Mid-Year Financial Check Up

At this point in the year there are a few very simple steps to check that you are progressing along your financial path in a way to achieve and even exceed your expectations.

• If you do not have a financial plan in place, this is a great time to begin! There are many ways planning pays dividends. One thing to remember is that people make moment to moment decisions with their emotional brain, while long term decisions are made with their analytical brain. Some refer to it as the old brain and the new brain. Regardless of what you call it, it is a fact of how we make decisions. Without a plan, we simply move moment to moment, making decisions with our emotional brain. We later justify these decisions with logic in an attempt to convince ourselves that we were acting with our analytical brain. When you establish a financial plan you engage your analytical brain, the one that deals with the future. This brain is logical, linear and uses language. This financial plan is a great way to keep our emotional brains in check, creating accountability. For example, your financial plan calls for saving $2000 a month, but you decide to go on an impromptu vacation that lowers your savings to $500. Without a plan there is no accountability. With a plan, we can look into the mirror and say “Well, I said I wanted to be financially independent and that requires $2000 per month. I saved $500 last month, so I either need to change my plan or hold myself more closely to it.” The feedback loop between your everyday action and the plan is what makes the greatest impact on behavior. Everyone who has wealth or wants to have wealth needs a plan. Sadly, many people believe that plans are only useful for those who have already achieved wealth and this is not the case.

• Review your asset allocation. Determine whether you are comfortable with your risk/return profile.

• If you already have a financial plan, call your planner and communicate with them about any updates or changes that need to be made. Keeping your plan up-to-date and current to your life is a way to ensure accountability.

• Talk to your partner about money. Over 50% of divorce is due to money issues. Find out how your partner thinks about wealth. If you are in a partnership (married or not) that means both partners consistently require that their needs are met to the highest degree possible. That means that you need to come together and communicate about how you each see money and what you individually need. After this meeting of the minds you can then begin the compromise phase and eventually joint goals can be developed. Without this sort of clear and conscious communication, the relationship can become riddled with conflict, resentment and passive aggressive behavior, all of which are destructive not only to your wealth, but your relationship in general.

• Lastly, learn something new. Find an area of wealth that you desire to gain knowledge in. Take a class, read a book, sit in on an online seminar, find a friend who has knowledge to share, spend time researching points of interest on the internet, and so on. Make yourself a more educated buyer and you will take the knowledge gained with you on your life journey.