Take control of financial fears
>> Tuesday, September 22, 2009
In her book ‘The 9 Steps to Financial Freedom’, Suze Orman asserts that at the root of issues many of us have with financial planning and money management is our fear of money. These fears have their groundings in our childhood memories of how the persons around us dealt with money and the power it seemed to have over their lives.
Based on our own personal circumstances and reactions we may become very unwise about money, spending beyond our means, or we may be overly cautious in our investment strategy. The first two steps in the aforementioned book force readers to take a look at their attitudes to money.
In addition to a lack of courage in money matters, there also appears to be a lack of knowledge. Despite the many “economists” our nation has, evidenced by the number of persons who call the radio talk shows with their solutions, few of us really understand how many of the financial instruments that are available work. This lack of knowledge may be due to our perception that the subject is too difficult and technical to understand, or it may be that our fear has made us avoid learning about the topic.
Money matters and financial planning in general can have persons cowering, but preparing for the day when the individual is no longer able to work appears to be the scariest scenario of all. Working as a Financial Professional I have deduced that there are three major attitudes to retirement planning. One belongs to a group of people who see retirement as death’s waiting room, the last bench on which they will sit before seeing their final doctor. These people not only avoid planning for their retirement, they may also avoid buying life insurance or writing their wills. (We will address the issues of the other groups — persons who believe that they have insufficient income to plan for their retirement and thus believe planning to be pointless, and procrastinators who view retirement as a long way off — in subsequent blogs.)
There is nothing wrong with having a fear. Being afraid of the unknown, of appearing foolish, or of our own mortality is normal. Yet because ultimately we wish to enjoy financially independent lives and not be a burden to others, we need to face our fears and take appropriate action. Our families and our children depend on us to be responsible. Writing a will for example, an important part of long-term financial planning, makes life that much easier for our loved ones. Seeking to understand the investment instrument that we have purchased, why it is the best for us, and the benefits and risks, will ultimately have an impact on our families. In being responsible for our financial well being we are being responsible to our loved ones as well.
Each of us needs to examine ourselves to discover what our fears are. What is stopping you from planning for your long term financial security? Some signs that maybe you are allowing yourself to be hindered by money fears include: (1) large sums of money placed unnecessarily in low interest bearing instruments such as savings accounts; (2) lack of a will; (3) chronic bank overdrafts and overspending on credit cards; or (4) not owning anything even though you have money to do so. Some of our fears will be dispelled with information.
I suggest a lot of research and there are many books and articles readily available in the market place today. Once you’re ready to put your plan together, you should speak with a financial advisor or a Consultant. They are not that scary.
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