Self-Evaluating Your Financial Behavior, Part I

financial behavior

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Self-Evaluating Your Financial Behavior, Part I

If you were to sit down with a financial planner, you might expect to state your goals and come away with directions for allocating your money.  You might expect to be sold a life insurance policy or have your money transferred to accounts that are under the control of the advisor.

A CFP® follows specific steps to align the client with a sound financial plan.  These steps involve establishing a relationship, gathering data, analyzing the current financial status, developing a recommendation, implementing the suggestions, and monitoring the plan.

A comprehensive evaluation of your financial status should integrate your underlying money motives and help you understand how you are managing yourself and your money.  This is critical knowledge because you are the only person that will take the necessary actions.

Dr. Brad Klontz is my hero on this topic.  Dr. Klontz combines behavioral finance and financial psychology into standard financial planning procedures. He’s the Dr. Phil of finances.  If you need help getting real with your finances, Dr. Klontz has your remedy.  In case you haven’t made the connection between your behavior and your financial status, read below where I’ll translate Dr. Klontz’s recommendations for conducting client meetings into self-evaluative introspection and actions.   If you understand your motives and harness that energy, you will be better empowered to make smarter financial decisions.

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Mid-Year Financial Checklist

financial checklist

Usually I wait until December 31st or January 1st to assess my financial condition.

I ask myself the following  questions:

  • How much have I saved?
  • Is my money in the right accounts?
  • Is my retirement account percentage enough?
  • Do I have a balance in my Flexible Spending Account?
  • Have I contributed enough to my IRAs (deductible or non-deductible)?
  • Have I donated as much as I wanted to?

With the blur of the holidays fuzzing out my faculties, I decided that halfway through the year is probably a better time to check my financial diagnostics.  By December I don’t remember anything and I don’t have time to fix anything to fall within the calendar year.

This weekend’s activities involved conquering a mountain of laundry and getting to my fiscal monitoring.  Here’s a list of things I took care of and recommend:

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Why We Buy Stuff

spending

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

I would like to weigh in on a hot topic.  My friend at Budgets Are Sexy posted an article on why we buy stuff.  J. Money’s piece emphasizes that buying makes us feel good.  Clearly true.  However, there are more reasons to explain why we possess compulsive spending habits.

The Sophistication of Marketing

I just read in Investor’s Business Daily that 7% of adults think that chocolate milk comes from brown cows.  7% is a small percentage of the population, but it’s hard to conceive that anyone believes that.  With that level of gullibility, no wonder marketers have brainwashed us into giving up our paychecks to endlessly buy things.

One of my favorite books is Born To Buy by Juliet Schor.  It not only reports on the sophistication of marketing but chronicles the stealth methods used to convert children into lifelong buying robots.  Given that the book was printed in 2004, and the author’s study subjects are adult age by now, most millennials have already been transformed into consumer zombies.

How Marketers Prey On Us

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