Hate talking about money? You’re not alone.
Hate talking about money? You’re not alone.
Over the past 34 years of interviewing thousands of people, one of the most frequent comments I get from savers is as follows– “I really feel dumb when it comes to this stuff.” Or, kind of in a similar vein, in some cases, during my first interview with a potential client, I’ll notice on the starter kit that this person is married. I’ll ask, hey, where’s your spouse today? The person sometimes responds with “he or she hates talking about money.”
If you’re one of those folks that would just as soon undergo a lobotomy, as opposed to having to sit down with an advisor and talk about your money, you’ve come the right place. I’m going to try and take the worry and angst you have in your financial heart of hearts right now and demonstrate to you why so many people feel the way they do. In our case, all of the planning that goes into money and making sure that you have a successful and worry-free retirement.
In my view, the reason people fear their financial future is: number one, they don’t understand money. Then, number two, since they don’t understand money, they know that they are going to have to trust someone else to handle it. Then, even worse yet, they act as they know about money, but really they don’t, which creates a whole other set of worries.
Now we call this entire syndrome being financially illiterate. Let’s talk briefly about this term, literate. I’m sure you’ve heard about it. Our society talks about being literate or literacy all the time. Our schools are supposed to teach our kids to be literate. What does that really mean? Well, literate means merely that you have the ability, the skill, to read and write. That’s very simple. But you know what? Without the help of someone else, it’s challenging to learn to read and write. Our society takes great pains to be sure that we are literate so that as Adults, we can more confidently live, function and prosper. Yet, while most Adults in this country are “literate,” many of those same Adults are financially Illiterate. How do I know this? I personally witness it day in and day out – hard-working Savers who admit to me their lack of understanding of what they are investing in and how best to use, enjoy and protect it.
When I’m talking to somebody, and they admit to being financially illiterate, I’ll start talking to them and ask them to describe a little bit about their past, about their parents. How financially literate were their parents? How much financial literacy did you get in school? You know what they’ll say? None, nobody taught me anything.
There have been numerous studies on this as well. Do American families hate talking about money? You bet. TIAA Institute and the Global Financial Literacy for Excellence Center found that less than one in five US adults demonstrated a relatively high level of personal financial knowledge when it comes to questions about literacy. In fact, they gave them a grade of C.
Then you’ve got FINRA. That’s the organization that oversees advisors, such as myself. FINRA found that 2/3 of Americans can’t even pass a five-question financial literacy test. You might say, well, Tony that’s crazy. Isn’t it? The wealthiest country in the world, and we’ve got all these people running around financially ignorant about money. What is the deal?
Well, in my 34 years in the financial trenches, I can tell you what the problem is, there is a pattern of mistakes that savers are making. In fact, I’ve seen five very common mistakes that, in my view, are literally paralyzing themselves when it comes to money and this continual digression and common problem of what I call “financial illiteracy.”
When people are coming in to see me, sometimes, people are saying well, Tony, I’ve kind of been shopping around, or I’ve been talking to other advisors. Sometimes, after letting them talk, I’ll say, so how’s that working for you? They’ll say; “actually, I’m more confused than ever before.”
The first mistake, I think a lot of people make, is they’re actually getting too much information and talking to too many different people. The problem is, I don’t care if these people are on radio, TV, the internet, sometimes, they’re giving you information that is not clear and understandable to you. That’s the first mistake savers are making.
The second mistake savers are making is not having any clear, reasonable, and specific financial goals that are in writing. Now, again, the reason you want your plans in writing is so that, number one, you can communicate those plans to loved ones and to an advisor. Secondly, so that there’s something to monitor and track. Let’s face it, it’s a lot easier to talk or think about goals but if don’t put them in writing there’s no accountability. There’s no way to monitor your progress or anything else. So, again, you’ve got to put those goals in writing.
Number three. I probably should have put this as number one. This is my favorite. I think it’s so critical. That’s embracing your God-given financial personality. Let me repeat that. The common mistake savers make, and the reason many of you feel financially illiterate is, you’re not embracing, nor do you understand, probably, your financial personality.
If you want to find out your financial personality, there’s three of them basically. You’re either a saver, investor, or speculator. You need to head on over to 3personalities.com. Take that quick little test, and it will tell you, in about five minutes, what is your predominant financial personality. Then, what you want to do from there is embrace the personality and find out things you should be doing and things you shouldn’t be doing.
Number four, investing your money in things that you do not understand. If you want to contribute to the feeling of worry and feeling like you’re a financial illiterate, you just keep investing in things you don’t understand. Case in point. One of the problems with this whole mantra of investing in the stock market really began with the advent in 1978 of the 401(k).
Before that time, most people were not investing in things they didn’t understand. My grandfather, for instance, as I said, never invested in a stock. He didn’t even know what a stockbroker was or what they did and didn’t really have access to them. But now, with the advent of the 401(k), many of you are just blindly throwing your money into the stock market vis-a-vis the 401(k). I know this, because when I meet with you, I’ll get out your 401(k) statement, and I’ll say hey, why did you pick these particular funds? You might be going, I don’t know, it just looked good, or I don’t know, it was like throwing a dart, Tony. I don’t even know what I’m investing in.
Number five, get a game plan in writing. Just had a gentleman today that came in for his second appointment. He’s been talking to other people, and I said, that’s fine. And he said, they’re going to do this, and they’re going to do that. This was after I put together a written game plan with this gentleman. He sees everything we’re going to do. He sees all the recommendations. He understands exactly what the fees are going to be. He sees exactly what the commissions are going to be. He knows exactly what we’re recommending. It ties into his situation. I’ve already done goal clarification with him, all those things we go through. And I said, well, that’s great you are getting second opinions.
But do you have anything in writing you could show me to back up what they say they’re going to do? He said, no, they didn’t give me anything in writing. So many of you are continually confused or feel ignorant about your finances, not because you’re ignorant folks, it’s because nobody’s laid this out in simple terms that are manageable and easy to follow.
In closing, be very careful when you’re meeting with advisors. Make sure you get a game plan and make sure that game plan is in writing. Before you invest money with anybody, make sure you have an excellent feel for the game plan, and how it’s going to work, not only now, but in the future.
If you feel like you aren’t getting clear answers, or something tangible in writing to get another set of eyes on, let’s talk. There is never a cost associated with sitting down and talking to me. Go to our Let’s Get Started page, fill out the form, and one of our full-time employees will be in contact with you shortly to set up a time that is best for you or call +1 (877) 499-9255.