Category Archives: Getting Started

What can you do to begin the process of retiring on your terms.

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The 6 Stages to Successfully Changing Your Financial Behavior

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Have you noticed how some salespeople are relentless in trying to overcome your objections to buying? Most of them are taught that the more objections you have the more interested you are in whatever they are selling. I know how this “dance” works because I have taught and coached hundreds of sales professionals over the years. It wasn’t until I read S.P.I.N. Selling
by Neil Rackham about 15 years ago that I understood that to be a successful salesperson/Financial Advisor you have to understand the psychology of the buying/decision making process. Rackam uncovered the truth about buyers responding better to their salesperson/advisor when they asked questions that uncovered problems.

Uncovering problems leads the buyer to acknowledge that there is a problem in the first place that needs to be addressed (one they may not believe exists). Even after addressing all of your objections you still might have resistance to moving forward and changing your “buying” behavior or in this case your “financial” behavior.

A Financial Advisor can sit with you and address all of your concerns but you still might walk away dissatisfied. Why? The answer is because you haven’t necessarily come to terms with the fact that there is a problem. You haven’t worked through the natural process to overcome your resistance to making changes because from where you sit you aren’t convinced yet that there is a problem.

In the book Facilitating Financial Health the authors Rick Kahler and Dr. Brad Koontz makes the point that there are six stages associated with overcoming our resistance to change. They sound a little clinical but see if you see yourself in any of these stages.

  1. Pre-Contemplation – This is where people don’t realize that they have a problem. For example it could be overspending or a lack of understanding as to how much money it will take to retire at a reasonable age. You have heard the term, ignorance is bliss”. That fits into this stage.
  2. Contemplation – This is where you finally realize that you have a financial problem and you are at least considering making a change within the next year. You might still feel ambivalent about that change but at least you have broken through the barrier to understanding the need for change.
  3. Preparation – Here your time frame for action has shortened to 1-3 months. You know that you need to take action and you are ready to start putting a plan together. You are willing to put that budget together and make changes to your spending and saving habits.
  4. Action – Now you are ready to implement those plans that you started in stage 3. You work with your financial planner to execute on your plan. You may still have some concerns that need to be addressed but you are ready to work on overcoming them compared to where you were in Stages 1 and 2.
  5. Maintenance – The changes you have made are now part of your life style. Congratulations! Sure you will have some setbacks and relapses but your mind is ready to accept the changes as a beneficial part of your life now. Here you can automate many of your financial transactions such as contributing to your 401(k), paying bills, etc. which will minimize those relapses.
  6. Termination – In this stage you have made permanent changes with little chance of reverting to old bad financial behavior. You and your planner meet periodically to monitor your plan and make asset allocation adjustments. You have a true partnership with your planner. You may even refer your planner to your friends and family as a result of your satisfaction with the partnership that you have developed.

So what can we learn from this discussion of resistance? First, resistance is a normal part of the behavior change process. Second, if you try to shortcut the stages you probably won’t be successful in overcoming the resistance. In fact if you don’t have some objections to overcome when you meet with a financial advisor it probably means you are not connecting with him/her at an emotional level. The days of having a financial advisor pat you on the knee and say, “there, there, I will take care of everything” are over just as they are in the medical profession.

The most successful financial advisor/client relationships from my experience are true “partnerships”. You need to connect with your advisor so I recommend that you not settle for anything less. It’s normal to resist changes to your financial behavior. Don’t beat yourself up. Give yourself time to work through these stages. When you are ready then find an advisor you can truly partner with; someone who understands that it will take time to get you on track to a successful financial journey. Plan well. Live better.

Click here if you want to explore my financial coaching service. I also offer free 30 minute Clarity Session as well.


Time Out!
What stage of overcoming resistance to changes in your financial life are you in? You can leave a comment here.

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Budgeting Smudgeting, Why Do I Need a Budget?

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I know, I know. Just the thought of having to put a budget together reminds a lot of people of going to the dentist when they haven’t been for a few years. It’s that fear of, “What am I going to find out? And, “Whatever it is, it’s going to be painful.” Before you run off to another blog site let’s try to come to terms with both the fear of budgeting and the reasons why you absolutely have to go through this process. And…it might actually be fun! Yes, I really did use the word fun in the same paragraph as “dentist” and “budgeting”. Hear me out on this.

Why is budgeting so painful?

I believe it’s because many of us know we have “leaky” behavior so it’s a matter of “the truth hurts”. Leaky behavior is what I call those expenses that may not seem like a big deal but over time they add up to thousands of dollars. Money that could help you reach your retirement savings goal; things like daily Starbuck’s coffee runs, eating out every weekend, weekly shoe shines, having a yard guy (or gal). You get the idea. At the risk of being called the “fun police” let me state that you don’t have to automatically cut out all of those enjoyable expenses but when it comes to finding extra dollars to invest for your retirement those are areas we want to look at first. That’s why it’s important to know what they are in the first place. And that is where the pain comes into play. Many people upon learning of the amount they spend on these various behaviors often bring their hand to their forehead and cringe. There’s the pain. We are often resolved to our income and know it well but we “hope” there is enough money at the end of the month instead of vice versa.

