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Archive for February 2012

Wealth Health #6: The Financial Journey

OK, we’ve done enough analysing in recent blog posts that you should now have an adult, realistic view of your current financial state. You will have also recognised your financial personality and should be well resourced to start your future financial journey.

Any planning exercise must begin with the setting of goals. Aspirational, inspirational, real goals.

What do you want money for?

Have you seriously thought of what it would mean to be truly rich?

Maybe it’s time to revisit the Wheel Of Life. Consider what having wealth would mean in each of those areas of your life: relationships, health, career, recreation, family, spirituality etc.

It is often said that if you wish to be a millionaire, then you should start by acting like one. That can be easier said than done, but look at those areas of your life again. Consider how you might start to create those improvements now.

In Tim Hales’ Smarter Investing he borrows from Maslow’s famous Hierarchy of Needs to present a pyramid model for setting financial goals. Start with the bottom foundations made of current needs: earnings, savings and debt repayments.

On the next level up the pyramid we have your retirement plans. On the third level are the solid future goals around things, experiences, college, weddings etc.

At the top level we find the long-term goals, such as legacies which are further in our future. It should be clear that the upper levels stretching into the future need good solid foundations beneath them.

Try to identify the big milestones in your own financial future: childcare, house, big trips, weddings, parental care, retirement. Trying to choose a date or age in your future where these might occur.

In these days of financial constraints, one of the most worrying aspect of many people’s financial planning is how to manage changes to their pension facilities.

“The question isn’t at what age I want to retire, it’s what income.” – George Foreman

Retirement planning may not be an end goal as such, but it surely ranks high in the important stops along your financial journey. We are destined to live longer than our parents did. We must plan for that.

On average, men live for 17 years after retirement, while women live for 20 years.

During the 1960s, spending focused on leisure, houses, travel and transport.

Since the 1970s, spending has focused on health care and domestic help.

This is a huge area to consider when we will look at it in some detail next time.

Let’s be prepared – or, as Warren Buffett puts it, “Someone’s sitting in the shade today because someone planted a tree a long time ago.”



Wealth Health #5: Common Financial Personalities

How did you get on with the analysis of your financial personality last time? I promised that we would look at these personality types in more detail, so here goes:

If you scored mostly ‘1’ then you are: The Perfectionist

You have to be sure that you are always doing the right thing in the right way and at the right time. These are admirable qualities, but if you adopt a more flexible attitude you will be able to open up choices you may not have otherwise considered. Solid financial planning designed to meet your specific needs can help you towards a more prosperous and stable future, which should allow you a more free and relaxed view of life. “Watch out for being too insular and not considering enough options,” says Jo Roberts at NeedanAdvisor.com. “You could easily make the wrong decisions if you believe what the wrong person is saying. Get professional advice.”

Mostly 2: The Provider

The world would be a far better place if there were more people like you. There is almost nothing that you wouldn’t do to look after loved ones. Engage in some solid financial planning for your unique view of the world. This could not only help you achieve the things you want, but enable you to do even more for others. Be careful of an easy sale: “People know you would rather say yes than offend by saying no,” warns Roberts.

Mostly 3: The Achiever

Rely on your pragmatic streak a bit more when it comes to planning your financial future. Sound financial planning requires a patient and methodical approach if you want your money to work as hard for you as you have it. With your financial affairs sorted out you can concentrate on your hectic high-flying lifestyle. “Watch out that you don’t go for the latest must have opportunity,” Roberts adds. “Only speculate if you can afford to lose your investment.”

Mostly 4: The Maverick

The everyday world must seem terribly mundane and boring to someone like you. It’s great to have dreams, but focus some of your considerable creative energies on more mundane money matters. Mavericks run the risk of doing nothing because looking after money is boring. “If you don’t want to do it, pay someone else to do it for you,” says Roberts.


Mostly 5: The Analyst

It is not enough to know how to ensure that your money grows; you have to make the right decisions to allow it to do so in abundance and support you and your interests fully. “You invest reasonable amounts but not often because you spend all your time researching,” Colin Jackson, a financial adviser for Baronworth, reckons. “You want to make the sole decision on whether your investments will work, so you’ll probably head for anything linked to an index.”

Mostly 6: The Sceptic

Very little in life is certain. A well thought-through yet more adventurous investment may be worth considering. It could provide you with some of the much-needed security that is so central to your existence. “You probably take the free advice of at least half a dozen experts then disregard it and put your money in the building society,” says Jackson. Is it perhaps worth living a little more dangerously?

Mostly 7: The Adventurer

It must get very crowded in your house with so many people wanting to hang around someone as exciting and spontaneous as you. Some careful financial planning will let you enjoy life to the full, both now and in the future. “You won’t be interested in mainstream investment products for the bulk of your money but would look at something more ‘interesting’ with the potential for a greater return and risk,” Jackson says. You’ve probably crossed your fingers a lot.

