

Those opportunities are dynamic and ever-changing. As markets rise and fall, currency depreciation becomes either a strategic liability to any investment portfolios that are heavily weighted in cash, or creates opportunities for portfolios exposed to the export market.

Currency depreciation is a fall in the value of a currency in a floating exchange rate system. Economic fundamentals, interest rate differentials, political instability, or risk aversion can cause currency depreciation. Orderly currency depreciation can increase a country’s export activity as its products and services become cheaper to buy. (Investopedia.com)

This phenomenon is not unique to any one country and can hit any economy at any time. This is why investing offshore may enhance your returns and reduce risk by diversifying your exposure to a single currency or country.

Whilst it can help to form a prudent part of your portfolio alongside local investments, remember that the level of exposure must be linked to your personal financial plan.

It’s not about saying that one economy is better than another; it’s about recognising that by investing in local property, a local business or the local stock market alone, you are highly vulnerable to local conditions.

Offshore investing can reduce the risk of capital loss by spreading your investments across markets and currencies. It will also minimise the impact of currency depreciation or political and market events on your portfolio. Local fiscal and monetary policies may deteriorate along with the likes of state-owned enterprises and other government-led initiatives.

That being said – there are three things to consider when evaluating the benefits of offshore investing: inflation, interest rates and costs.

For all three, we should have a conversation about your personal setup to see how they could affect your decision to explore offshore.

Typically, you can invest directly, or you can look at an asset swap. According to Investopedia, an asset swap is used to transform cash flow characteristics to hedge risks from one financial instrument with undesirable cash flow characteristics into another with favourable cash flow.

Before you make any decisions, make sure we have checked in on your decision and that it aligns with your personal financial plan.

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How to make a sustainable change

All of us have moments in our life when we realise that we have to make a change. Sometimes change is something we choose, and sometimes it happens to us, forcing us to find a new way to cope.

Making a sustainable change is something that we can choose – before life forces something worse upon us. As Reinhold Niebuhr’s serenity prayer says:

“God grant me the serenity to accept the things I cannot change; the courage to change the things I can; and the wisdom to know the difference.”

We can’t change everything in our lives, but we can change some things. However, it’s not always easy to sustain the change, and this can become a frustrating cycle of to-and-fro that leaves us with a profound lack of serenity.

Change is a process of growth; it’s not supposed to be easy and natural. It’s a process of creating a new natural, and it will eventually become second nature, but getting to that point requires intention, skills and coaching.

STATING INTENTION

For anyone familiar with the 12-Step-Programme, they will know that the first few steps to making a sustainable change involve acceptance. You need to accept that you are responsible for that change that you’d like to see. It’s powerful to articulate, verbally and written down, the changes you’d like to make in your life and accept that you are the best person (the ONLY person) who can make those changes.

This is where we create intention. Without this first step, our efforts will likely fizzle out as our commitment and persistence wane when things get tough.

CREATING A PLAN

Prepare and plan. A friend recently shared his experience of becoming a vegetarian and highlighted how much more time is needed for food preparation and planning. He never thought he could follow a diet that excluded meat, as he was the first to buy a boerewors-roll at the local Saturday market and loved to snack on meaty-leftovers.

Four years down the line, he and his family spend considerably more time planning and preparing meals, and they love it! They’re more mindful of what they’re eating and are living a choice that they’ve made for themselves.

The change was possible and sustainable because they put in the effort to plan meals and do the needed preparation. A bonus of this journey is that they can be more mindful, which is a powerful tool for keeping our head in the game. And, they are able to spend quality time together as a family when they prepare food together

Whether it’s changing your diet, your spending habits or spending less time on social media, planning and preparing your world around you to LOOK different will help you BE different.

SUPPORT AND ENCOURAGEMENT

As we look at the example above, another element of their success in embracing a different diet was that they had the support and encouragement of each other in the family. They decided to make the change together.

When it comes to your changes, you don’t necessarily have to have the support of those in your family, but it certainly helps. If your family are not on board, seek out thought leaders or influencers who have the same mindset – they’re a great source of encouragement, and they add credibility, as they most likely did the research!

People who support you help you hold onto the hope of what your changed future could look like; they hold you accountable to the goals that you’ve set for yourself and help you develop your potential.

Above all – remember this: you are not alone. You’re not the only person to want to change your debt situation, change your eating habits, your sleeping habits or bring more balance to your life. Find out, speak out, reach out and begin to see sustainable change in your life.

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Ifs, buts and Bitcoin

“If only I’d bought into Bitcoin in 2008…”

“But, it’s not regulated…”

“But, the bubble…”

“Bitcoin – I don’t want to miss out…”

Before engaging in any blog about Bitcoin, it HAS to be stated that Bitcoin is an incredibly risky investment that may or may not pay off. Bitcoin is a decentralised digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.

It could be the answer you’ve been looking for. Or, it could be the worst idea ever.

It’s probably not the best fit for most people. If you’re eager to invest in cryptocurrency, it’s essential to do so safely.

As with ANY OTHER INVESTMENT DECISION – make sure you have a personal financial plan, an investment strategy with a well-diversified portfolio, and you don’t have to borrow money to invest.

Most people have a good handle on what Bitcoin is, but how to use it and whether to invest in it is the tough question that you simply cannot google.

As companies (like PayPal in October 2020) begin to buy into the viability of Bitcoin, its uses will increase and its value.

When Elon Musk announced on Twitter that he was a big supporter of Bitcoin, his particular endorsement rallied the value of Bitcoin significantly. He has repeatedly shown his support to online currencies and caused significant movements in their values due to his own personal wealth and influence.

