Category: LIFE

The root of our wealth is not in our income or our spending; it’s in our behaviour. Our habits make us wealthy, not the markets. Some have said that sound financial management comes down to spending less than we earn – but whilst this adage holds merit, it’s a lot more complicated in practice.

It’s complicated because people are complicated.

It’s not helpful to tell someone who is already relying on credit to get through the month, to spend less than they earn. Most often, in our experience in the financial planning profession, people find themselves in debt because life throws a curveball they weren’t expecting, and despite prudent planning, they have had to incur to make ends meet.

We need to stop feeling guilty for having debt, and we need to find ways to sustainably work towards healthier finances. This is difficult to manage when we have people telling us that we need to “save for a rainy day”, “invest for the long term”, and “pay down our debt”.

What we need is people telling us that where we are right now, having decided to improve our financial situation, is an excellent place to be. It’s a good place because our intention is right – and when we set a good intention, we can ensure that energy and resources flow towards that intention.

Saving and investing form part of this, but not often how we expect. Saving and investing are actually only powerful when we can form them into habits. Remember, the root of our wealth lies in our repetitive behaviour.

Saving and investing have many different features, but they do share one common goal: they’re both strategies that help you accumulate money. They allow us to consider what might happen tomorrow and ensure some of the money we may need will be available.

It’s helpful to think incrementally when talking about planning for tomorrow’s financial needs. If we hold an idea that we’ll make a bulk deposit into our savings or investments, we unconsciously do two things: we put it off until we think we have enough, and we see it as a big-in and big-out deal (kind of like a get-rich-quick scheme).

But, if we hold to the premise that wealth is built through good habits, we can start to see that both saving and investing work best when practised a little bit at a time. This means we don’t have to put it off; we can put a little bit aside each month – whatever we can afford. The amount is far less important than the habit we’re trying to develop. And, we’ll be less likely to make significant withdrawals on our savings and investments because we can appreciate how long they’ve taken to accrue.

Whether through our savings or investments, building wealth is best done, one brick at a time. This is how we build a firm foundation for healthy financial planning.

WHERE TRUE FINANCIAL PLANNING STARTS

One of the best ways to make any constructive change or difference in the direction of our lives is to take a moment to observe what’s currently going on. Life whizzes by so quickly that if we don’t check in with ourselves, we will find it hard to observe and articulate what has changed.

Financial planning, if done right, should start in the same place. Rather than beginning a financial planning conversation by talking about what’s changed in the market, or what’s changed with financial products, it’s more helpful to talk about what’s changed within our own life.

So often, it’s easy to get sucked into the financial happenings of everyone else, and then benchmark ourselves according to things that we cannot change or influence. This is when we run the danger of developing a toxic and harmful view of our financial situation.

If we think that everyone else is doing well because we see the lifestyle choices they’re making, we can feel like we’re falling behind or the only people struggling. 

We read on social media how other people are buying new cars, moving homes, or emigrating – we see the changes happening in their lives and can subtly start to think that perhaps we should be doing the same. But – it’s not about what changes in their lives. It’s not about what happens with the stock exchange or political unrest on another continent.

It’s about what’s changing in our own lives.

Financial decisions are linked to our daily lifestyle choices; we cannot separate them. Anything we choose to do today will impact our finances tomorrow. So, if we’re going to talk about financial planning in a way that is inseparable from our life, family and business, we need to focus on what’s changing in our own lives, day-to-day, week-to-week, month-to-month.

You may know that journaling is a powerful way to help us heal and sustain our mental health. Coaches, counsellors and psychologists all encourage their clients to keep journals to track their emotions and thoughts in a way that can help them observe behaviours and articulate the changes they’d like to make. This process often includes identifying behaviours that are sparked or triggered by specific thoughts or feelings.

When it comes to our finances, it’s not too different. In fact – in accounting, the record of business finance is called a journal, and each item is referred to as a journal entry. In personal finance, the journal is a little like your personal budget. It helps us understand where our money is going, and why.

Financial planning considers your budget, all of your assets and responsibilities and the potential risk of losing or limiting your income. It’s all about you and helping you navigate the journey of making better financial decisions.

So – your financial planning should always begin with a conversation about what’s changed in your life, not what’s changed in the middle of Asia. It should focus on your concerns, not those of your neighbours down the way. This is how we can work together to help you achieve and engage with a financial plan that truly benefits you and your family and changes with you.

