I’ve struggled with this weeks blog. One, it’s a few days early and I’m a stickler for routine. But two, I don’t have all the answers. But I can direct. The economic pressures that people in the everyday are under is enormous. It can be crippling. It can be a fear filled roller-coaster ride. It can for some be easy street. And everything in between. And for most of us … it already is too late.
It’s too late as the lessons we have, the habits we have formed about money, have been formed very early on in our lives. Some say at ages 4-7, some say around 10. Either way this means that the lessons we have learnt about money and therefore the enormous impact that this can have on our lives we have gleaned from the significant people in our lives at a very young age. Typically our parents. Now that can mean that we’ve adopted their habits or we can have rebelled and done totally the opposite.
Most young children have grasped all the main aspects of how money works and formed core behaviours which they will take into adulthood and which will affect financial decisions they make during the rest of their lives.*
But in later life, we all have the ability to change, to progressively seek out advice and to change positively the way we approach our economic situation.
There are two professions that really come to the fore here to help us. Psychologists and financial advisers.
Why these two?
Well for most of us there is a need to come to terms with our values when it comes to all aspects of our lives especially money. We carry guilt and we carry baggage from life experiences and it is our self awareness that allows us to process and progress into a more well rounded version of our selves where we continually remind ourselves of who we are at our best.
Now I am not saying we all need therapy, but we do need to understand the psychology of what makes us, us.
As for financial advisers they serve a role as professional wealth managers and consultants. And we need to dispel a myth here. You do not need to be rich to seek financial advice. All you need is the motivation to make a positive change in the way you manage your money. Match that with a financial specialist who has a service proposition that has as a deliverable cash flow management and advice, and then you are heading in the right direction.
Any professional adviser worth seeing has three core propositions: cash flow management and assessment, contingency planing and wealth planning. Cash flow planing is the starting point. Advice around these three core areas is the singularly most powerful step to breaking detrimental habits and thought processes about money.
*Habit Formation and Learning in Young Children, by Dr David Whitebread & Dr Sue Bingham (University of Cambridge)