LOUISE FAIRSAVE: Mastering money
YOU WILL LIKELY BE SURPRISED to find out what is the most profound step you can take towards mastering your money. Today I will discuss that major step along with two other key pointers to get you on your way to improving your personal financial management.
1. Examine your values: What makes you happy? What motivates you? Why do you do what you do? What is important to you? What are you planning for and why? Can you answer these questions right off?
Given the busy rush and noise of life, we hardly ever stop to consider the standards and principles which underpin our choices. In fact, we are quite likely drawn to follow the latest advertised trend. Worse still, we may follow the neighbours without really thinking about what is best for us. However, the most fundamental step in planning our financial future is to examine our values and rank them in order of importance.
Your values help in setting goals which will motivate you and keep you motivated. Values vary from person to person. Also, be mindful that you change and your values change so it is important to revisit this exercise. The first step is to identify your values and then to rank, say, the top ten values and if possible the top three that impinge directly on your financial goal-setting.
For couples who are in a long-term relationship, this may be a very revealing exercise if done together; yet it can be very helpful in understanding each other’s financial values and goals. Based on the results of the ranking exercise, you can move on to develop goals that are consistent with your values.
You then aspire to these goals and work towards attaining them, with your value set providing the ‘why’ for your life choices. Somehow without goals that are grounded in your personal values, you can go through life feeling like something is missing. Alternately, some people reach near the end of their careers and wished they had made this “value” consideration from the beginning.
2. The next important step in mastering your money is to take the time to improve your knowledge and understanding. How much time do you spend each week planning your finances? The saying goes: if you fail to plan, you are planning to fail.
So, take the time to review your finances regularly and to assess how you are doing. Start to spend at least two hours each week reviewing how you are spending, saving and investing your funds and the plans for the next few weeks. Are you operating consistent with your values and goals? The website www.google.com is always ready to answer any spur-of-the-moment query you may have; there is a wealth of guidance available on the Internet.
3. Read about personal money management. Whereas the Internet can be useful for researching spur-of-the-moment queries, it is important to build up a fundamental body of knowledge and understanding of how to manage your finances. There are many good books available and more being published every day. You can establish a kindle library of reading material on topics that interest you most. Here are three top recommendations:
• Rich Dad, Poor Dad by Robert Kiyosaki with Sharon Lechter;
• The Millionaire Next Door by Profs. William Danko and Tomas Stanley; and
• The Wealthy Barber By David Chilton.
You will know when you are improving your understanding when you are in a position to pass on tips, explaining with confidence to your family and friends. • Louise Fairsave is a personal financial management adviser, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek advice about their specific circumstances.
This column is sponsored by the Barbados Workers’ Union Co-op Credit Union Ltd.