Some people say that magic isn’t real, but what about the first magic words we’re all taught to say? No – not “abracadabra” or “zimzalabim”, although those are great words. Abracadabra is thought to come from the Aramaic phrase “avra kehdabra”, meaning “I will create as I speak”, and zimzalabim comes from the mythological tricksters, Zim Zala and Bim.

But, our most basic and formative levels of social etiquette (getting people to do what we want = magic) include the words “please” and “thank you”. Leading money gurus and coaches are increasingly aware that much of our sentiment and feelings influence our ability to create, grow, protect and share our wealth. Having a positive mindset around our money is instrumental in maintaining good mental health.

Many years ago, the phrase “an attitude of gratitude” became a popular saying. If we read the early Stoic philosophers, the themes of thought linking gratitude and wellness are abundant, reminding us that it’s not a new concept but possibly as old as magic itself. 

The link between gratitude and our wealth can be as simple as saying thank you when we receive a flow of money. It can be from a regular paycheck, an upward shift in our stocks, the sale of an asset or any other windfall or gift of generosity. Every time we open a statement or receive a notification from our bank or e-wallet letting us know that there’s more money now than there was a few seconds ago, we can say, “Thank you, money.”

The thought behind this practice is much deeper than simply acknowledging the money itself; rather, it’s about recognising the gratitude for what the money will mean to how you can be generous. When we see money as a flowing commodity that moves quite freely between us all, we can see how it connects and empowers us, and we can use it in a healthier way.

We can also say “thank you, money” when spending (paying it forward) money. Whether it’s for a basket full of groceries, school fees, a cup of coffee, dinner out with our loved ones, or a payment for our home, releasing that money with gratitude improves our mental wellbeing and our ability to sustain a positive mindset.

What we’re ultimately saying is that we’re grateful that we have the money we need, to do what we need to, at that moment. This is why it’s so much deeper than just the momentary transaction. This approach speaks to how we received the money and have kept it; it recognises the people involved and the opportunities with which we’ve been gifted.

Would you consider yourself to be financially intelligent? Depending on how you answer that, here’s another tough question: how much do you trust yourself to manage your own finances? Often we find that after answering the second question, clients want to go back and reanswer the first! And, that’s okay.

As Ken Honda suggests, there’s more than one type of financial intelligence, and we can work on both to be happy and prosperous.

Honda, Japan’s no. 1 money teacher, helps people understand money’s true role in their lives and manage their feelings towards money. In his approach, he speaks to Money IQ and Money EQ. We have found that most people only ever discuss Money IQ or the practical accounting, money-making, investing side of money. Unfortunately, we’re never really taught how to have conversations about Money EQ — our emotional intelligence about money.

We need a healthy balance of both Money IQ and Money EQ. High Money EQ allows us to develop a much better relationship — not only with money but also with the people in our lives — and at the end of the day, all of life’s most important chances and opportunities come to us through people we know and meet.

Here’s how Honda unpacks the different stages of integration of our Money IQ and EQ:

#1 Low Money IQ – Low Money EQ

People in this category are fraught with money stress, finding themselves in a perpetual state of scarcity with seemingly no sign of upward mobility. This is where most of us begin our journey.  

#2 High Money IQ – Low Money EQ

The vast majority of people fall into this category, knowing the mechanics of money, but the idea of money still carries some emotional baggage.

#3 Low Money IQ – High Money EQ

People in this category tend not to have money stress, but they don’t always have a good handle on their wealth. Interestingly enough, if you find yourself in this category, getting to the next and final stage is a lot easier!

#4 High Money IQ – High Money EQ

Here, we strike the ideal balance between handling and growing your wealth and enjoying everything our money can do for our quality of life.

There are many ways to move from one end of the spectrum to the other, and having a financial adviser help you along the way will make the process significantly easier! As we journey together, you will hopefully begin to face your finances with positivity, confident in your ability to fulfill your goals. Even after a stumble, moving forward will become much easier, freeing yourself from constrictive viewpoints about finance to avoid sabotaging yourself. 

You will also find it easier to focus on what you can control and detach from what you can’t control.

At the heart of everything, we find relationships. Most of these are unintentional relationships that happen situationally, but some are relationships that stem from our choices. From the moment we enter the world, we will have a relationship with everyone and everything: from the space around us to the people who are present and how each made us feel.

While these connections are as old as life, the Scientific Revolution sparked Newton’s insight in 1687. He discovered that when two bodies interact, they apply forces that are equal in magnitude and opposite in direction. This is known as Newton’s Third Law: the law of action and reaction.

In other words, everything is related to everything. It’s science. And, as sentient beings, our relationships influence our thoughts, feelings and actions (or reactions…).

