Have you ever stopped to think about how you relate to money? Do you sometimes wish you had stronger financial acumen? Personal temperament, family history and values, life experiences and opportunities all contribute to your financial personality. While you may not be able to control all of the factors that motivate your money behavior, you can seek to understand what’s behind your actions. With self-awareness, a desire to change—and a little help along the way—you can become more financially savvy.
Your saving aptitude. Saving is a learned behavior, so if you didn’t have much practice growing up, you may need guidance in how to go about it. If you perceive saving as “not fun” or even painful, you’re psyching yourself out before you even get started. Learn more about the benefits of setting money aside for the future to combat inflation, including the potential value of compound interest. Seek financial expertise and positive role models to help strengthen your resolve to be a saver. When you’re ready to get started, automated savings programs can help make putting money away even easier.
Strong focus on tomorrow. Are you on the other end of the saving spectrum, squirrelling away every cent you earn and making yourself miserable with a shoestring budget? Sometimes super saving is a reaction to scarcity in the past. Talk to a financial advisor to get a balanced perspective. Together you can review your savings in the context of your assets and earnings to determine whether your thrifty ways are creating unnecessary deprivation right now. You may be able to loosen the purse strings and allow yourself greater financial flexibility when you can see that you are in a good place financially.
Appetite for risk. Do you get excited about high-risk investments, even when the odds are stacked against a positive outcome? Your natural optimism may be clouding your judgment when it comes to risk tolerance. Are you afraid to put any money on the line to grow your nest egg? Inherent pessimism and distrust can hamper your ability to invest appropriately. Aim to take the emotion out of your investment decisions. An investment professional can help you objectively assess your risk tolerance in the context of your time horizon, assets and financial objectives. Together you can move forward with a disciplined approach to investing that avoids extremes at both ends of the risk spectrum.
Your buyer mentality. We often associate good feelings with acquiring something new. The desire for “new and improved” can lead your budget astray and also leave you feeling like your financial goals are out of reach. To feel more assured financially with a new purchase, conduct research on items you want and comparison shop. When you’re allured by what seems like a great deal, discuss the purchase with a spouse, trusted friend or family member. Discussing the purchase can encourage you to make the smart choice for yourself today and tomorrow.
Today’s the first day of the rest of your life. Honestly evaluate your financial personality and review your goals with an experienced financial advisor. He or she can help you identify areas for potential improvement, provide strategies to help you save and spend more wisely and inspire you to stay on track with your financial goals.
William “Drew” Watson CFP® is a Financial Advisor and Private Wealth Advisor with Ameriprise Financial Services, Inc. in Owensboro, KY. He specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact us by phone, please call 270-684-8424, or mail to 111 West 3rd St., Owensboro, KY 42303. You may also visit our website at www.williamawatson.com.