Now that I work with a digital direct mutual fund company instead of a bank, there are many more people who come asking for guidance for financial planning. In a way, more in-depth and genuine conversations about money are possible. Which also means that I get to see more of human idiosyncrasies with respect to money.
A week or two back something happened that got me thinking and also got me into a vortex of emotions – mad, sad, irritated, you name it. A client came in asking for help in financial planning with some ambitious goals. Currently, he had a well-paying job while his wife also was working somewhere. He had used the initial years to pay off the debt on the house that they live in. Now, he was looking to really start investing for his childrens’ education and his own retirement with some ambitious numbers.
I got back to him with a purely numeric response in an editable excel sheet. Since the resultant numbers were much bigger than he said he was willing to invest each month, I kept the numbers customisable leading to the required investing amount changing automatically.
Unfortunately, I have now been ghosted by the client. There is no initiative from that side and neither is there any response to my attempt to discuss this further. I realised that this would not be a one-off instance and many people could end up acting exactly like this. Like what, you ask? Like a money ostrich, where we hope that if we don’t look at our money gaps they will dissolve into nothingness.
This post is meant as a red flag to not be an ostrich with your money. Do not compound your mistakes. In fact, starting today there are a few steps you can take so that you are not caught in this swirling vortex of things getting worse.
1. Face up to your money scenario
First things first, running away is not a solution. In life, we grow up doing a lot of scary things. When it comes to money, sometimes all you need to do is roll up your sleeves and take a deep breath. As with other things, once you truly decide to tackle it, it will continually shrivel on the scariness meter. On the contrary, if you choose to let it fester it will only keep getting so much more difficult to tackle.
2. Get the right help
Before I go about giving the wrong impression, this is not a post to say that I was right and the client was oh-so-wrong. If anything, I realised that maybe the environment of my setting did not allow him to open up completely to discuss things in depth like a true financial planner should.
In today’s complex scenario of brokers, bank RMs, money advisors or financial planners, finding the person right for you is almost as tricky as finding a soulmate. But, it is truly worth the effort because if someone can help you untangle the complex money web, you are sorted for life. Since I wasn’t the right person, I truly hope the forementioned client got to this step 2 to do his research and find his Goldliocks’ advisor who is just right for him.
3. Do not be wedded to your numbers
When most of us set goals, we can often err on one of two sides – too high or just not enough. Ideally, with goals it is easier if you are a little specific so that it can be researched and a more accurate number arrived at.
For instance, one of the goals is retirement. Try and imagine what would your desired post-retirement life look like. Will you stay in the same house or would you ideally pack up to live in a smaller town? Would you still have any monetary obligations? Of the current spends, how much would your spends reduce by post retirement? Are you sorted on the health corpus front or would it give you more peace of mind to have that separate? Are there any indulgences like travel that will be lived out in retired life? What is the corpus you need for that?
Goal setting is not an easy exercise. It is not as simple as coming up with a number from the air and going to one of the multiple calculators. If you get the right financial guide, you are also then signing up for a Shifu to guide your Po in getting to the right numbers to start with. Once you have a number, check out this post for a detailed idea about how to go about investing for it.
4. Go deeper into your money habits and mindset
This is tricky and again I would advise professional guidance. How many of us think money is simply a numbers game? Past me from about 6-odd years back is raising her hand with all of you out there but alas we are all mistaken.
Money is an alive, throbbing life force. It’s dynamic and shaped by our experiences all through. For most of us who have seen our parents trust their money only to Fixed Deposits, we find it hard to reconcile with the idea of risk and make that transition to other assets. If we saw someone’s life get ruined from being ensnared in a debt trap, we will end up treating debt as a disease that needs to be cured first. In that pursuit, even if there are better uses for money we would rather keep feeding the loan to keep that demon silent.
If you would still rather do this part by yourself, try and see things from a third party view. Scan your spending patterns for it will tell you your priorities. Go to trusted sources for financial literacy (yes, I am rolling my eyes at the umpteen “financial” youtubers that have suddenly sprung up). See how you can marry your spending patterns to what you learn about Personal Finance.
5. Take action
You know what they say – there is many a slip between the cup and the lip. You might just be rolling your eyes at me thinking, oh Aparna we have already seen 20 youtube videos about the hottest stocks, before we thought of scrolling through your rant. (Hint: I am being sarcastic about the “hottest stocks” part. Do not, I repeat, do not take action on such click-baity advice)
But, as I was once told very wisely by Carl Richards, the difference between winners and losers is the simple difference between active and passive. Most of us view or read content to nod or shake our heads. To truly take your head out of the sand, use this inspiration and take action. Stop being an ostrich. Take control of your money life. Your future self will thank you (and if you remember this post, maybe even me J )
If you do want to stop being an ostrich and don’t know where to start, drop an email to email@example.com. I would be happy to give some more thought starters on the same.