Financial Well-being is a Result of Compounded Behaviors!
If we want to take this concept to the next level, being financially responsible is the key. Achieving financial responsibility means that we are accountable for our future financial well-being and that we strive to make wise financial decisions.
My two cents as a Financial Counselor
I am honored to lead a financial empowerment initiative at work, and I thought I could go from zero to one hundred. I was going against the advice I usually provide during the financial coaching sessions I lead. I had to hear my voice and words to realize that “Generational Wealth” means nothing to somebody who wants to make ends meet or escape the cycle of debt. Sometimes, depending on the client’s situation, budgeting during the first session is not necessarily the solution because they already maximize and utilize their personal and family resources in the best way possible. Besides, they probably don’t trust us yet, and we have to read those signs not to push them beyond their comfort level. Everybody has a different pace. There is always room for improvement; the key is to empower people to become aware of their financial scripts and dream about a brighter financial future not just for them, but for their future generations.
I also had to realize that as counselors, it’s easy to give advice based on our own values and beliefs when it comes to money management. Our job is to guide our clients to make informed decisions by understanding their money stories, behaviors, values, and beliefs. That is the is the foundation of a “personalized work plan.” We just provide people with a bridge to go from point A to point B in their financial landscape. One of the most important skills as a counselor is understanding that it is never about us and always about them.
Financial Stability is the First Milestone
To achieve financial stability and prosperity, technically, all we need to do is create (and stick to) a spending plan and balance our budget to make sure we are not spending more than what we are earning every month. We should pay ourselves first every month at least 10%. Have a solid emergency fund of 3 – 6 months of living expenses. Stay out of consumer debt, ESPECIALLY PAYDAY LOANS. Start to invest as soon as possible and diversify your portfolio to balance risk. Once you build assets, it’s time to protect them.
Personal finance is not solely math; it also involves human psychology. The truth is that it’s not fun to realize that you are spending more on dining out than on groceries or that your debt-to-income ratio is above what it should be. It’s not easy to build a habit of reviewing your spending plan every month. It feels like we are losing our finanical freedom, doesn’t it? Creating a spending plan is actually telling our money what to do, instead of our money dictating what we can and cannot do! Since repetition is how we adults learn, I’ll say it one more time; awareness is the foundation. Once we become aware of something, the question is, do I want to keep doing the same, or do I want to do something different? Will I have different results if I keep engaging in the same financial behaviors? What financial behaviors should I build if I want to have different results? Why would I want to cross the bridge? The moment we have enough reasons, moving forward becomes a bit easier. We just need to know where we are headed. It’s not about movement; it’s about progress.
A solid foundation is a requirement for stability and sustainability
Part of the foundation is understanding our financial behaviors and decisions. Acquiring technical knowledge about budgeting or investment strategies will not take us far if we are still operating based on money imprints such as money avoidance or vigilance.
How do we identify our money scripts? Self-awareness is key. See how I said it one more time? Start by asking yourself, what are some of my earliest memories with money? What did my parents or adults say about money at home? Did my parents talk about money openly with me? What does money mean to me?
According to MoneySense, money avoiders tend to believe that “money is the root of all evil.” They often associate wealth with corruption and greed and may feel guilty for wanting or acquiring money for themselves, especially when others have less. The money vigilant money script applies to people who are diligent about and attentive to their financial lives. They are constantly making sure they have enough money, such as by reviewing financial documents.
To achieve financial stability, getting familiar with financial concepts and principles and combining our knowledge with the ability to take action is important. Budgeting for the first time can be scary because it’s part of our human nature; the unknown is scary because it activates our survival mechanisms. Seek for help. There is nothing wrong with it. If it’s your first time discussing your finances with someone else, make sure you trust this person, when you receive advice; double-check it by asking another financial professional for their input. It’s good to double-check, you can save a lot of money!
Nos leemos pronto,
Saul Vasquez
