Archive for the 'Tracy's Thoughts' Category
Wednesday, November 17th, 2010
Recently, an article was published for financial professionals that presents some of what we have been saying for years. Here are my comments on some of the quotes from the article:
Early financial education helps make the distinction between learning a life skill and what should be left to the professionals. This is such a key quote because adults today have not formally been taught finance. They think they can, and should, do it themselves, which also devalues professional advice.
“Part of the problem is [that] the educators don’t necessarily have the skill set to be able to teach financial literacy in the way we are talking about.”
Financial knowledge needs to go beyond product knowledge to include fundamentals of financial planning, an area where the financial community can assist by providing teachers [with] professional learning opportunities and resources.
There’s a significant role for the planning community to play in “promoting learning opportunities through professional associations and federations for educators to enhance their financial knowledge and skills”. This is part of the niche MoneyMinding fills by providing tools and information to both the industry and their clients.
The push from the financial planning community serves a dual purpose: it brings people to advisors. “The majority of people who don’t go to advisors… don’t know what they don’t know.” Hey, this has been my line for years!
See the full article here
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Thursday, August 13th, 2009
It’s more than just missed education… listen here!
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Thursday, August 13th, 2009
A short while ago, the income tax department called me – not exactly a call I was excited to get, but none-the-less I proceeded because it wasn’t a significant issue. On the other hand, however, their phone policies are the reason for this writing.
When I think about the way the call went, it’s rather unbelievable really – so much so that part of me doesn’t want to share the story for fear someone will use the information unscrupulously. But alas, I hope there are more people that will be on the alert by reading this message that it might help stop some unscrupulous fraudsters.
The agent called and gave me her first name and said she was calling from Canada Revenue Agency. As soon as I said “hello”, she immediately said she needed to confirm that she was indeed speaking to me and proceeded to ask me to give her personal information. What? They called me. Shouldn’t they give me some information and ask me to fill in the blanks or to give me something basic then ask me for more details? It started by her asking for my complete address, then my birth date and my social insurance number (Canadian Government ID number).
Wait a minute – “If you’re the government calling me, aren’t you supposed to have this information?” How about if you read off what you know and ask me to fill in the blanks like the name of my husband or something similar.
I was completely taken aback and suspicious so requested to call them back so I could be sure that it was really the government calling. It was – as I found out after working my way through the maze of voice mail options and taking 20 minutes to do so – just to have to explain to a completely different person that someone from their organization had called me about something, which I had no idea what. I was completely inconvenienced by having to prove to myself that the phone call I had received was legitimate! I was not happy – can you tell? Here we are, the government is telling us to be careful, yet they themselves are not setting a good example – what’s with that?!
This entire experience left me completely dumbfounded and hence the reason for sharing the story with others….I guess the moral is to be on the alert – it’s sad, but a reality that we need to double check our sources before giving out our personal information – even when the person sounds official. And, perhaps maybe someone should tell the government that this is a very poor example and that they need to revisit their phone policy immediately.
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Friday, July 17th, 2009
A friend of mine just shared an article titled ‘More Wealth for Those Who Wait.’ I fully expected it to be another one of these seemingly good advice messages about the benefits of delayed gratification or working longer so you can save more money.
Instead, it was a very brief synopsis of some new government plans (Canadian) to keep workers in the workforce longer to help ‘lessen the anticipated labor shortage when the baby boomers exit the workforce’.
Hmmm… it seems to me to be sad enough that so many people have bought into the idea that retirement is an age driven event and that in order to retire, you have to have a big pot of money saved so you can draw on it when you’re not working. Now we have the government putting plans in place to keep people working longer – not helping them to become financially independent so they can work at whatever they want to because they want to, not because they have to because they need more money and haven’t saved enough.
If that’s not bad enough, this very short article quickly explained that if you did ‘leave work early’ i.e. at age 60, you could receive a government pension and your salary from work albeit a reduced pension and a larger reduction than the current government plan. It then went on to say that if you worked longer (to age 70), before you collected your magical pension, you would be able to collect a significantly higher government pension than what is currently in place.
In my experience, when a worker is presented with this decision, they might be tempted to look at the reduction or pension amount or increased amount and not have the skills to evaluable the effect of time value of money – and how it all tied into their day-to-day lives. There are so many factors to consider with something like this, I can’t help but wonder who in the government or who in the companies will be able to guide the employee with this kind of decision.
