Better For It

Nike has perhaps its greatest campaign every running right now.  It’s the one where several women are embarking on their individual fitness journeys for the first time, and they’re each experiencing that beginning stage of getting started – the dreaded “climb”.

 What is the climb you ask?  It’s that first step that you take on the treadmill, the wobbly tree pose you do in your first yoga class, or the first mile that you complete in that marathon that looks and feels so overwhelming, it makes you want to quit before you even really begin.  Before the journey gets, well easier; and you actually accomplish your goal.  I’ve learned that it’s part of Nike’s “Better For It” campaign.

Everybody hates the “climb”, because let’s face it, it’s hard.  It’s unfamiliar ground and your body’s just not use to toning those specific muscles yet.  But the more you stay dedicated to your goal, in no time at all, the exercises get easier and you start to feel better.

This reminds me a lot about personal finance.  I encounter essentially two kinds of people every day when I introduce myself as a financial professional.  The person who leans in and perks up, ready to talk “finance” with me without becoming intimidated. They’ve already started they’re own financial fitness journey, or they’re at least thinking about it.  

Then there is the other person.  The one whose eyes immediately become downcast, or they step away and grow oddly uncomfortable because they know that, like the gym, they need to be doing more regular workouts with their financial portfolios.  They know that they need to become more financially fit, but they’re terrified of the “climb”. 

 Like most fitness routines, there truly isn’t anything to fear.  We hate the pain, or that “burn” we may feel when we know that our muscles are being exercised in new ways, but ultimately we always feel much better when we get to shop in our own closets again, or do everyday tasks without feeling run down too quickly; or we basically feel whatever health benefit we were targeting when we started.  In the end, we are ultimately better for having gotten started and staying the course in the end.

So why not take a similar approach with your personal finances?  As oppose to wishing that we had emergency cash when a crisis hits, or disposable funds to do, or have the things that make us happy, let’s consider viewing our journey to financial wealth, like starting a new fitness routine, with our own specific wealth goals in mind.  We need to ask ourselves what tools, routines and support we need to put in place in order to position ourselves for success. 

I think it involves setting clear goals, identifying the routines that you will need to implement to help you accomplish your goals, enlisting the right support and staying the course during the climb and through the burn, however they may manifest.

Get Started

First and foremost, it’s about mindset.  You have to make a conscious decision to begin.  When you do, for many, those first few stages can be hard because you don’t know what to expect, or if it will even work.  It is new territory for you when you start changing your habits and implementing new disciplines that you may have never used before.  But what most people don’t realize is that moving at a moderate pace, facing your transition in phases and staying the course, will eventually get you to your end goal, whatever that may be.  You’ll feel so good in the end because ultimately, not having to worry about money, only adds to your peace of mind and your mental health overall.  In fact, for those who are unsure about where and how to start when getting your financial portfolio’s and routines together, try starting with the simplest adjustments that don’t insight massive change to your current routine, and therefore your sense of comfort. Establish your goal, break it down into manageable steps, implement them in a way and at a pace that’s comfortable for you, and stay committed to your plan.  This will prove rewarding in the end.  If you still need support in understanding what that should look like, seek the help of a professional, but not matter what – get started.

 The Goal

 People are always hearing financial advisors and other financial professionals talk about retirement, which can again be a daunting prospect; especially when you’re only twenty something and just beginning your professional career.  So while planning for retirement should absolutely be something that you keep on your short list, think about planning for your one, three or five year goal. 

When I start a new fitness workout, I always identify what I want to accomplish specifically, so that even though the bigger picture means that I attain overall health, the indicators that I’ve succeeded are toned abs, weight or inches lost, or clearer skin and healthier looking hair.  Your goal can be as short term as saving for an upcoming event like a wedding or a trip, or planning to make your first big purchase, like your own home.  There’s also nothing wrong with just wanting to have disposable cash to take a vacation on a whim or go on a really fun shopping spree.

 If you identify your purpose, which truly reflects who you are, your wants, needs, habits and other lifestyle choices, then you’re on the right track.

 Planned spending

 Look at your daily spending, which are the things that you do with your money every day to meet your daily and weekly needs.  Start paying attention to what you’re doing with your money on a daily basis.  Many financial professionals recommend keeping a spending journal, which is an excellent idea.  When you see exactly what you’re doing written down on paper, you become more conscientious about it, and it often causes you to implement more strategic thinking before you make that next purchase. 

Above all else, I strongly believe that even with note pad in hand, a critical next step toward financial fitness is to create a working budget.  A budget will help you map out exactly what you’re bringing in on a monthly basis and match it against what’s going out.  You’d be surprised when you actually see where the bulk of your money is going, and how much easier it becomes to re-direct it and save.

