When first starting out, we may feel utterly out of control, and it this terrifying and defeating feeling which leads us to seek control, calm and a larger sense of choice. We begin learning, and gaining skills and knowledge. We begin to make different choices and enjoy - or regret - the consequences.
On the road to financial awareness and intelligence - and eventually independence - there are signs. These signs tell us how we're doing, and they direct us accordingly, if we listen. Sometimes we ignore the signs, especially when we perceive them as negative. They threaten our sense of comfort and of self, so we bury them, along with our reactions. However, awareness and acknowledgement are what we need. They lead to the changes we seek, and so we must heed these signs if we want to grow and increase our financial intelligence.The following is a list of signs that indicate you could have more control over your finances. If you are reading this column you are already on your way, so congratulations are in order. RTake a deep breath and see if any of these signs apply to you. If they do, swallow your pride and look at the bigger picture - the wonderful, bright and shiny financial future you are creating for yourself by facing your less than shiny past decisions.
- Balance Avoidance: This sign occurs when you go to take money out of the bank machine and you dont know what your receipt will read, or you are afraid to even look at the numbers. The same applies if you are unsure of what your mailed bank statement will read, and doubly if you are afraid to open it and look at it. When you are in control you will look forward to ensuring your balance is exactly as you expect it to be. It will not be more, because you KNOW your own money, and if it is less, you will know someone has made an error and you will pursue the correction of said error. The first step in reaching this point is to separate your emotions from your finances. Try and look at things objectively; forgive yourself and move on, and start keeping track of your hard-earned money. Never stop counting.
- Passivity: You rely on someone else to make suggestions (broker or advisor) or take care of money tasks (husband). While this may seem a reasonably safe route for many women, the facts and statistics tell us otherwise. Women form the majority of those who live in poverty, and it is not just about those who live in bad neighborhoods or make poor choices. Many women are shocked to find themsleves with little or no money in their later years, just when they thought they'd be retiring in comfort. For some eye-opening information as well as some strategies to overcome this wall of misperception, try What's Your Net Worth? by Jennifer Openshaw, and Women & Money: Owning the Power to Control Your Destiny by Suze Orman.
- Disinterest: You are not interested in money. If you find financial websites, television shows and newspapers boring, or just generally feel the subject of money is not for oyu, then you certainly cannot be in control of your finances. This is can be hiding a fear of the unknown, a sense of intimidation, or ignorance. See the next point.
- Ignorance: You have not read a book about finances in the last year (if ever!). The subject of money gets more interesting the more you learn. Indeed, as you see how what you are learning applies to your specific ability to create and to keep more of the green stuff, your interest level rises proportionately. It becomes extremely exciting as you prgoress towards mastery and financial independence. No matter how intimidating or boring it may seem, start reading and don't stop. At some point, things will begin to gel and you will feel a growing sense of empowerment and control. Then let us try and stop you!
- Crunching the Numbers: You don't shop around for financial products eg. mortgage, bank accounts, investments. When you feel your efforst in this arena won't make any difference, or you just can't be bothered, you haven't seen the big picture. Take a look at the chart below and compare the difference a few percentage points can make over time. It is based on an initial amount (invested or spent). Remember, this chart would apply to interest paid on debt in the opposite way as interest paid on investments. Every penny you can manage to put in your pocket or not pay in interest is money that can work for you to build your fortune.
Interest Future Value Future Value
Rate (20 years) (40 years)
4% $2222 $4,801
5% $2712 $7,040
6% $3310 $10,286
7% $4038 $14,974
8% $4926 $21,725
9% $6009 $31,409
10% $7328 $45,259
- I'm-not-worth-it-itis: You feel you are worth more at your job but haven't done anything about it. It doesn't matter whether you are self-employed and not asking enough for your work, or you have a traditional job: you know when you are being undervalued. It may be you haven't had the self-esteem in the past to feel worthy of more money, or perhaps it is your boss who has allowed you to languish in a low-paying position. As you gain more financial knowledge your self-esteem will increase as well, and you will find yourself intolerant of receiving anything less than you are able to generate. When you know every dollar counts and you are in control of your finances, that control bleeds over to all aspects of your life. If you feel you are underpaid, and especially if your job is your onlu source of revenue, you need to step up and make things happen. Only you can make whatever changes you feel are necessary to ensure a birght financial future, and that includes making as much money as possible within your working years.
- Lack of Strategy: You cannot name at least a few strategies you employ to save on taxes. This is not a trick. Anyone with true control over their finances knows that there are many factors which affect the bottom line. It's not about how much you make so much as about how you keep. Like shopping around for financial services, knowing your rights when it comes to tax payments can add up to significant savings each year, leaving more in your pocket. Your tax bracket and payment obligations are NOT set - there are many perfectly legal ways to offset and mitigate taxable events in your life. To become financially savvy and independent requires knowledge of all factors which affect your pocketbook, and that includes tax strategy.
While this list is not exhaustive, it may bring out emotions in you which you recognize. It is these emotions - fear, embrassment, disdain, regret - which trip us up when it comes to money. We must learn to look at our finances with objective eyes, to push through any guilt or fear we are experiencing and keep our eyes on the prize. If/when you can go through this list and confidently say none of it applies to you, you are well on your way to financial independence. Remember, you are not alone, and anyone can do this. YOU can do it.
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