It seems to me that if all you do is look at the numbers without having a complete picture of what’s important to the person making the choice, then you can easily miss the opportunities that will exist to create wealth from an extra income coming from a reduced pension amount rather than staying in the workforce for an extra 10 years for those few extra dollars from the government. I’m pretty sure the corporate and government benefit departments won’t be skilled in providing employees with ideas on what other options are available to them. The only way is for the employee to educate themselves on what’s important to them so they don’t find themselves faced with a dilemma based entirely on numbers given to them by the benefit clerk. This is sad, confusing and wrong.
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Sunday, July 12th, 2009
Most people avoid creating a budget and fewer still stick to one. But it doesn’t have to be painful.
PLEASE SEE MY COMMENTS BELOW IN CAPITAL LETTERS. THIS ARTICLE WAS PRINTED IN CNNMONEY.COM ON JULY 6TH, 2009.
If you’re the type of person who always has plenty of cash, knows exactly where every penny goes and never has trouble paying bills, skip this chapter. You’re either too rich or too smart to need it. WRONG – I WORKED WITH A BILLIONAIRE TO SET UP BUDGETING BECAUSE SHE CONFIRMED TO ME WHAT STUDIES HAVE SHOWN, THAT WEALTHY PEOPLE WANT TO KNOW THAT THEY ARE SPENDING AND USING THEIR MONEY IN LINE WITH THEIR VALUES.
For the rest of us, unfortunately, (NOW THIS IS AN INSIRING WAY TO START A SUPPOSEDLY HELPFUL ARTICLE - NOT) making - and sticking to - a budget is the essential tool for ensuring that our money gets used the way we need it to. Even if you’re in the happy situation of having plenty of income, the homework involved in drawing up a budget can be instructive, since you may find that you are spending more than you wish on items like DVDs, electronic gadgetry or restaurant meals. DISGUSTING – YOU MAY FIND THAT THERE ARE MORE EFFICIENT WAYS YOU COULD BE USING YOUR MONEY!! THERE IS NO POINT IN STARTING OFF BY POINTING OUT THAT YOU MIGHT BE DOING SOMETHING WRONG – FOR HEAVEN’S SAKE THE BIGGEST POINT IS MISSED – THE OPPORTUNITY TO FIND OUT ABOUT WHAT’S REALLY IMPORTANT TO YOU AS IS CURRENTLY REFLECTED IN YOUR DAILY SPENDING!
Drawing up a budget is usually pure drudgery (OH THIS IS PLEASANT) enlivened only by the reality of staring your foolish spending habits in the face. (CAN I EVEN BELIEVE THAT THIS WAS PUBLISHED WHERE THOUSANDS OF PEOPLE CAN READ IT – WHAT ON EARTH ARE THEY TRYING TO DO?) Why do you have a luxury sound system if neither you nor your spouse listens to it? In fact, one of the chief impediments to budgeting is that most people would rather not know how they really use their money. I REALLY DON’T WANT TO GO ON AND HOPE YOU DON’T EITHER…BUT ALAS…
It’s bad enough to learn this kind of information on your own. It’s even worse when a spouse or significant other finds out, since it usually confirms his or her worst fears - and provides new ammunition for future “discussions.” UUGH – YOU KNOW THE BEST WAY TO STRENGHTEN A RELATIONSHIP IS TO HAVE HUSBAND AND WIFE DO THE BUDGET ‘RESEARCH’ WITHOUT JUDGEMENT FOR THEIR CURRENT SITUATION, THEN TO DO THE SAME FOR THEIR ‘IDEAL BUDGET’ AND DISCUSS HOW THEY CAN FILL IN THE GAPS – THIS ADVICE SOUNDS LIKE A SURE WAY TO GUARANTEE THE DIVORCE RATE INCREASES.
