Archive for the 'Tracy's Thoughts' Category
Tuesday, June 23rd, 2009
While I would never want to comment on someone else’s marriage, the situation with Jon and Kate plus 8 has certainly grabbed my attention. For 12 years I have been studying and applying the emotional side of money with the practical day to day money decisions we all make - in my own life and the life of clients I work with – individually and couples.
We all know that it takes commitment and work to be married so it’s interesting to me, and I’m sure many others, what role money has played in the public breakdown of this marriage. Obviously they make a lot more money now from their reality TV show, than they did when Jon was working to support her and the 8 children.
My husband and I have a daughter who loves the show so we take note of the message she receives by watching it. Together we have survived a bankruptcy, death, cancer, and a host of other family crises and are still married after 14 years because one of our values is commitment. Obviously, couples of our parent’s generation who have been married for 30, 40, 50 and more years, have lived through financial struggles and triumphs and have stuck together through it all.
The fact that Jon and Kate’s marriage is in trouble now when on the outside they have all the money that many people think will solve their problems is a great reminder that more money is not the answer to money problems. In fact, it’s your values, priorities and commitments that are the basis from which to make financial decisions.
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Friday, June 19th, 2009
I wrote this in response to an article piece that I found online in regards to teaching the younger generation about being financially responsible. Although there was a lot to the article, I found myself focusing on a piece in the article that focused on the message that I see all the time in the media: That we need to cut back on spending. I have spent over 12 years studying the psychology and emotional sides of money as it connects to everyday financial transactions. I have a system that I teach to the financial industry as well as to consumers of all ages and economic backgrounds that is a values-based financial decision making program. I still stand by my comments about deprivation because there is a very big difference between living within your means and earning what you spend.
I absolutely agree that we need to reach out to our young people to teach them to be financially independent – meaning they have enough money coming in every month to live the lifestyle they chose without having to go to work to earn their pay check. For over 50 years we have done a very poor job in teaching this to anyone – in part, because the financial curriculum is very simple in it’s approach: save a big pot of gold to live on when you get old. It’s not the big pot of gold at all that we need – it’s an ongoing income. And, what is immediately in front of us is always more powerful than what is off in the distant, yet we learn very little about how to earn an income today, let alone in the future. We now have a society dependent on a job and their ability to save whatever they can only to be told that when they do finally accumulate some money, that they better not risk it because it’s all they have. It’s no mystery that running out of money is the number one stress in retirement. And, it’s no mystery that young people get into debt and aren’t motivated to fend for themselves – because all they are bombarded with marketing messages to buy now, yet all they learn is to ‘live within their means so they can save money for the future’ when they still have their youth in front of them and they see the financial stress of their parents generation.
Barak Obama called for a paradigm shift in his inaugural speech in order to help the economy – it seems to me that to help make this happen we need to help people, one at a time, to learn to spend money so that while they’re spending they’re also learning how to earn it, manage it, grow it and maintain it.
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Tuesday, May 12th, 2009
Today, it seems all too common that young people have very little appreciation for the concept of “work ethic”. The implications of this as it relates to the near crisis financial statistics in North America are huge.
Jobs are prolific and as a result, many young people don’t seem to understand commitment or work ethic. They expect to have everything they want, when they want it; and when they don’t they just move on, leaving a wake of hard-working, committed business owners and managers behind. They will often not move on quietly either. If they expect something they don’t receive, they can be verbally abusive to the innocent shopkeeper behind the counter.
Their expectations are so high they become impatient or don’t even see the value in what they’re doing or learning at the time. Their respect for work and for training is negligible.
What I’ve discovered from sharing my story with my peers about a young employee I had is that everyone has at least one version and often multiple versions of the same story.
In North America, our youth are still looking for job security and high pay, with complete flexibility and lots of time off. They are still telling themselves they will save a lot of money so they can buy a house in 5 years’ time and save for retirement after that. They are completely closed-minded to the idea that you can learn how to buy real estate and create income in other ways besides working at whatever job seems to offer the highest pay and most rewards at the time.