How Can a Budget Help?

First, you start form a position of strength. You take control of the monthly expenses instead of the expenses taking control of you. In other words you have a game plan. Imagine if your favorite sports team started the game with no real plan, just a vague idea of how they hoped the game would go. They know they want to score more point than the other team and they have a pretty good feel for how they have done it in the past so off they go. What do you think the chances of victory would be? Well, that’s how many people treat their personal finances. They hope their income will cover their expenses. Your budget is the foundation of your game plan.

How Does the Budgeting Process Work?

It begins with gathering the data that makes up your financial history. Next, you use this information to do a cash flow analysis. That’s taking a look at your income versus your outgo. You will calculate what’s called your net cash flow. That will tell you whether cash is coming in faster than it’s going out…or vice versa. Then we need to know your net worth. In simple terms, your net worth is the sum of everything you currently own minus the sum of everything you currently owe. Why is this important? It gives us a snapshot of where you are today…financially. This is the foundation of our game plan. It tells us form where we are starting. Just like a team at the beginning of the season. They need to know what they have to work with and go from there.

Once we have the snapshot of you financial situation, then we start looking at your money goals including retirement, college funding, social security, healthcare just to name a few. Of course not all of these may be on your list of goals depending where you are in life…at least not yet. We have to set priorities and timelines.

Budgeting is not a one-time deal or a once a year deal like paying taxes. Yes, we have to revisit that bad boy on a regular basis. So like anything else that can be a chore to do we have to make it as enjoyable as possible. Thanks to technology even budgeting can be fun. Yes, I used that “fun” word again. Well, even if it isn’t fun it can become bearable.

Check out my Budgeting That Makes $ense course. Click here to Learn More and check it out!

Check out our Budget Tracker tool here. I know that you will find it helpful. You can also get a FREE copy of our Net Worth Calculator here.

Question: How do you feel about the idea of building a personal budget? You can leave a comment by clicking here

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It’s Time to Leave “Someday Isle” and Start Planning Your Retirement Journey

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The Employee Benefit Research Institute conducted a telephone survey recently and asked people age 25 and older how they felt about their retirement finances. The responses were interesting and confusing. As the Wall Street Journal reported, it conveyed a sense of false hopes for many Americans. Consider:

  • Two-thirds of those surveyed said they felt confident about their retirement income preparations but…
    • 64% said they or their spouse had saved for retirement
    • 57% said they or their spouse are currently saving for retirement
    • 44% said they or their spouse had tried to calculate how much money they will need in retirement
    • 32% are confident Social Security will provide sufficient benefits
    • 22% said they had saved $100,000 or more for retirement
    • 19% stated they had received advice from a financial advisor

So the survey results above don’t match up with the expressed optimism and confidence. What gives? Are we fooling ourselves into a retirement death spiral or are we afraid to face the reality that the boomer generation just hasn’t done a good job of preparing for retirement?

In either case, it’s time to get over the “woulda, coulda, shoulda” thinking and start looking at what we can do right now, today. I am sharing my “Ready List” to quote my old college football coach, Bill Walsh. Just as a football team develops their Ready List to prepare for an opponent you too need a “Ready List” – the retirement income planning “plays” you can “run” right now depending on what opponents you are facing right now which could be one or more of these:

  1. I haven’t saved enough
  2. I’m not contributing to my company 401k or other retirement plan
  3. I don’t understand how Social Security works
  4. I spend too much money on “stuff” instead of saving for retirement

And there may be more. But let’s start where we are and go from there. Get off the “Someday Isle” and let’s look at these possible solutions – my “Ready List”

  1. Start with the end in mind – Sit down with a CFP (Certified Financial Planner) and figure out how much you have saved right now. Together you can uncover the retirement income “gap” and discuss solutions to help bridge the gap with one or more of the Red Line Solutions discussed below.
  2. Look at your expenses – We need to look at what you spend now and what lifestyle you want when you retire. Most people want the same or as close to the same lifestyle that they have pre-retirement. So we typically use 70-80% of your pre-retirement expenses in retirement as a starting point.
  3. Don’t forget Social Security – This can make a huge difference in your retirement income projections. It’s a guaranteed annuity with inflation protection. We need to figure out when the best time to start taking benefits will be. Don’t assume it’s at age 65. More on Social Security here.
  4. Find the gap – I use a terrific program called Retirement Analyzer. Once we account for your assets, expenses, Social Security and other potential sources of income we can determine when you will or won’t run out of money. We call this the Red Line analysis. The Red Line is when you will run out of money. We want to push it beyond age 100 just to be safe – make it disappear!
  5. Bridge the Gap – Depending on where/if your Red Line shows up, for example, at say age 75, then we need to come up with Plan B. We call these the Red Line Solutions. What are those? Here are some examples:
  • Modify when you start taking Social Security
  • Work longer
  • Work part-time in retirement
  • Reduce expenses in retirement
  • Increase contributions to retirement accounts
  • Sell an asset

I explain these Red Line Solutions in more detail here. Beating yourself up over what you haven’t done won’t get you any closer to an enjoyable retirement. Taking action now will. You don’t have to do it alone. Work with a professional advisor and get started on your retirement income plan. That’s the only one that matters.

