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financial control

Exercise Your Financial Control

THIS POST MAY CONTAIN AFFILIATE LINKS. SEE MY FULL DISCLOSURE FOR DETAILS.
In Stumbling Upon Happiness, author Daniel Gilbert explains a few fundamental characteristics of how the human brain works. He completes the sentence The human being is the only animal that ______, by filling in “thinks about the future.” He indicates that the brain is an anticipation machine and its ability to “make” the future is the most important thing it does. The skill of expecting something next is a uniquely human tool.
In tandem with the faculty of expectation, our minds are built to exercise control.
This was a revealing point for me, and certainly explains a lot. My brain is wired to be in control, and that’s that. I don’t even like riding in the passenger seat. Not controlling the speed of the car and the braking gets my stress juices flowing. Even worse, if it’s not my car, I don’t decide when I can leave. There’s the anticipation factor working its way in. Not only do I struggle with not driving, I am thinking about when the drive home will occur.
I also excel as a project manager. I like to call the shots and make decisions, directing adjustments along the way, and finding solutions.

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Free Online Wealth Summit – Vanguard Senior Analysts on Active vs. Passive Investing

wealth-summit

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Free Online Wealth Summit – Vanguard Senior Analysts on Active vs. Passive Investing

 The stock and bond markets can be a fearful and terrifying place, especially considering their effect on your financial portfolio. No one wants to see red numbers on their account statement after all. Unfortunately, that’s part of investing.

On average, the stock market enters bear market territory (a drop of twenty percent or more) about one in every four years. We’re eight years into a bull market now without really coming close to bear market territory.

I found some insight from two of Vanguard’s senior analysts over at the Wealth Summit.  The Wealth Summit is a collection of interviews and panels with thirty or so money experts. Companies like Vanguard, TIAA, and Dimensional Fund Advisors have speakers at the Summit. There’s a New York Times bestselling author as well.

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FINANCIAL HAPPINESS

financial satisfaction

I like reading the latest financial tips as much as the next person, but sometimes it’s redundant.  I know how to budget, save, and spend responsibly.  I don’t need a daily article telling me to do all those things, I can write a book on that.  (Oh wait, I did.)  Anyways, instead of dwelling on the next money crisis or offering another seven-point list on how to side-hustle, let’s celebrate some financial success.

 

Yes, things are tough when you’re young because, like most, you may have started with zero, or negative zero, if you had student loans. After some time goes by, the small actions count.  Little by little, the emergency fund gets funded, the necessities are bought, then the pleasures can follow.  One day, going to work may not feel so bad and your life won’t depend on your next paycheck.  It’s when you realize that you have money left over from your last paycheck.  You get a few raises and promotions and there’s finally more money than month with a small checking account buildup.  The money gods have smiled on you and you can start moving on to bigger and better.  This is what’s known as financial satisfaction.

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Investing and Behavioral Risk

investing decisions

THIS POST MAY CONTAIN AFFILIATE LINKS.  SEE MY FULL DISCLOSURE FOR DETAILS.

So, you bought that stock and expected it to return a pile of cash to pay your current debt.  How long has it been, four months?  You watch it every day.  It’s a good day when it goes up, if it goes down, it clouds your mood.  Today, it’s down 12%, maybe it’s time to sell?  You sell the loser and put the diminishing dollars into the bank or, worse yet, into another stock that you expect to skyrocket.  Within a few months, you’re disappointed again.  The cycle repeats.

 

Here’s a sobering thought.  If you’re not happy with your investment returns, it’s your fault.  If you’re new to investing, you would best follow research-based advice – it will alleviate future regrets.

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Self-Evaluating Your Financial Behavior, Part II

financial behavior

THIS POST MAY CONTAIN AFFILIATE LINKS.  SEE MY FULL DISCLOSURE FOR DETAILS.

 

This is a continuation on evaluating your financial behavior.  See Part I for identifying your goals, gathering your financial records, and getting real with money attitudes.

The backdrop for each step describes what a financial planner would direct you to do; the self-study action is included.

These last three points put the plan in motion.

4)Develop and Present a Recommendation

Financial Planner Action: Communicate a plan, make recommendations, and identify alternative options.  At this phase, the financial professional may sense resistance and ambivalence from their client.  Financial psychology* suggests engaging the client in dialogue that fosters the client’s positive changes.  This method of conversing provokes the client to recap their goals and why the goals are important.  Instead of being directed by an outsider, which is typically not well-received, the client feels a sense of empowerment and autonomy.

Self-Evaluation:  This is where you decide what changes you’re going to make and is most likely the part where your well-intentioned launch could lie like an unhatched egg.  You’ve reached this segment, but your avoidance may kick on.  Vacuuming dust bunnies and pulling weeds might look exciting compared to figuring out how to manage your wallet.  If you sense hesitancy, acknowledge it, but don’t judge yourself.  Identify your resistance and figure out ways around it.  You should be sitting on that egg like a stubborn hen, not avoiding it.

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