If you’re reading this column, you’re concerned about your finances. You know how important they are. Why? Are you looking for financial protection, or is your goal to buy a house, a boat, finance your child’s college education?
Your answer really matters.
While there’s nothing magic about financial planning, it takes time to implement a strategy. If your motivation is to satisfy a short-term goal of making a major purchase, how patient will you be? If your motivation is to improve your financial health, then you’ll have to get the stamina necessary to make a plan work for you. So, forget about the short-term goals. Focus instead on your motivations. What is important to you?
Let’s assume you want is self-sufficiency. What does that mean? Owning your own home, being able to retire and live at about the same level as if you were still working? What would make you most satisfied with your finances? Where is your comfort level? Are you realistic enough to admit that it’s unlikely you will ever have as much money as Bill Gates?
To get started, let’s make a list of your motivators—what you really want to achieve from your lifetime of financial planning.
Get pretty specific about what you want. Identify your comfort level. Of course, this will likely change over the years, but to start, figure out today’s list and we’ll use that for now.
Here’s an example of a motivations list prepared by Jane, age 33. I want a lifetime financial plan because:
- I don’t want to have to worry about money constantly. I want to know I’ve done the best to minimize my worries so that I am not a burden to my family or loved ones. I want to know enough to be able to create a money strategy and execute it.
- When I retire, I want to be independent. I don’t want my husband/ children/family to have to care for me. I want to pay my own way.
- I want to be able to help my loved ones financially, like paying for college for my children.
- I want my plan to help me pay off my house so that when I am older, I won’t have mortgage payments to worry about.
- What do you see in Jane’s list? Clearly, she’s concerned about having and keeping money. It seems that she fears lack of money. OK, that’s fine as a motivator. But why? What’s going on in Jane’s life that causes such worry? What Jane needs to do is delve deeper into her list:
- I worry about money all the time, about having enough to pay off my bills. They seem to come at me from nowhere and pile up. I lose sleep worrying about where I will find the money to pay all the bills.
- I cannot seem to control myself, or my situation. I feel I am a burden on my loved ones, my family, since they often loan me money. I know they can’t afford it. Why can’t I learn to control money?
Whoa! Jane’s deeper list contains something important. Control. Jane’s relationship with money is out of control. Now we get to a real motivator for Jane.
Suppose she got control? Suppose she learned enough to manage her relationship with money? Feeling that control, exercising a newfound power over money and its relationship to her, now that’s a true motivator for a lifetime of financial planning.
Jane can do it and so can you.
See what I mean about the motivations list? Start with a list, then read and re-read it and go deeper. Be brutally honest with your feelings. Identify why you want a lifetime financial plan. Getting to the why is half the battle. Learning how to plan and executing the plan are easy compared to identifying why you want the plan.
Remember Scarlet in Gone With The Wind? To paraphrase, “As God is my witness, I’ll never go hungry again!”
Freedom from hunger is a true motivator. No one who has felt real hunger ever wants to be hungry again. But, is it fear of hunger pangs that is the motivator, or is it really the powerlessness of being unable to feed yourself? Lack of power over your circumstances—that control thing again, appears to be the true motivator. Maybe that’s why those who survived the Great Depression in the 1930’s were better savers than later generations. It’s because many of them went hungry, and lost control over their life situations. That’s why they tended to set aside a greater portion of their income in savings as protection, as a cushion.
If you think you’ll never be able to achieve your financial plan because of a lack of education, think again. You can learn about finances. But you will only stick with a financial plan if you learn first what it is that motivates you.
It all begins with motivation. Why is having a financial plan important to you? Your motivations must be honest. Complete your list, re-read and refine it until you are satisfied that you understand what truly motivates you to create and follow a lifetime financial plan.
Write down five factors that motivate you to create a financial plan. Now, review your list. Is there any common denominator? Is something else going on? Like Jane, is gaining control a primary factor that will motivate you to create and follow a lifetime plan?
The goal is to identify your motivating factors in your relationship with money. What causes you to stress about money? What would make you feel more secure? If you can answer those questions, you’ll be able to commit yourself to creating and following a lifetime financial plan.
About the Author: Lyn Striegel is an attorney in private practice in Chesapeake Beach and Annapolis. Lyn has over thirty years experience in the fields of estate and financial planning and is the author of “Live Secure: Estate and Financial Planning for Women and the Men Who Love Them (2011 ed.).” Nothing in this article constitutes specific legal or financial advice and readers are advised to consult their own counsel.