Personal debt levels are at record highs and savings rates at record lows. The way out of this mess is not to cut back spending and save more money. The answer is to learn how to earn more money and to re-ignite the entrepreneurial spirit in young people like it has been for people in overseas countries – namely China and India.
Yes, today’s youth are facing an uncertain future, as the largest and most powerful generation in the world, the baby boomers, will be retiring. And yes, there are organizations that support and recognize the youth who will become our future leaders. There are also some amazing young people who get inspired by a cause and commit their time, and their piggy bank to do what many adults don’t even think of doing. The question is, will enough of our youth be ready and prepared to take on the challenges their generation faces? Is there enough training and support to raise financially independent, hard-working, inspired, future leaders?
The young person in my story decided she wasn’t getting the training she wanted despite being paid to review a very expensive CD program from one of the top professionals in her field. After less than 2 months, she decided she wanted more security and to be involved personally with the company’s consultants. I’m not sure what she expected besides her regular paycheck but she certainly wasn’t going to be the junior person in a start-up organization and have personal access to $1000-an-hour consultants. She decided to look for work while continuing to accept the payment for her training then gave 2 days’ notice and expected to be paid the day she left – hmm.
I guess I should be so lucky; my brother owns a catering company and has shown up many times for work to find that the person who was supposed to start early on food preparation for that day just didn’t show up because they were too tired from being out late the night before.
There are also the poor employers of young people who don’t service the clients because a) it’s their break time or b) the request by the customer is something they don’t want to do or c) it was slightly outside the normal course of business.
The bottom line is the entitlement mentality is becoming an epidemic. And that’s a problem because this Generation Y, as its known, expects to have all the benefits the current generation has worked hard for without the commitment to make it happen. There are too few young leaders who take up the challenges of our society. Those that do step up need support, and unfortunately this means they will have to work alongside the growing number of youth who jump from job to job and pay for things on credit they don’t have money for, and then look to parents or the government to bail them out when they can’t make things work for themselves.
One of my favorite success stories is a young woman who opted to work as consultant, rather than settling for an entry-level job right out of school. Her income jumped from $1500 per month to $7500 in 4 months because she followed her passion. Another young woman I know (still in high school) is very interested in fashion. Rather than take a retail job she found a way to open her own “shop” in the back of another store.
There are examples all around of young people who are making a difference – just a few more of them who aren’t. It’s time for business owners, teachers, parents, and other would-be “mentors” to stop bailing out our young people. “Generation Y” needs to take responsibility for their actions and to be committed to the decisions they make. We have to help more of them learn to earn a living for themselves so they understand the commitment and responsibility the people who employ them take on when they hire them. We have to help them understand that when they learn these skills they actually can have the securities and freedoms they want when they want them. We have to help them learn how to earn so they can be part of the change we so desperately need in North America to maintain our independence and financial freedoms.
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Tuesday, May 5th, 2009
This blog posting was written in response to an article I read in Macleans Magazine:
“Ben Bernanke, the chairman of the U.S. Federal Reserve, and the man charged with resuscitating the world’s largest economy, thinks we all need to be smarter about our finances. “As the global economy continues to experience extraordinary turbulence . . . the need has never been greater for initiatives that help consumers learn to manage their money wisely,” he told a conference on financial literacy this week. Big Ben should be careful what he wishes for.
NPD Group issued its latest consumer sentiment survey last week and found that most Americans remain convinced the economy is in the toilet, but their spending plans are edging back up. As NPD said, consumers appear to have “reached their cost-cutting limit.” In other words, we’re getting frugality fatigue—and thank goodness.
We might’ve saved ourselves a lot of pain if we were all more financially literate a few years ago: If all consumers wait for definitive signs of recovery before venturing out to make major purchases, then the economy will never recover. Fear becomes self-fulfilling, and prudence self-defeating.”
Hence the reason I’m so passionate about how everyday spending makes us all wealthy.
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Thursday, April 30th, 2009
And, if you’re a bank, ‘are you causing your clients more financial stress’?