Have you ever noticed how something as simple as the weather can affect your feelings and choices, or how the energy of someone else in the room can fill you with hope or totally deflate your sails? What about coffee, sugar, meat, milk, gluten and soy – what is your relationship like with them? What about your money, job, family – how do these relationships leave you feeling and influence your choices?

Sometimes these feelings are legitimately influenced by external forces of attraction; sometimes, they start in our head. Cognitive-behavioural therapy (CBT) is a type of psychotherapy that attempts to modify thought patterns to help change moods and behaviour. If negative thoughts begin in our head, we can hopefully end them there too.

According to a recent blog on healthline.com, CBT is based on the idea that negative actions or feelings are from current distorted beliefs or thoughts, not unconscious forces from the past. These patterns can form into several categories of self-defeating thinking (also known as cognitive distortions).

These may include:

• all-or-nothing thinking: viewing the world in absolute, black-and-white terms
• disqualifying the positive: rejecting positive experiences by insisting they “don’t count” for some reason
• automatic negative reactions: having habitual, scolding thoughts
• magnifying or minimising the importance of an event: making a bigger deal about a specific event or moment
• overgeneralisation: drawing overly broad conclusions from a single event
• personalisation: taking things too personally or feeling actions are specifically directed at you
• mental filter: picking out a single negative detail and dwelling on it exclusively so that the vision of reality becomes darkened

When we can identify and observe these patterns of thinking, we can do something about them! This means that if the stock markets crash or someone crashes into our parked car, we can re-train our brains for healthier reactions.

We can learn to manage and modify distorted thoughts and reactions, and accurately and comprehensively assess external situations and reactions or emotional behaviour. Practising accurate and balanced self-talk will help us reflect and respond appropriately. So the next time you’re talking to yourself – see if you can retrain your brain and feel healthier.

<Click here for more on CBT>

If we don’t stand for something, we will fall for anything. Essentially, our actions will either result from what we choose, or what is chosen for us.

Our days are packed full of communication and actions. From the moment we engage with our mobile device or open our emails, messages begin to stream in and affect us. We will either be triggered into action by what we engage with or choose to follow our own intended plan of action for the day.

When we look deeper into how and why we are triggered, we enter a complex world of psychology and psychoanalysis, encountering things like our ego, our hidden self and our true self. There are excellent resources and coaches to help us understand our personality and strengths. Ultimately, we arrive at a state of being more mindful and intentional.

When we consider intention and how it impacts our future self, it’s helpful to consider the difference between making choices and making decisions. A choice can be seen as the result of intentional mindfulness, and a decision can be expressed as an intentional response to consequences.

Choices connect us to our desired intention, values and beliefs and speak to rights, power and opportunity. Decisions connect us to behaviour, performance and consequences and focus on the act of needing to make up our mind about something. Neither approach is wrong, one is merely premeditated whilst the other is responsive; both can be intentional.

If we want to be successful in our choices and decisions, we need to assess our habits and our cheerleaders.

Habits are at the root of all of our worst and best decisions. It’s often said that it’s not the markets that make us wealthy, but our habits. This is true for every area of our lives – not just our finances. Our habits are so powerful because as we stand at the helm of our life, we determine the direction we will take. If there’s a storm, we can navigate around it or through it; if there’s land, we can go towards it or away from it. We make our habits, and our habits make us.

Our cheerleaders are those standing beside us to help us navigate and manage the ship. They’re our closest friends and family, our colleagues and our coaches. They’re the ones we choose to listen to, and their messages will either reinforce us or ruin us. They can help us see our blindspots and help us identify strengths.

However you want to enhance or improve your life, take the time to be intentional about how you choose what you will stand for.

We often don’t worry about something until we realise that it’s limited. If we have lots of something, it’s a fortune. If we don’t, it can become a focus of concern and anxiety. 

Young children generally don’t worry about much if their needs are met. With access to their parents’ love, attention and confidence, children have much of the social affirmation they need. When school starts and they are placed in a room with lots of other children with similar needs and only a handful of adults, they quickly become aware of social capital.

Within a few years, money becomes more of an issue. Realising we can’t have everything we want, when we want it, awakens us to the importance of financial capital. As soon as we are old enough to start earning money, we jump at the opportunity, whether babysitting, washing cars, a paper route, waiting tables or any other casual position.

With increasing age, our good health becomes harder to maintain. It can happen for some in childhood years; for others, it kicks in around their twenties and thirties when weight gain is the first sign of an ageing body. And, with significant health scares or ageing, our acute awareness of how little time we have left leaves us aware of our time wealth.