Take heart. Any spending mistakes (WHO SAYS THEY’RE SPENDING MISTAKES – THERE IS NO WRONG ONLY AN OPPORTUNITY TO DISCOVER THAT PERHAPS YOU NEED TO RE-THINK YOUR GOALS AND FIND A WAY TO EARN MORE IN ORDER TO LIVE THE LIFESTYLE YOU REALLY WANT TO LIVE AND ALREADY ARE) you’re making are probably common and not impossible to kick. Moreover, the bulk of budgeting’s pains are at the beginning. PAINS – THIS IS EXCITING AND FUN – IT’S INTROSPECTIVE AND A FABULOUS OPPORTUNITY TO LEARN ABOUT WHAT’S GOING ON, AND WHAT YOU CAN DO TO MAKE IT EVEN BETTER.
After you have a budget in place - and you’ve fine-tuned it with a couple of months of actual spending - tracking your expenditures becomes almost automatic.
If your boss at work were to ask you for an analysis of the department’s spending, you’d figure it out quickly enough. Budgeting your household should be approached in the same businesslike fashion. A variety of electronic tools can make the process easier. AND THE DICTIONARY DEFINITION OF BUDGETS IS ‘PLANNED EXPENDITURES AND A PROGRAM FOR FINANCING THEM’ AND THAT IS VERY BUSINESS-LIKE – BUSINESSES DO NOT OPERATE THE WAY THIS AUTHOR SUGGESTS – ANY BUSINESS THAT JUST LOOKS AT CUTTING BACK WITHOUT ALSO LOOKING AT HOW TO EXPAND IS NOT GOING TO BE SUCCESSFUL.
THIS AUTHOR IS OBVIOUSLY OPERATING FROM A SCARCITY, FEAR BASED PERSPECTIVE AND ONLY CONTRIBUTING TO THE NUMBER ONE FEAR PEOPLE HAVE AROUND MONEY – FEAR.
ALL-IN-ALL I SEE THAT ARTICLES AND MEDIA COVERAGE THAT CONTINUES TO PROMOTE THIS CONFLICTING NEGATIVE APPROACH IS ONLY GOING TO PROLONG AN ECONOMIC SLOWDOWN AND WORSEN THE ECONOMY BEYOND REPAIR.
BARRAK OBAMA SAID WE NEED A PARDIGM SHIFT TO TURN THE ECONOMY AROUND AND STARTING WITH A POSITIVE, PRACTICAL AND PERSONAL APPROACH TO FINANCIAL MANAGEMENT IS A PERFECT PLACE TO START.
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Monday, July 6th, 2009
I love shopping. I love nice clothes. I love fashion. And, I love a bargain. It’s treasure hunting to plan out a wardrobe then to play games to find just the right pieces at just the right prices. A recent comment on a sequel to Sex and the City sure missed the point. For all you Sex and the City fans, here is a link to the article I am referring about http://tinyurl.com/l3c85d . I struggle to understand why it’s so hard to make the connection for designer styles to goals. If an $800 pair of shoes isn’t affordable at your current income there are a couple options:
- Find a way to make them affordable
- Look for something similar in a price that is reasonable
- Assess why it is you’re attracted to the item - is I the look or the name?
- If it’s the look - go find it
- If it’s the real deal - then find a way to fit it in to your lifestyle - not by going into debt over - but to really have an income where it’s reasonable to pay that kind of money for an item like that
If all this brings up other judgments or fears or negative reactions, then this is all good learning and an opportunity to assess what’s really important to you and why. For what I can see the comments in the Sex and the City sequel review just illustrate the writer’s values without creating an opportunity for personal assessment or learning from the reader. I’m not sure if the comments were meant to be a review of the movie or not, but regardless, they sure missed the opportunity to provide the audience with some valuable financial training.
The writer’s last paragraph said “What would have been helpful and more inspiring if she wrote something like this: “SATC is an escape for women. We’re not idiots, we know hardly anyone can afford to buy a new pair of Manolo Blahniks and Louboutins every month, and during an economic downturn like this it’s inspiring to be reminded of the light at the end of the tunnel. Since right now when we don’t want to pay $12 to go to the theatre it’s good to be reminded of the abundance we have all around us and the freedoms we have to pursue our dreams and give back to others in need and to be encouraged to create our ideal budget rather than one of constant sacrifice and struggle”.eate our ideal budget rather than one of constant sacrifice and struggle”.
If you like what you have read and want to learn more about money as it relates to you personally, please go to the moneyminding.com website and subscribe to our mailing list for more tips.
