Inspired by this post by the aptly titled humble dollar, let’s explore the behaviours that improve our finances.
These are all achievable and, unlike stock picking, do not rely on insider knowledge or luck.
Humility
First off, embrace humility. The financial world is uncertain – from market changes to unexpected life events. Focus on what you can control: your saving habits, spending choices, and investment strategies.
A financial planner is your guide in this uncertain terrain. They can help you accept that there are many things we cannot predict or control. Together, you will zero in on what you can influence, like how much you save, spend, and invest. They can give you valuable insights to navigate this uncertain terrain.
Managing costs
Next, let us talk about managing costs. Keep an eye on fixed expenses like rent, mortgage, utilities, and insurance, as well as discretionary spending. The lower these costs, the more room you have for other activities, saving, and giving back.
A financial planner can help you examine your expenses closely. They could work with you to find ways to lower these costs, like reducing utility bills or suggesting affordable activities and hobbies that align with your interests. By optimising these costs, you can free up more resources for the things you care about.
Long term perspective
Thinking long-term is another powerful tool. Unlike professional money managers, you can look beyond short-term gains and losses. This can lead to more stable, diversified portfolios that withstand market ups and downs. Even in retirement, keeping a balanced approach between conservative and stock-heavy investments can be smart.
Your financial planner would discuss your long-term goals and help you design a strategy that fits your unique situation. They can guide you in structuring your investments for potential long-term growth. Together, you would find the right balance between conservative and more aggressive investments based on your timeline and goals.
High risk tolerance
Building up a higher risk tolerance is something we can work on as well. Understanding market history and facing our fears can make us more comfortable taking calculated risks. Of course, balancing and keeping ourselves from overextending is essential, especially in retirement.
A financial planner can educate you about market history and help you understand the risks involved in different investment approaches. They could work with you to build confidence in your risk tolerance. While they would not push you to take on more risk than you are comfortable with, they can give you the knowledge and perspective you need to make informed decisions.
Knowing yourself
Knowing ourselves is a game-changer. Understanding our financial hopes, fears, and values allows us to make decisions that align with our priorities. This self-awareness is a lifelong journey that evolves with our experiences.
A financial planner can encourage you to reflect on your values, hopes, and fears. They would provide exercises and discussions to help you better understand your relationship with money. This ongoing self-exploration can lead to more aligned and fulfilling financial decisions.
Caring about your future
Lastly, let us not forget about our future selves. Balancing today’s desires with tomorrow’s needs is a constant challenge. Finding a healthy middle ground is crucial, where we enjoy the present without jeopardising our future well-being.
A financial planner can help you strike a balance between enjoying today and preparing for tomorrow. They would help create a financial plan that addresses short-term desires and long-term needs. They can also offer strategies to ensure you set aside enough for your future self while still enjoying the present.
