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Revisit Your Emotions Before Revising Your Financial Plan

Article Contents:

Overview

First off, great job for having a financial plan or even considering getting one. Setting the course for and being willing to look at your financial situation is both a great beginning and a great destination. It takes courage, discipline and a moderate level of humility to accept responsibility for your money situation. 

As you may be aware, having a plan and sticking to that plan are not the same thing. I have probably had 17 workout plans (in the last year alone) and an equal number of diet, nutrition, and habit goals. And guess what I’m tempted to work on? Yep, Creating plan #18. 

If your financial plan doesn’t seem exciting or doesn’t seem to be working, it might be time to consider the emotions that are guiding your financial life before making a new financial plan. 

"Unless you make the unconscious conscious, it will rule your life and you will call it fate."

Financial Emotions

So, just as we have taken a clear and honest look at your financial statistics, let’s look at your financial emotions. This will require similar—if not more—courage, discipline, and humility. It will also require loads of compassion towards yourself. 

 

Owning the Past to Own the Future

“The more you take responsibility for your past and present, the more you are able to create the future you seek.” – Anonymous

Before making plans for your financial future, it is a good idea to completely accept that every financial result—the good, the bad, and the ugly—is a result of our choices. We choose how much to plan or not plan, what financial priorities we set, and to what extent we sacrifice for our goals. Once we accept that our values have influenced our past choices, which led us to where we are now, we can reevaluate our values and our financial choices if needed, leading us towards a better destination. 

"Don't tell me what you value, show me your budget, and I'll tell you what you value.”

So, let’s look at what our values have been until now. Listed below are examples of questions you can ask yourself to gain clarity of the unconscious (or conscious) values and behaviors that have led you so far. What is my proudest financial decision? 


  • What is my biggest financial regret? 
  • What’s been the best use of my savings?
  • Do I have an emergency fund? 
  • Have I prioritized investing? 
  • Am I knowledgeable about investing options appropriate for me?
  • Who is my role model when it comes to money?


It’s okay to confidently answer all of these questions. It’s also okay to answer less confidently and take full responsibility for your answers either way. The goal, for now, is to accept that our current financial situation is the result of our previous financial plan, or lack thereof. 


After Acceptance Comes Clarity

As we accept that we are the masters of our past, we can now become the masters of our future. How do we do this? As Stephen Covey taught, let’s “start with the end in mind.” 

Money is a tool. Just as rulers measure length and thermometers measure heat, money measures economic value and allows us to exchange it. However, this tool needs a purpose to be useful. 

So, what will be the best use of your money? 


Example 


Let’s review a situation between two people. The first person is a boy named Rob. The second person is a girl named Sue. Rob has $100 in cash. Sue has $1,000 in cash. 


Rob knows exactly how to spend his $100 bill. He goes to his favorite ice cream shop to spend $5 and get his favorite combination of flavors. He then spends the remaining money in the following ways:

  • Saves $20 in his piggy bank
  • Uses $30 to buy gas for his car
  • Goes out to the movies to watch the new release of his favorite cartoon for $35 
  • Donates $10 to his struggling friend, Drew, who needs a new pair of shoes


At the end of the day, Rob looks back at a day where he has satisfied his pleasures, taken care of a friend in need, and has not fallen behind in his obligations. 


Sue, on the other hand, has $1,000, which is a lot more money than Rob has. She spends it buying a stylish bag for $1,000. It is a bit expensive, but her friend Jess has a similar bag, and Sue wants to look as cool as her. Once the bag arrives in the mail, she opens the box and realizes that the color is not exactly how she imagined. Bitter, she spends the next day trying to get her purse reimbursed and returned to the seller. 


The point of this story is to illustrate that the art of spending money is just as important as the art of accumulating money. If you don’t know how to trade your money for full enjoyment, then why accumulate more? 


So, let’s start there. Ask yourself: What do you feel has been the best use of your money in the past? 


Whether it’s pursuing a passion, donating to an honorable cause, or helping a loved one in need, there is one common trait to money satisfaction: giving.


“Many people will just laugh when they hear that the secret to success is giving. Then again, many people are nowhere near as successful as they wish they were.”

As you work on growing your nest egg, it may be helpful to make sure that you have a clear idea of how you’ll give it all away, of how you’ll live a legacy. Once you have that decided, with this goal being revisited as needed, it’s time for the real planning to start. 

 

If Money Was A High School Class

 

If I had a chemistry test coming up, I’d do 4 things:

 

  1. I’d find someone else who is taking the same test at the same time
  2. I’d find several books that cover the material I will be tested on
  3. I’d find a teacher that can answer questions specific to my learning style and pace
  4. I’d schedule my learning and practice around that timeline

Now, let’s replace chemistry with money. One day, we will all be tested on money. We won’t be able to trade time for money anymore, as our body will be tired. Retirement, they call it. Retirement is maybe less of a future single event, but more of a class we can enroll in. 

 

  1. Who is someone that plans to retire around the same time as you?
  2. What books do you need to digest to be ready for that day?
  3. Who is someone that can help you plan according to your investment style and pace?
  4. Are you on track to retire? 

Science is nothing other than learning and effort applied to discover what used to be a mystery. And retirement is much more of a science than an art (or a mystery). 

 

Summary

 

Be kind to yourself as you accept that you are responsible for your current and future financial situation. As you plan for the future, remember to practice the art of spending early on, so that you’ll be able to trade more money in the future for more joy instead of dissatisfaction. 

And as you embark in this great journey of practicing stewardship in this game called life through the management of your financial resources, don’t forget to turn the mysterious money game into a classroom filled with easy-to-understand books, cheering classmates, kind teachers, and a plan set to match your pace and capacity. 

More importantly, don’t forget that time, like money, cannot be stored indefinitely but only given away. For this reason, it’s just as important to know how we’ll give money away as it is to have a plan to accumulate our wealth. You will never feel that you have enough money if you don’t know who and what you are accumulating money for. 

“To be financially wealthy you must have a purpose for your life. In other words, without purpose, you’ll never know when you have enough money, and you can never be financially wealthy.”

As you continue to accumulate your wealth, don’t forget to keep the end in mind. 

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Article Author:
Dany Watts

Dany Watts

Dany Watts is a finance professional with more than 5 years of experience. Dany obtained a master's degree in quantitative mathematics from Brigham Young University. Currently, Dany works for Carta, a fintech company, performing private equity valuations and consulting. In his free time, Dany enjoys reading psychology and fiction books, writing blog articles, and cooking Italian food with his friends.
Article Author:
Dany Watts

Dany Watts

Dany Watts is a finance professional with more than 5 years of experience. Dany obtained a master's degree in quantitative mathematics from Brigham Young University. Currently, Dany works for Carta, a fintech company, performing private equity valuations and consulting. In his free time, Dany enjoys reading psychology and fiction books, writing blog articles, and cooking Italian food with his friends.

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