For over 3 months, I have been in the process of switching banks so that all my personal banking is at the same institution as my corporate banking. To say that this process is daunting is an understatement – hence the reason this process is taking so long.
It seems that almost daily, I discover something new about the new bank that I hadn’t even thought to ask. Today, it was about deposits through the ATM, compared to the teller. Now I know to ask different questions – next time. But, how often will I be switching my banking? Not likely for years if at all.
There are so many things: I call the 800# service to find out and they say I have to go to the branch for that. I go to the branch and they say that both my husband and I must come in together. I log on to the computer and find my temporary password has expired. I phone the 800# and I have to reset the password. I find out that the new bank has a process to help switch the automatic debits from one account to another. They say go to the branch. I go to the branch and they say I have to go online.
As you can imagine, it’s not a simple process.
Banking. It’s the cornerstone of where we interact with our money on a day-to-day basis. Is this process stressful – you bet it is! Even simple things like the name of my bank account and which account is connected to my ATM card.
We all spend money every single day and the relationship we have with our bank begins with the banking process. When my bank can help me with my banking, they will certainly be able to help me with my mortgage, my investments, and all the rest of my financial life.
I’m always looking for the teaching tip in any financial transaction so here are some of my tips to help banks and consumers communicate in a stress free way. For detailed banking tips, please refer to Step 7 in the MoneyMinding Makeover Course.
- Know what you need your bank account to do for you.
- Write out how you will use your bank account.
- Get or create a checklist of bank account issues to be aware of from your bank. These are things like number of deposits and withdrawals before fees, holds, ATM access, etc.
- Balance your checkbook as well as check your online statement – i.e. keep good records.
- Allow lots of time and make banking a regular activity in your schedule.
And above all, remember that banking is your daily connection to your money and therefore your best wealth building tool.
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Wednesday, June 4th, 2008
I’m speaking just from my experience as a retail customer
A few things that would make my wait in line more bearable would be:
Friday, May 23rd, 2008
MoneyMinding is an incorporated, international company with several employees and contractors, and with hundreds of clients and “Certified MoneyMinding Advisors” – and it’s still operating from my home office after several years.
Avoiding burnout is an understatement: it’s easy to blur the boundaries between work and home when the office is right below your bedroom. I’ve responded to emails at 3 in the morning, and done business deals in my housecoat. What keeps me going, even when growing the business seems to take more hours in a day than a person can stay awake for, is the following:
- Clear vision of where we’re going and the purpose for the work and involvement in this vision by the family
- An open door policy for family. I will always take phone calls from them and answer and homework questions or take time for a midday mom-daughter talk
- Asking for help (employees, investors, mentors, peers, friends, and my very supportive husband)
- Healthy living where possible (a good lunch, water jug on my desk, exercise in the evening, involvement with the church)
- And, a mid-day play with the dog always helps too.
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Friday, May 16th, 2008
If your goal is to live on one income so the children can have their mom at home, start from there and make the finances work by committing to that goal.
Next you research your existing spending patterns by documenting all the details of your current lifestyle. With baby coming you need to add to this amount the expected costs of raising the child. The exercise of gathering the information is not to judge the spending; it is to make sure you know what amount of monthly income will be required to support your family in this new lifestyle.It will not work simply to say you need to replace the pre-working income of the mother.
I had a multiple 6-figure income to replace when my daughter was young, and it wasn’t until I realized that I was jealous of my nanny that I got committed to finding a way to make the finances work so I could stay home. I first put a plan together to give us some extra cash in the bank that we planned to draw on while I invested in developing a writing and teaching business. This meant preparing detailed financial projections so we could make informed decisions that balanced lifestyle spending with business and investments to enable our desired stay-at-home lifestyle to be funded.
The options available to earn income outside of going to work full-time are endless. It takes a commitment, a very specific monthly financial goal, a documented plan, and a supportive and knowledgeable financial professional to help put all the pieces together.