This alone reminds us of the volatility of this young phenomenon of cryptocurrencies. But… still, people don’t want to miss out. The Brobdingnagian bubbles it’s created in the last decade have always left an aftermath of if-only-I-had-invested-sooner sentiments.

Actuary Imran Lorgat says that a sure way of realising that you are about to make an investment mistake is when an intense fear of missing out is spurring you on.

In an article for BusinessTech, Lorgat says: “Many invest in cryptocurrencies without a solid grasp of the basics. If you are interested in buying Bitcoin, then invest time into researching how it works and the risks associated with owning Bitcoin.”

“The price of Bitcoin over the long-term is driven by supply and demand, as well as adoption and technological development of the currency. However, in the short term, the price is driven mainly by hype and emotion.”

He goes on to talk about the value of buy-and-hold strategies when considering Bitcoin, which is similar to the approach of dollar-cost averaging in conventional investment strategies.

Bitcoin has been around since 2008, and it has always had a vacillating public interest. It is speculated that investors who have resisted the temptation to trade their Bitcoin through the highs and lows have probably gained the most.

“The conventional wisdom of ‘dollar-cost averaging’ applies to Bitcoin as well and is popular amongst Bitcoin investors. This means investing the same amount every month, without checking the price or trying to time the market. I follow this strategy myself,” remarked Lorgat.

If you are risk-averse and don’t have expendable investable income, Bitcoin is most likely not a good idea. But even so, it pays to be aware of how it’s growing and keep yourself educated around both it and other cryptocurrencies.

If anything is certain, it’s that the future is uncertain. Bitcoin is a fresh reminder that anything is possible.

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It’s Hue-Guh, not Hoo-Gah

Hygge (pronounced hue-guh, not hoo-gah) is a Danish word used when acknowledging a feeling or moment as cosy, charming or special. This can happen whether alone or with friends, at home or out, ordinary or extraordinary. It’s about how the event makes you feel, not the event itself.

From Danish cookies, cheese and pastries to their culture of simplicity, politeness, and equality – they should have a pretty good sense of how cosy-charming-special truly feels! And, when life is handing us bagfuls of lemons, it’s encouraging to know that there’s a word for how we can adopt a strategy to cope; hygge is a fresh, yet traditionally sound, system to consider.

In Danish, it means “to give courage, comfort, joy”, but in the Old Norse, it stems from the words used for “to think” and “hug”. It’s an active word that quite literally wants to embrace. It’s a word that affirms everything will be okay, that we’ve got this, and that we’re going to make it through to the other side.

Hygge helps us find and acknowledge comfort, contentment and wellbeing in the current moment, and not feel like it’s an unobtainable future feeling. It’s wise to consider this when we look at our life plans. Planning can be very future-focussed and, if we’re not careful, transport us out of the present and into a future that may or may not happen.

But joy is found in the present; it’s not something that we work towards. Joy is something we choose for today. We shouldn’t be planning to be joyful; we should be planning from a place of joy. This is how we can muster up the courage to be present and not panic about tomorrow.

Courage is resilience put to the test. We’re living in an age that is calling us to be more courageous and more vulnerable. The awareness that courage and vulnerability go hand-in-hand is so new that many large businesses are still restructuring their leadership cultures. They hope to connect on a more engaging level with their teams and find more fulfilment, more hygge, in their corporate culture.

Hygge reminds us that it’s okay to wear track pants today, to stay in those comfy old socks and work from the couch. It reminds us that comfort foods (those cookies, cheeses, pastries and pasta…) help heal our emotional and mental states. It can be as simple as lighting a candle and surrounding ourselves with people and things we love.

We don’t have to swim upstream all day, every day. We need to take rest days, personal health days and pamper days. It’s about the attitude of comfort, not the cost of conformity.

Give yourself a hug – take a Hygge-Day.

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Bite-sized chunks

No matter how hard we try, we never seem to get it all right… all the time! We were taught as kids that practice makes perfect, and this phrase set us up for unrealistic expectations. At some point in our future, we figured we would get it perfect. All we needed to do was keep trying and keep practising.

A different way to phrase that saying could be that practice makes progress, not perfection. Progress is far more accessible, sustainable and encouraging.

Progress acknowledges that we won’t get it right all the time. We will make mistakes, we will take risks, and we will have transitional periods where we slow down from fatigue and overwhelming circumstances.

Because, at the end of the day, that’s how life looks. It’s not steady, it’s not entirely predictable, and it’s certainly not perfect. This is why our finances don’t follow a straight line of growth. When we get battered in life, our finances get battered. We can mitigate that battering, and we can bolster reserves and protections, but our money will be affected.

It can be enormously disheartening when this happens; especially when the losses are high and they are accompanied by emotional trauma and loss. Most people cannot get back up on their own – and it’s likely that we were never supposed to do it alone.

We need the support, advice, patience, and love of our family and friends. And, we need to rebuild in bite-sized chunks.

There’s a lovely quote that says the best way to eat an elephant is one bite at a time. It reminds us that we need to break it down into bite-sized chunks when we’re faced with a seemingly impossible task. Another quote that is similar to this is one the Chinese proverb that says: “The journey of a thousand miles begins with one small step.”

When we have been knocked back (or completely flattened) in our financial plan, the best way to regain control is to tackle it in bite-sized chunks. After the turmoil of the initial shock, we need to return to the basics of budgeting, where we become mindful of daily spending and monthly responsibilities. We first work to reclaim control in this area – it could take a few months to take a few years.

This will be an empowering journey, not just for our finances but also for our personal growth and well-being. As our headspace heals and our heart beats more steadily, we will be able to engage more strategically with our financial plan again.

This doesn’t happen overnight – it happens one bite-sized chunk at a time. This is how we build and rebuild a robust life measured by progress, not perfection.

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