Last week’s blog talked about having a vision for your future and how linking your New Year’s Resolution to taking a step to turning that vision into your reality will significantly improve the likelihood of you successfully keeping your resolution this year. For many people, this step will involve reformed spending, paying down debt or saving more. All of these actions are good, and any one of them will contribute to the improvement of your financial well-being. But we don’t want to limit the potential New Year’s Resolutions to just budgeting and debt management. Rather this week, in part 2 of our 3 part series, we are going to continue further down the path of thinking about our finances more holistically as you consider your 2020 Financial New Year’s Resolution.
The topic of personal finance is actually a very big topic. In fact, it incorporates things like:
- Structuring your wealth
- Protecting yourself & Vulnerability Planning
- Giving & Philanthropy
- Financial Planning, which itself can include:
- Retirement Income
- Major Purchase
- Estate Planning (which even includes Health and Care Directives)
- Powers of Attorney and other important roles
I have a theory that because the area of Personal Finance is one that is so far reaching it becomes a significant contributing factor to why so many people simply do not have confidence in their finances, whether that is their current financial position, their ability to reach their goals or even their financial knowledge. Quite frankly, Personal Finance is such a big topic that unless you are a financial professional, and even then the area is so big that financial professionals specialize (that’s why you have Bankers, Mortgage Brokers, Accountants, Financial Advisors / Planners, etc), that it can be overwhelming. If we are concerned about just one area, we have a tendency to let that area of concern overshadow the areas we are good in, and the result is an overall feeling of insecurity about our finances and/or knowledge. In my professional practice I see it all the time, people who come in, they have managed the household budget and day to day banking for decades, they are the ones who managed and figured out how to pay off the mortgage faster while diligently saving for the future, and yet they claim to know very little about money. They would say they are not confident in their finances / financial knowledge when in reality, they actually have a lot of it right. They just may not be comfortable or understand Investments. They are missing the forest for the trees. Instead of being proud of themselves for having responsibly managed a very important part of the household finances, they allow that success to be over shadowed by a single area of concern.
As you think about your New Year’s Resolution this year, don’t limit yourself to just spending less, saving more or paying down debt. Rather consider whether or not your New Year’s Resolution should be to prioritize improving your financial knowledge / awareness or simply get an area of personal finance that is unruly under control so you can improve your overall confidence in your finances.
Look for part 3 of our New Year’s Resolution series next week – a questionnaire to help you identify which area of Personal Finance needs your attention in 2020 to and to identify the best New Year’s Resolution you can make to achieve your vision for your future and improve your financial confidence.