Mostly 8: The Challenger

You are a natural leader with strength, resourcefulness and inner drive. But you can’t exercise total control over your environment and people around you. Taking a bit of advice from others may give you a wider perspective and enable you to improve your financial well-being. “Rather than having a portfolio of diversified assets, you will tend to have a collection of products that were good in the past,” Alex Pegley, from financial adviser Calculus, says. “You should arrange for a personalised portfolio, setting out clearly defined objectives and reasonable expectations.”

Mostly 9: The Deliberator

Money is very important to you, but your quest to achieve balance and avoid conflict could mean important decisions are delayed while you consider all the aspects. Don’t dither when it comes to your finances; take positive action for what life has in store. Pegley adds: “you tend to miss the boat and take up things too late. By hesitating, you’re unlikely to get enough money invested quickly enough to prepare for retirement, and investments could be overly cautious with restricted investment growth.

As I mentioned last time, no type is the right one or the wrong one. Pat Knightley, who devised this test, points out that we all have flashes of all of these traits, but one will be dominant, especially at times of stress, such as shopping on Christmas Eve in London’s Oxford Street. Knightley also says not to panic if you are not happy with the result. “If we always deal with our money in the same way, you will always get the same outcome. Take a step back, think through your approach and things may change.”

So far in this series we have hopefully increased your own financial awareness, analysed your financial reality, taken a close look at your beliefs and feelings about money and arrived at some indication of your financial personality. Now it is time to start your new financial journey. Next time we will consider setting financial goals.

Wealth Health #4: Your Financial Personality

Wealth Health #4: Your Financial Personality

How did you get on while analysing your feelings about money last time?  Did that expose memories of past conversations about money? Do you recall specific adult behaviour in relation to money as you were growing up?

Have these memories lead to any negatives FEELINGS about your financial situation today? We are not talking here about numbers, but about FEELINGS. Where do you think those feelings come from?  Maybe it was decisions made by you or others?  Maybe it was from comments made by others regarding money?

How are these negative feelings being kept alive in you today, and how do they impact on your financial life?

Before setting off on a new financial journey, including any changes to saving and spending habits, you need to understand fully what your feelings about money really are. What is your financial personality type?

Here is a new set of questions for you to consider. As always, be honest with yourself and choose one best-fit answer in each of the eight sections below.

You are aware that you need to boost your income. So you:

  1. Draw up a detailed plan and seek out the perfect way forward.
  2. Work closely with your friends to make life good for you all.
  3. Look for another job that gives you a higher income and status.
  4. Come up with lots of imaginative and innovative ways to fill the coffers.
  5. Analyse areas in your life where you might make some savings.
  6. Consider the upside and downside of working harder.
  7. Come up with lots of different ways in which to increase your funds.
  8. Decide the way ahead for you and then do it.
  9. Look at both sides of the coin before deciding on the best way ahead.

An unexpected bill arrives in the post. You:

  1. Wonder how this could be possible.
  2. Remember that you had a sudden urge to buy something for someone.
  3. Try to remember how you spent the money and if it was worth it.
  4. Stick it in a drawer and forget about it until you receive a reminder.
  5. Are surprised, as spontaneous impulses aren’t something you usually indulge in.
  6. Worry that you had forgotten about this, and consider the possible consequences.
  7. Ignore it. You’ll get around to paying it when you’ve got a spare moment in your busy schedule.
  8. Pay it is as long as it is fair and correct.
  9. Accept the inevitable and pay it when you get a moment.

You are invited to invest in a new venture. What do you do?

  1. Look at the deal in detail and make sure it fits perfectly with your plans.
  2. Make sure that it will serve both you and your family best.
  3. Wonder how it will make you look good in the eyes of others.
  4. Imagine how it might help you to meet your dreams and desires.
  5. Think how it will boost your reserves and help you to be self-sufficient.
  6. Look for the hidden agenda and any potential disasters.
  7. See if it can provide you with lots of opportunities to be truly free.
  8. If it fits your vision of what you want to do, then fine. If not, then no.
  9. See who else is interested in going along for the ride.

You realise that you have overspent this month. What is your first reaction?

  1. Beat yourself up for not keeping a tight rein on your finances.
  2. Reflect on how much you have helped your friends and resolve to keep a tighter hold on your own expenditure.
  3. Hide the fact and work harder to make up the difference.
  4. Take pleasure in the things you have enjoyed and how they made you feel.
  5. Wonder how such a thing could happen, since you take pride in keeping things to a minimum.
  6. Worry how such a thing could happen, since you’re usually so careful to plan for a rainy day.
  7. Look on the bright side and figure out multiple ways to get more cash.
  8. Accept it as part of the lifestyle, and take the view that you’ll find the money somehow.
  9. Ignore the discomfort and keep calm and unresponsive, knowing that all will be well.

