“The ability to be in the present moment is a major component of mental wellness”
– Abraham Maslow (American Psychologist, best known for creating Maslow’s hierarchy of needs)
You may be wondering, is it really possible to live in the moment and reduce stress about finances, yet still achieve my long-term financial goals? The answer is: Yes! Absolutely!
For many of us, the internal desire to achieve our financial goals causes us to worry about all the potential obstacles and things that could go wrong which could prevent us from achieving them.
Many of these goals are longer-term in nature, such as planning for retirement, sending the kids to college, purchasing a first-home or upgrading to a more expensive home, buying a second home, etc.
Over time, these worries turn into stress, as we are not sure how to address the potential obstacles. The longer these concerns are not addressed, the more they fester in our minds and can turn into a constant 24/7 low-grade (or worse) level of stress, preventing us from enjoying our lives and living in the moment.
In fact, a 2010 study by the American Psychological Association¹ found:
- Most Americans are suffering from moderate to high stress, with 44 percent reporting that their stress levels have increased over the past five years. Concerns about money, work and the economy top the list of most frequently cited sources of stress.
- 76%of Americans have somewhat / very significant stress as a result of money.
- "America is at a critical crossroads when it comes to stress and our health," says APA Chief Executive Officer Norman B. Anderson, PhD.
So what is causing all this stress? Undoubtedly, the following play a major factor:
- Lack of Formal Goals/Priorities
- Lack of Information, Wrong Information, or Both
- How much do I need to save / invest to achieve my goals?
- Which of my goals are feasible and which are not?
- What are the best steps to take and strategies to utilize to achieve my goals?
- How much do I need to continue my current lifestyle in retirement? When can I retire?
- How should I invest based on my goals?
- How much should I be saving versus spending?
- How will inflation and market volatility impact me?
- Which benefits should I utilize?
- How can I reduce my taxes?
- What happens if I become disabled or pass-away?
- Am I doing things in the best way? Am I missing anything? Etc.
- Lack of Control or Progress
- Lack of Feedback, Advice and/or Advisors
How can we address the above issues to reduce or eliminate our financial stress, and still pursue our financial goals?
- Create a financial plan.
- Create quantifiable goals and prioritize them in relation to each-other
- Develop a step-by-step plan for managing cash-flow, investments, benefits, taxes, etc. to achieve those goals.
- With this plan-in-place, you will take control of your financial life and begin to make progress.
- Create systems to make this easy to manage.
- Having automatic systems in-place that are built based on your financial plan will help assure that you are consistently on-track for your goals, with the added benefit of minimal effort to manage them.
- Often our stress comes from feeling like we don’t know if we should be buying something, or if a certain decision will be detrimental to our other goals. These systems will dramatically reduce your stress over day-to-day decision-making.
- Set a formal review schedule to review and update your plan and systems on a regular basis.
- Most of us have no formal system or regular dates established for reviewing our financial situation and creating a plan designed to achieve our goals. The reality is that to do this right, we need to sit down for numerous successive hours at least a couple times throughout the year to really focus and make progress on planning.
- In contrast, many of us think about our financial situation constantly in the background while we are doing other things, and haphazardly worry about it without actually making any progress.
- Regular and formal sessions in which you create and update your planning should not only help you feel better and less stressed knowing you have a plan and systems in-place to follow the plan, but will also help assure that you are on the right track toward achieving your goals.
- They should also provide you with a reminder of why you are managing things the way that you are and the long-term impact.
- These sessions should also provide time to go through the necessary and critical ‘thought exercises’ before making investments.
- Get educated and/or work with an advisor
- Even the smartest and most successful among us find value and comfort in working with trusted advisors. For example, Bill Gross – a multi-billionaire who built his fortune in the finance world by building the mutual fund company PIMCO, managed (at the time) the largest bond fund in the world for many years, and is considered one of the greatest investors of all time, utilizes a team of financial advisors. ²
- Why do wealthy and financially savvy people such as Bill Gross work with financial advisors / planners? Certainly there are very tangible items such as tax-planning, trust and estate planning, insurance planning, and other complexities that come with having a large net-worth. But beyond that, there is a much simpler explanation. Most people get their own financial advisors to keep them out of trouble. Intelligent people understand the benefits of having an independent third party there to make sure they don’t make any huge mistakes (which are often based on emotion or a lack of perspective).
- In addition to independent feedback on decisions, a competent advisor will hold regular and formal reviews with you to address all the issues described above that lead to stress and a lack of planning.
- A good advisor will also help educate you to the degree that you are interested in learning
- The best news is that you don’t have to be Bill Gross, or have anywhere close to his net-worth, to find and work with a competent financial advisor.
Remember that health is your most valuable asset; please don’t let financial stress destroy that. Let us know if you have any questions, we are happy to help!
CRN1856863-072617 Odyssey Wealth Design provides financial planning and wealth management to cients in Orange County, Irvine, Newport Beach and around the country.