If we want to know just how wealthy we are, we need to consider all four of the types of wealth above:

1. Social Wealth
2. Financial Wealth
3. Health Wealth (Physical & Mental)
4. Time Wealth (Freedom)

Social Wealth

The amount of support for and from others that we enjoy is our social wealth. Investopedia defines social capital as a set of shared values that allows us to work together in a group to achieve a common purpose effectively. The idea is generally used to describe how members can band together to live harmoniously.

In a way, our social capital is our most important as it allows us access to the finances, health, and time of others in our social sphere. 

Financial Wealth 

Indeed, money doesn’t make us happy, but having access to financial resources to build and grow is essential to the contributions we can make in our social circles, in protecting our health and affording us freedom of our time.

Health Wealth 

When we assess our financial portfolio, we often see health in terms of medical cover for emergencies and chronic illness. But it’s so much more than that. It’s physical, mental and emotional, from every bite of food we eat to every word we read and repeat, from how we manage anxiety to how we manage our sleep; our health wealth is integrated into every choice we make.

Time Wealth

We had absolute freedom of time in our first few years of life, and we didn’t realise it until we traded it for schooling, working, and maintaining our health. We need to be intentional about reclaiming our power in this wealth area, and we do this through building our social, financial and health wealth. 

Our fortune is not just the balance at the bottom right of our monthly bank statement or acquired total assets. It’s so much more meaningful and purposeful when we can see the areas in our lives that accrue and attribute value and make us fortunate.

Have you ever gone down a rabbit hole on social media? You know, that moment when you see something triggering and you click on it, and then scroll down through the comments, becoming wholly engrossed in a conversation that turns out to be a waste of time and emotional energy. While we’re in that moment, we’re often completely unaware of how it’s affecting us. Catastrophising is a little like that.

We can all be affected by catastrophic thinking to differing degrees. It happens when we ruminate about irrational worst-case outcomes, assuming that the worst will come true.

For example, when we get a sore throat, we might leap from one disastrous medical condition to the next, ending in our impending doom from some rare and awful disease. Or, when someone doesn’t reply to our text message, we immediately start to assume the worst and run down a track that ends in our removal from every social group.

Perhaps there is a significant crash in the markets, and we assume our investment portfolio will be wiped out, or we lose a large client, and we think our business will crash. If these patterns sound familiar, don’t panic – you’re not alone.

Many of us engage in this type of self-sabotaging thinking at very manageable levels, we snap out of the catastrophe-coma and vow to never do it again (until the next day…) and carry on with life. However, there are times when catastrophising can become a debilitating reality. Various research has linked this more profound experience of catastrophic thinking to other conditions, such as chronic pain, chronic illness, or poor mental health.

If we are prone to depression or high anxiety, then catastrophising might very well be much harder for us to identify and manage. If we are in constant physical pain, this too will impact our mental health and render us more vulnerable to crippling thoughts. Some articles have shown that it’s not just psychological as it can affect the physiology of the brain.

The first step to managing catastrophising is to identify it. Many of us do it without realising it, so the sooner we can observe this behaviour, the sooner we can change it. As with most mental concerns, therapy is beneficial, and so are mindfulness practices and meditation. These are reflective processes that break down our repetitive thought patterns and allow us to decide which habits we should develop and which to abandon.

We can also intentionally surround ourselves with people who help us make better decisions, who understand what is important to us and can lovingly support us when we fall down the inevitable minefield of rabbit holes ahead of us. Most of the battle ahead is fought in the mind; if we can take steps to protect not only how we think but who we allow into our headspace, we will be stronger, safer and happier.

One of the hardest questions to answer when it comes to financial planning is: How much do I need?

There are two ways we can look at this. Either, I believe that my external circumstances will eventually reach a point where I have earned enough, and I’ll finally feel that I have enough. Or, I will come to the realisation that my wants and needs are based on my own personal perceptions.

It’s also difficult because no matter how we see this, external or internal, we will most likely continue to vacillate between the two. This is because our head seldom wants what our heart wants, and our heart seldom wants what our head wants. Even when we can discern the difference between a want and a need, the goalposts keep shifting.

There’s no list of one hundred things every family must have – it’s incredibly personal. And this is what makes financial planning so complex. We can’t actually answer the question “How much do I need” because that answer will keep changing.

This is why we need to find better questions to ask, and we’re doing that with some success, but it still doesn’t always help when we’re sitting staring at a Black Friday special and wondering if we should impulsively add it to our basket.

