4 Tips for Your Financial Self-Assessment

4 Tips for Your Financial Self-Assessment

If life were only as simple and fun as a BuzzFeed quiz, we’d be awarding ourselves with lavish titles of “hero”, “artist” or “divine spirit”. But alas, self-assessment, when it comes to your personal finances, acumen can be deeply challenging. We tend to believe we are champions of knowledge and experience, but the reality might lead us to disappointment. Remember, your beliefs inform your attitude and your attitude informs your decisions. In other words, what you believe becomes your reality; sometimes in direct opposition to reality.

Personal financial planning not only deals with where you allocate your 401(k) plan, but spans areas like cash flow management, risk management (more than just investment risk), college cost planning, retirement planning, investment planning, tax planning, estate planning, social security and health care planning. All areas that determine your future.

Let’s examine 4 topics that might provide you with a basis for self-knowledge and a platform to make choices that really work to better your life.

  1. Your beliefs: If you flip a coin, and during the first 7 flips the coin lands on heads each time, do you believe the next time the coin will come up tails? If you believe that, you are asserting that the coin has decision-making ability and will try to equalize the binary nature of coin flips, and subsequently, will want to come up tails. After 7 heads in a row, it has to land on tails, right? Of course, we are aware that the coin has no ability or even desire to land on a certain side. When it comes to your attitude towards money and issues of financial concern, consider what you believe and whether those beliefs are grounded in objective information or if they’re tinged by bias. Think about areas like buying a stock: You believe the stock price will rise—but what you might not consider is that you are buying the stock from someone who decided that it was time to sell. What knowledge did they have that you lack?
  2. Acknowledging lack of knowledge and experience: I don’t know about you, but if my furnace breaks, my hand is reaching for the phone—not a wrench. The same holds true when it comes to my health. While WebMD contains a lot of information, I am confident that I can get better answers from my physician. Somehow, when it comes to financial issues, men (especially) seem to feel that they are, by genetic disposition, able to handle what can be extremely complex, and contain far reaching consequences. When it comes to making money decisions, are you more or less likely to ask for help or rely on your feelings of what you believe is correct?
  3. Frequency of review: How often do you review, or believe that reviewing all your financial matters is necessary and important? If you believe that financial planning is a “set it and forget it” check box, or that items only need to be revisited when there is an occurrence like a recession or change in employment status, marital change, death or a noteworthy event, you might be surprised that a reactive stature when it comes to your financial plan can place you in a very problematic position.
  4. Change-ability: Even for the most self-aware, change can be difficult. Consider the last significant change you’ve experienced and what process you endured to create a successful change. Whether it’s a change in job, housing, health insurance carrier or CPA, there’s typically a level of pain in starting afresh. Shifting strategies, even something as seemingly simple as cutting discretionary spending, can be rife with pain. Consider how well you navigate change and how you’ve been successful in the past. Use this knowledge to better your financial path for the future.

Your ability to successfully meet the challenges of your complex life are best supported by having a clear understanding of your knowledge, beliefs, biases, and ability to insert objectivity into your preset thinking. Move away from biases and towards objectivity. Take some time to really consider these four items and where you stand. The security and the well-being of you and your family depend on it.

Michael Kay
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I founded Financial Life Focus because I wanted to work with people who put your success at the forefront of everything they do; people who understand that finding balance is ... Click for full bio

Most Read IRIS Articles of the Week: April 17-21

Most Read IRIS Articles of the Week: April 17-21

Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, April 17-21, 2017 

Click the headline to read the full article.  Enjoy!

1. Market Keeping You up at Night? Look for the Right Hedge

Like so many others in the industry, I was wrong. For years, I was certain that the bull market was nearing its end. I thought the market was over-extended, and that, surely, the wild equities run was coming to an end. But everyone else was bullish, and perhaps rightfully so. And while I’ve watched equities continue on their spectacular rise, I do think now is the time (really!) to put a hedge in place. Here’s why. Here’s how. — Adam Patti

2. How to Manage Bond Market Pain and Seek the Gain When Rates Are Rising

The realities for fixed income investors have changed. How is this being reflected in markets? Bond investing has become increasingly difficult over the past decade. Markets have been heavily distorted by ultra-low interest rates and quantitative easing, as well as by extreme risk aversion in response to the global economic crisis and the eurozone debt crisis. — Nick Gartside

3. Seven Reasons You'll Fail as a Financial Advisor

Is being a financial advisor worth it? I am an optimistic person and I encourage other people to keep a positive mental attitude (shout-out to Napoleon Hill and W. Clement Stone). However, by taking a good, hard look at the negatives in life, we can successfully pivot towards the positive aspects that will help us achieve our goals. — James Pollard

4. The Secret to Turning Every Prospect into a Client

How do you treat one of your most valued, existing clients? Here’s a list of some things that come to mind. — Andrew Sobel

5. Why Do Clients Change Advisors?

According to many advisors I speak with, the only clients that leave are those who have died. And while attrition may not be a big problem in this industry, I have to assume that at least a few clients change advisors without doing so via the funeral home. — Julie Littlechild

6. Why You Should Focus on Getting Referral Sources

I was talking with an advisor last week about how to get into conversations about what he does. He was relaying the story of going jogging with a friend who could be a good client but is, more importantly, connected to a large network of people who fit this advisors ideal client description. — Stephen Wershing

7. How Big Picture Thinkers Seize More Opportunities in 7 Steps

Big picture thinkers are not unicorns - rare and mystical. And they were not born with the innate ability to think big. They do, however, pay attention to the broader landscape and take the time to think, analyze and evaluate. — Jill Houtman and Danny Domenighini

8. 5 Actions to Build Your Reputation

Your reputation is who you are and how you show up, Monday to Monday®.  Many of us take our image and reputation for granted.  Give careful thought to the kind of reputation that you would be proud of Monday to Monday® and that would resonate with your purpose and priorities. — Stacey Hanke

9. How Are You Poised to Begin Welcoming GenZ to Your Workplace?

The generational changing of the guard is a fact of life as old as time. Young replaces old in responsibility, importance, control and culture. Outside of the family, the workplace is perhaps where this is seen most regularly by most people. — Shirley Engelmeier

10. Are Price Objections REALLY Price Objections?

Next time you hear your prospects give you price objections, it’s not because of the price. The give price objections because they don’t know the full value proposition that they’d be paying for. And it’s not based on their need, or your features and functions. It’s based on the buying criteria they want to meet internally. — Sofia Carter

11. Understanding the Economic Value of Transition Deals

Last week we wrote about the economic rationale behind going independent vs. moving to another major firm as an employee. As a follow-up topic, we thought it prudent to analyze transition packages attached to big firm moves and peel back the layers of the onion to show the components of these deals. — Louis Diamond

Douglas Heikkinen
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IRIS Founder and Producer of Perspective—a personal look at the industry, and notables who share what they’ve learned, regretted, won, lost and what continues to ... Click for full bio