Why do so many of us love wandering through a "haunted" house on Halloween?
Because no matter how much we're willing to suspend our disbelief, we always know that the monster lurking around the corner is just a teenager in a mask. We may scream and run in terror, but knowing that we're safe makes the illusion of danger fun.
If only breaking the spell cast by our financial fears was that easy!
Money makes just about everyone nervous. And as we're approaching major life transitions, it can be hard to keep our money worries in check. But when you're working with an advisor and following a Life-Centered Financial Plan, many of your financial fears are no more real than the bowl of peeled grapes posing as eyeballs.
Let's pull back the curtain on two common financial fears that could be spooking your Return on Life.
Fear of Investing
When you make any investment, you're taking on risks. That's why many folks who are skeptical of the markets think Wall Street is just a big casino where the house always wins. Because they're worried that their investments won't pay off, they prefer to "play it safe" by keeping most of their money in the bank, with a few government-backed bonds and CDs rounding out their portfolios. They might even apply this “safe” mindset to other aspects of their lives. Why "invest" in a gym membership when your fitness resolutions have always failed? Why "gamble" on yourself by starting your own company when the odds seem stacked against you?
Unfortunately, in both finance and in life, there's no growth without risk. The give-and-take between buyers and sellers that causes market volatility is also what creates value and, for disciplined investors, increased wealth in the long run. Your Life-Centered Financial Plan is designed to account for, weather, and even take advantage of these quantifiable and manageable risks.
You can also plan to make more effective investments in other aspects of your life. For example, ditching resolutions for incremental SMART goals – Specific, Measurable, Achievable, Relevant, and Time-Bound – can help you face your fears and start achieving more.
Fear of Spending
In addition to following a diversified investment strategy, living within your means and keeping debt under control are often keys to financial success. But frugality that's rooted in fear can turn a good habit into a bad relationship with money.
Folks who spend their working days only working for more money often miss out on too many of life's most meaningful moments. An obsession with "hitting a number" that will magically create financial security can distort a person's retirement timeline. Some folks work longer than they have to and miss out on that sweet spot between leisure time and good health. And even if they do "hit their number," seniors who were afraid of spending when they were earning a monthly paycheck are often terrified to open their wallets once they start living off a fixed income. These retirees often struggle to switch from a saving mindset to a reward mindset. As they did when they were picking up all those extra weekend hours, they put off dream vacations and creature comforts. They figure they'll start spending more and doing more "when the right time comes."
Sadly, for many folks who are too afraid to follow a financial plan and use their money to enjoy life more, that "right time" never comes.
Who ya gonna call?
Don't let these kinds of scary stories keep you up at night. Let’s schedule a year-end review to put your financial fears to rest and help you feel more confident about 2024.