At this point in the conversation, it’s important to remember to be kind to ourselves. We will always make impulse purchases, and that’s okay. The dangerous territory lies in what habits we’re forming. If we’re habitually buying things we don’t need and spending money too carelessly, we will find ourselves in a place that is tough to change.

Here is a great way to leverage better money habits in our purchasing behaviour: create space to reflect on your purchase.

This is how:

1 – Be a basket case: once you’ve decided you want something (or need it…), put off purchasing for a day or two. For online shopping, leave it in your basket for 48 hours before proceeding to the checkout.

2 – Quarantine it: leave it sitting in the garage or your spare room for three days after buying it. If you’re no longer convinced it was a worthy purchase, send it back to the store.

3 – Last in, first out: if you buy a new one, give the old one away. The more clutter we accumulate, the harder it is to appreciate what we have.

These tips help us create space to think about how much we really need and can be powerful practices in developing habits that make us wealthy.

When we stand together, we can succeed together. We can support and encourage one another. But this only happens in our smaller, more intimate groups. The fourth industrial revolution has slowly edged us into a communication environment that is overwhelmed with information.

We are learning that whilst we can stand together in powerful support, we can also suffer together. A burden indeed shared is a burden halved, but if we’re not aware of it, the cumulative stress of those around us becomes additional stress for us.

This means that whilst we’re battling our own stress, we’re also taking on the stress of our collective unconscious.

This is known as the allostatic load: “the wear and tear on the body” that accumulates as we are exposed to repeated or chronic stress. As we scroll through our social media channels late at night (instead of getting an early night…), the algorithms feed us information that shows people behaving with less tolerance, forgiveness and empathy.

It’s because this keeps us scrolling for a few seconds longer. 

Mass media, for decades, has known that bad news sells. Social media has taken it to an exponentially higher level. It’s mentally corrosive and erosive, all at the cost of public interest – purely to remain interesting to the public.

It would be lovely to simply silence the onslaught of media and messages that cling to the virtual platforms that we use to engage with our family, friends, colleagues and customers, but we’re too far into the 4IR to turn back now. We need a different strategy to regain our sanity – and sustain our sanity.

Clean your feed 

Begin by boycotting the channels that happily fill your head and mind with a worst-case view of what’s going on in the world and, in the process of doing it, make you sad or angry.

Be more proactive on your social media channels. Hide or unfollow posts that are bating or triggering you.

Choose trust over mistrust

If we can break the natural circle of societal mistrust that has grown over the last decade, we can begin to rebuild a circle of trust in its place.

This isn’t about blind trust – if someone is being a bully online, we should shut them down. It’s about retraining our brain to realise that not everyone is out to spread malignant information. If we can slow down our reactionary time and squeeze in some reflection before responding, we can improve our ability to filter the riff-raff from the genuinely benevolent.

Avoid putting a spotlight on drama

We’ve become masters at making mountains out of molehills, and we have to keep our overreactions in check! Catastrophising is an extraordinarily debilitating trait because it is a trigger for anxiety, stress and depression.

Late night (or 3am) browsing is often a recipe for terrible decisions. We’re tired and emotionally vulnerable at these times – it’s not a great state for responsible online engagement. Put boundaries in place, both on what you’re seeing and when you’re seeing it.

In her blog – How To Stay Sane In A World Of Pain – Zoë Clews offers this advice:

Know what you’re in charge of – for good mental health, it’s important to understand these three areas: 

Locum of control – what time you get up, what you choose to put into your body, whether you pay your bills on time – this is you being in charge of yourself. 

Areas of influence – these are the things we can influence, but not directly control. They might include helping someone to quit smoking or persuading a friend not to go back to a toxic ex. Once we have done what we can to influence, we have to be ready to let go regardless of the outcome.

Things we can do nothing about – this covers things like whether an asteroid is going to destroy the Earth in your lifetime. These are the situations that really aren’t worth worrying about, and it’s these things that the media revels in telling you about. In the end, your anxiety and stress just feeds your sense of powerlessness.

If you really feel you can exert enough control and influence over something to make a tangible difference, then do it – the world needs more people like you. But be circumspect enough to be able to recognise when a situation is beyond your mastery.

We reclaim our sanity with intention, intention to do better and be better. If we just go with the tide of a dangerous shoreline, we’ll be bashed about by the waves and sucked in by the undercurrents. Every choice we make is a reflection of our mental health and will either help or hinder those around us.