 Allocating

 Working with people one on one, and listening to their fears has definitely shown me that most people see the process of getting their finances under control as a drastic life transformation that happens overnight; and only the strong survive.

 Well, I’m happy to reassure you that this doesn’t have to be the case at all.   Altering the prospects of your financial future is in fact life changing, but it’s a lot easier to be proactive and smart about your money, if you establish a system that allows your money to move automatically on a regular basis. Manage the different items that you need your money to take care of regularly by setting up different accounts and initiating automatic funds transfers, or bill payments from your main checking account into these subsidiary or alternate accounts.

A checking account can allow bills to be paid automatically, and most bank accounts have both a checking and a savings component to them.  Speak to your bank about sweeping a percentage of your checking balance into the savings automatically.  This way, you’re relieved of the responsibility of doing it yourself.  Likewise, brokerage accounts can often be set up to receive funds automatically from outside accounts.  Moving comfortable amounts of cash into a brokerage account each month, is a productive way to start investing and building wealth, as opposed to waiting until you come into a hefty lump sum of money.  Let’s face it – the latter can be just as productive as waiting for your numbers to hit in the lottery.

This will also help you avoid that frustrating conversation that you have with yourself when you know that you should be putting more money away into your savings or investments, as opposed making that unnecessary purchase on Gilt.com.  Your money is being allocated automatically, and you don’t even think about it after awhile.  The net deposit is what you actually learn to live off of, and you’d be so surprised to learn what you realistically need to live off of most times.  I even encourage a lot of my clients to open a “recreational” account if it helps.  That way, when they’re ready to do something fun, they can see what’s in there and not worry about deducting funds from money that’s meant to be used for other purposes.

Investing

This brings us to investing.  By far, the most fear that I witness on people’s faces comes when the conversation pivots to the market and investing.  We know that the market can be a volatile environment, but it has also served to be very beneficial for those who have participated in investment vehicles that match their risk tolerance and investment objectives.  The bottom line is that your money has a better opportunity to benefit from the power of compounding when it’s appropriately invested, as opposed to sitting as cash in your bank account.  There are in fact, a host of benefits that the right investment strategy can potentially reward you with, including tax advantages, but you have to do your due diligence and seek the right sources of guidance. 

Much like having a personal trainer, this is also where having a financial professional such as an advisor, to educate and guide you on the investment products that best suite your personal risk tolerance, as well as short and long-term goals, will be highly beneficial.  And like a personal trainer, a good advisor should be coaching and equipping you with the appropriate tools to manage your risk in order to improve your prospects for success.

In the end, the objective is to start sooner than later, and stay as consistently engaged in your investment strategy as you can possibly be.  There are also many online resources and tools that create good platforms for education about investing. It’s a great idea to educate yourself, but ultimately find an advisor to work with, who will educate you regularly about the market and the products that they recommend for you in order to avoid the knee jerk tendency to pull out should things become a little unsteady. 

Stay The Course

No person on a workout regime reaps the benefits of their work by quitting to soon.  Likewise with your finances, I encourage you to stay the course.  These initial life-altering habits will eventually start to reveal their positive future benefits.  For example, automating your bill payments can potentially reduce your debt, and positively impact your credit score.  Continue to reduce stress by putting a little more toward those outstanding balances if you can, and pay the smaller balances off completely sooner than later.  This can also increase your purchasing power, for that great large purchase that you’ve been planning for down the road.

 Start investing and seek the right support in order to make the most strategic decisions that best reflect your goals and risk tolerance.  Contribute regularly into your investment accounts and ensure that you’re well diversified.  Above all else, seek professional guidance from an advisor you feel comfortable with and trust. They should be designing strategies and making recommendations based on your life objectives, and what they know you can tolerate in terms of risk.  Participating in the market is risky by nature.  An advisor cannot prevent risk.  Their goal is to manage your investments through it.

For many people, it often feels overwhelming to get started with their personal financial strategies.  That beginning stage can feel very similar to the initial climb that we all find so hard, when starting a fitness routine.  However, like a great fitness plan, the potential life changing benefits are just too great to not get started at all.  And if I may share in the words of Nike’s campaign – you will most definitely be much better for it in the end!

Shurnette Henry

Shurnette is a Registered Representative and Managing Partner at Papillon Financial, LLC, a New York based wealth management firm.  Her 15 years of experience in the financial industry, allows her to provide clients with the full suite investment products and services.  She is co-author of the firm’s signature wealth education program PEAK (Proactively Educating & Acquiring Knowledge), which uses a dynamic temperament tool to help people uncover their individual characteristics and tendencies around money, in order to build positive and productive financial strategies to build wealth and live the lives they most desire.

To register for the next PEAK Climbers Club, starting on June 20th, 2015 please go visit www.papillonfinancial.com  and click on “Join The Climb”. Only 25 can climb at a time. Secure your spot now!