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Thursday, May 8th, 2008
Many people who spend time and effort teaching others about money want to cure “bad spending habits”. That’s an intriguing point, because spending is not “good” or “bad” necessarily… even compulsive gamblers, at least in Canada where the government regulates gambling, have the results of their spending benefit many charities. It’s all in the values we attach to our spending, and when you come right down to it, how intentionally you spend it. So for argument’s sake, let’s say you open your closet door one day to find some shoes, and you realize you have so many that there are some you have never worn – maybe you don’t even remember buying them. That lack of awareness while you were accumulating all those shoes might be a sign of a spending habit you want to change. In order to change the habit, it’s not enough to stop what you have been doing – you need to exchange that habit for something with some more value to you. My tip: Why not take the shoes you haven’t been wearing, and donate them to a charity that outfits low-income women re-entering the workforce? Your habit now has a great benefit to others, and a tax receipt for you. If you want, keep that charity in new shoes for as long as you like.
The bottom line is to learn to spend in line with your core values by starting off using cash (not credit or debit) as your payment vehicle, and keep your overall big picture – your goals – in mind. The MoneyMinding Makeover teaches a whole module on spending.
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Tuesday, May 6th, 2008
I actually posted an early version of this just as Tracy was getting fired up about the topic. Since then we have put more effort into getting this message out, and polished up the message even more. Please send your comments!
The tax rebate checks under the Bush administration’s economic stimulus plan won’t do any good if people simply put them in the bank.
Last week, an online article in the Wall Street Journal claimed that we need to save more money – even if the interest on the savings won’t keep up with inflation. This same article also restated the obvious: “we live in a culture fueled by spending and credit.”
This is double talk and misses the whole point of why America is headed for recession. Wealth is created with credit. The government knows it, the banks know it, corporations know it and the wealthy know it. With credit, there is access to money to spend which increases corporate earnings, which increases tax revenue, both of which provide jobs and, therefore more income for workers to spend which continues this profit cycle.
When you remove access to credit, spending decreases which means earnings drop, which means jobs disappear, which means people stop spending and the problem gets worse and worse. This downward spiral is the recession the government is trying to thwart with the stimulus checks.
If you, and everyone else, takes their $600 average family rebate check and sticks it in the bank then no one is buying the products and services you, or your company, sells to earn the money to pay you your salary. When you lose your monthly income and can’t pay your bills, that is when you end up losing your home and your security.
If you and everyone else stop spending then there won’t be much left of Corporate America. People in other cultures have learned to do what North Americans seem to be ‘too afraid’ to do; that is, find ways to earn a living besides going to work for someone to get a paycheck. Just look at the growth of micro-lending companies in India as people start businesses on even less than what the average American is getting in his or her “stimulus check”.
If we don’t wake up and learn how to earn an income that pays for the freedoms and luxuries that we’ve bought on credit, then being broke will be the least of our worries – it will be our freedoms we’re losing as emerging, strong foreign companies and banks who already own more than half the U.S. debt move in to take over struggling American ones.
Saving money is what people do when they are afraid of losing – not when they expect to win. It comes from the scarcity mentality that keeps people from stepping out and finding ways to earn the income they need to live, the way they want to live.
North Americans are able to start and run a business of just about any kind using credit. We can even use that money to invest in a variety of wealth building ventures that others have started – both of which create more income which enables more spending.
If you had planned to invest your stimulus check in a growth mutual fund or stock, your investment returns would give you about 7% as suggested in the Wall Street Journal article. On a $600 stimulus check that works out to only $3.50 a month. However, without spending, those returns would drop because the companies wouldn’t be earning the returns they had in a strong and growing economy.
For $600, you could buy a bolt of cloth and make dish towels and your profit would be much more than $3.50 a month. Make cookies, make anything and sell it! Alternately, if you don’t know how to sell what you’d make, then take a course to develop your financial and entrepreneurial skills.
Please spend the money from your stimulus check, and while you’re doing it, make sure you start learning how you can earn even more money on an ongoing basis.
And, be sure to pass on this important message!
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