You receive £5000 unexpectedly. Do you:

  1. Think about how you can spend it sensibly.
  2. Use it to help your friends and family.
  3. Tell everyone about it and how you plan to spend it.
  4. Enjoy imagining all the amazing things you’ll buy.
  5. Put it away for a rainy day or use it to develop your interests.
  6. Invest it safely to help you towards a more secure financial future.
  7. Use it to help you indulge in ever more adventurous pursuits.
  8. Spend it or save it as you think best.
  9. Acknowledge your good fortune and enjoy whatever it brings.

You are invited for financial planning seminar at work. Do you:

  1. Accept immediately. It may help you to do what is absolutely right.
  2. Say that you’re far too busy helping others.
  3. Consider whether it would offer any useful networking opportunities.
  4. Wonder if it will really answer your unique requirements.
  5. Review whether it would be the best use of your time and energy.
  6. Analyse whether it really could help you have a safer financial future.
  7. Find something more enjoyable to do.
  8. Go or not depending on whether you think it would be useful.
  9. Put it off until another time.

You’re reminded by a colleague of the importance of pensions and inheritance tax planning. So you:

  1. Take pride in the fact that you are fully up to speed with the subject.
  2. Consider how this could benefit and support your loved ones.
  3. Feel confident that you have or will take care of this in the best way possible.
  4. Fantasise about how savings like that could help you have to things that you’ve always dreamed of.
  5. Calculate what needs to be done without having to waste valuable time and energy.
  6. Investigate ways to deal with them in a secure and risk-free manner.
  7. Think about all the many different ways you could deal with the subject.
  8. Decide what suits you best and do it.
  9. Worry that this may create conflict with your current lifestyle and put off dealing with it.

You see something in a shop that you just have to buy, so you:

  1. Think about it carefully and decide whether you can really afford it, or should you wait until you’ve saved up.
  2. Decide to get it; not for you, but for someone you love.
  3. Just buy it even if you don’t have the money right now.
  4. Buy it so that you can get that quick rush of satisfaction than worry about how to pay for it later.
  5. Take a minute to calculate what you might have to do without if you buy it.
  6. Consider whether you really do “absolutely have to have” it, and if you have the money to buy it.
  7. Think about how good it’s going to make you feel to have what you really want.
  8. Buy it or don’t buy it depending on how much you really want it.
  9. Weigh up the enjoyment of having it against the efforts of buying it.

Now analyse your results and see if you answered mostly “1” (The Perfectionist), “2” (The Provider), “3” (The Achiever), “4” The (Maverick), “5” (The Analyst), “6” (The Sceptic), “7” (The Adventurer), “8” (The Challenger), “9” (The Deliberator). This test was designed by NLP Master Practitioner and Enneagram expert Pat Knightley.

There is no right or wrong answer and no right or wrong Financial Personality type, but to look in more detail at what each of these means then join me next time for Wealth Health #5: Common Financial Personalities

Wealth Health #3: Beliefs About Money

Previously, we have looked at how to gain some clarity about the reality of your personal finances. Now it’s time to delve a little deeper than that in order to expose your underlying beliefs regarding money. This is important, because your beliefs may well be having a greater effect on your financial decision-making than any set of real facts regarding money.

What are some of the things that you are saying about money? What are you saying which may not be serving you well? Which of these common sayings do you use regularly?

  • “Money does not grow on trees.”
  • “I’m not made of money.”
  • “I can’t afford it.”
  • “You can’t take it with you.”
  • “It’s alright for some.”
  • “You can’t take it with you.”
  • “I don’t understand money.”
  • “I haven’t got enough money”
  • “I deserve it.”
  • “I might not be rich but at least I’m honest.”
  • “I work hard, why shouldn’t I enjoy life?”

Most of these sayings have a negative slant to them, so let’s try to reframe them to be more positive, supportive or even motivational.  For example,

“I haven’t got enough money,” becomes, “I have got enough money for my needs.”


“It’s alright for some,” might be reframed to say, “What’s alright for some is alright for me too.”

We seem to reserve our strongest beliefs for those who are richest. What do you say about those who are very wealthy? Would you like to be really rich too? Is it OK to be rich only in certain circumstances? What does that say about your view of being or becoming rich?

What does money mean to you? Try taking a sheet of paper and brainstorming this by just writing words which reflect your beliefs about money.

MONEY =        freedom                      choice              consequences              fun

Sacrifice          pleasure                      pressure          impact on others


Does thinking about money give feelings of pain or pleasure?

Next time we will try to pin point which financial personality type you are, by uncovering your deep seated FEELINGS about money.