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Friday, July 3rd, 2009
Yesterday Julie, who is an amazing young MBA grad who works with me directed me to an article on CNN Money.com about the 7 new rules of financial security.(http://money.cnn.com/galleries/2009/moneymag/0903/gallery.financial_rules.moneymag/index.html) She thought I might find it interesting and be able to comment in some way. Well, my first reaction to her says it all. I said it was boring but I’d get back to her with some specific comments. It’s not just boring it is unbelievable. I don’t think I can read the whole thing. I got to the first ‘what to do’ in the section on retirement and just about fell over when it suggested the financial benefits of delaying retirement by one year.
For heaven’s sake – this is the problem with our society – it’s completely lost sight of the whole concept of financial independence and developing income. While this article says work longer is Plan B – it doesn’t offer anything inspiring, original, creative or helpful in terms of how to create income – it only talks about how to save, cut back and sacrifice – this is the problem and it’s disgusting that this same boring message that hasn’t worked for over 50 years is still accepted as the norm. Retirement has nothing to do with age and everything to do with how you hare arranged your finances so you have enough income coming into your household to live the life you want without having to go to work every day. Retirement is when you have arranged your finances so you are financially independent – regardless of age or how much money you have accumulated in your ‘nest egg’.
If you like what you have read and want to learn more about money as it relates to you personally, please go to the moneyminding.com website and subscribe to our mailing list for more tips.
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Monday, June 29th, 2009
Like many people, I don’t claim to know all the details of Bernie Madoff’s massive Ponzi scheme. In fact, I’m just as caught up in the disbelief at the whole thing as everyone else. I do not know anyone personally who lost money in this scam, but I know many others, some well, who have lost money to fraudsters over the years. My heart aches for the thousands of people whose lives have been forever altered because they trusted someone with their money who was not honest. I know what it’s like to lose money and no matter how seemingly insignificant the amount, it is always incredibly painful.
While Bernie Madoff has now traded the rest of his life for the money and lifestyle that was created from this scheme with the 150 year prison sentence he received, there are others who have unwillingly done the same. I wish I could wave a magic wand to help them go back in time to prevent or minimize the effects, but since that is impossible, I will use it as an opportunity to remind everyone (myself included) of the principles of know yourself, know your advisor and know your investment. We certainly will not be able to prevent fraud, but hopefully we can use some processes and decision making tools to help make personal financial decisions that can minimize the devastation of losing money.
The process should be life first and then money, not vise-versa. This is some of the earliest work I did in the area of values-based financial decision making. If you’d like to know more, please visit www.moneyminding.com for the ‘Accepting Financial Advice’ report, or ‘Lifestyle Financial Assessment’ and the ’12 Step Plan’ roadmap to help make sense of this situation going forward.
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Friday, June 26th, 2009
I was sitting in a reception area with a variety of magazine headlines competing for for my attention: ”Ways to Save on Everything”, ” Live More Spend Less”, and the beautiful book beside them all, “The World’s Finest of Everything”.
This is a perfect example of the conflict we all face every single day in many unsuspecting ways. This is the reason why having a clear vision for our lives is critical. This is the reason why making financial decisions is stressful without a structure to link your vision to every day…
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Wednesday, June 24th, 2009
Something has come up over the past week that I just don’t understand. There was an announcement by a financial company about some research they’ve done to come up with a $20 rule for retirement planning. This was one of the most ridiculous marketing messages I’ve ever heard. One that borders on malpractice from what I can tell, based on what I know about the psychology of money and the importance that personal preferences play on financial decision making.
The basic concept was to say that rather than the age old standard rule of thumb amount of money needed for retirement of 70% of pre-retirement income, the new ‘rule’ said you need to have $20 saved for every $1 of income you want to receive in retirement.
This is so totally absurd. It makes no sense and takes most of the money myths that keep you broke and wraps them into one neat and tidy message. Retirement is not based on savings at all. Retirement is based on your ability to bring enough income into your home on a monthly basis that you can live the lifestyle you desire without having to go to work everyday to earn it. It is a point in time which has nothing to do with you age, but rather when you would be financially independent.
From what I can tell, the only good thing about this new ‘rule’ is that it did break down something far off and unrelatable into a small very relatable, real, tangible number. Many people can relate to $20 so if that same message could have been related to day to day spending – then it would make sense.
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