Time Out! What is the number one roadblock to your retirement income goal? You can leave a comment here.

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5 Ways That You Can Retire on Your Terms Even If You Are Getting Started Late

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Being a CERTIFIED FINANCIAL PLANNER®, I am naturally more in tune with the truthfulness or, should I say, the intentions of retirement advertising. It’s all about hitting the pain points. Not much fun, right? At least buying a new car or a house is fun. Yet sometimes the important things in life are not “fun”. Retirement planning is one of those things.

When you need a new car, you check out the rates at the credit union. If you need a mortgage you also check rates. In other words, you shop for the best rate before you shop for your car or your new home. When was the last time you said, “Hey Honey, we haven’t saved enough for retirement. Let’s go down to the credit union and meet with a financial advisor.”? Probably never. I wish people were as in tune with their retirement planning as they are with getting a new car or a new house.

To compound matters, the big financial companies, that can afford to advertise on TV like to make you succumb to what I call the Lump Sum Scare. You know, they tell you that you need a lump sum of several million dollars or you won’t be able to retire – ever! I know better. If you haven’t saved “enough” and that is a relative term. It’s as personal as your fingerprints, you can still retire, be they different terms than maybe you are thinking about right now.

Let’s look at 5 ways you can retire on your terms, even if you are starting late.

  1. Work longer, retire later. Don’t forget, each year that you continue to work increases not only your Social Security benefit, if you have a pension it could increase that benefit as well. It will also allow your retirement investments to continue to grow (401(k), IRA accounts, and taxable investments)
  2. Work a second job or part-time after retirement. The first step is to figure out what your income shortfall will be and then you can start considering the type of part-time work you will need to supplement your other sources of income in retirement
  3. Reduce monthly expenses. Yes, this can be a painful process but in many cases, it will be necessary. This is why the budgeting step is so crucial. You don’t know what needs to be reduced if you don’t know what you are spending. Check out my “Budgeting That Makes $ense” course for a great way to develop your own successful budget. You can also get a free copy of my  Budget Tracker tool to get started. Most retirees don’t need to live on their pre-retirement standard of living. It will probably be somewhere between 70-80% of what you are spending now. Once you have your budget you can figure out what can be reduced or eliminated.
  4. Increase the contributions to retirement accounts. Use the power of compounding and time to work in you favor. Even a small increase of $50 to $100 a month can have a dramatic effect on your retirement savings depending on how long you have until retirement.
  5. Sell an asset. Again, probably a tough decision. Maybe not, if that vacation home is going unused now that the kids have grown and are not as interested in using it as they were once upon a time. Or maybe you want to downsize and get a smaller, less expensive home or move to a part of the country that is less expensive than where you live now.

Don’t be brow-beaten by TV and social media. Meet with a financial advisor or check out my coaching offer and decide what your retirement terms look like, even if you don’t have a big lump sum saved. You can still retire on your terms. Even if you are starting late. Get my free guide to retirement when you are starting late here.

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Hall of Fame Retirement Advice From a Celtic Legend

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Several years ago I wrote a little book titled, Think Like an Athlete, Manage Like a Pro, where I extolled the many positive personal qualities that successful athletes utilize and that business leaders can employ to build their companies. One thing you won’t hear me recommend is that you invest like an athlete. The halls of retired professional athletes are littered with tales of bankruptcy and financial excess leading to financial ruin. One statistic I read recently stated that 78% of pro football players and 60% of NBA players are bankrupt within 5 years after retiring!

With this knowledge I was all the more intrigued to learn of the financial success of one of my all-time favorite athletes, John “Hondo” Havlicek. A recent Forbes magazine article explained how Hondo achieved his success with discipline and sound advice. Consider that he earned $15,000 in 1962 as a professional basketball player with the Boston Celtics. If we factor in inflation at 4% per year then $15,000 per year in 1962 would equate to $116,524 a year in 2014. There are probably ball boys in the NBA making that much today. So how did he do it and what can we learn from his success?

  1. Start early. Yes, Hondo told his advisors to invest his money in “Blue Chip” stocks. He was looking to invest his money for the long haul. Like Hondo if you don’t understand investing go with companies that you are familiar with which typically are Blue Chips, those that make up the DOW for example – like AT&T, Lockheed, Eli Lilly, H&R Block and UPS. The best way to invest in Blue Chips is through a mutual fund such as an exchange traded fund (ETF). If you didn’t start early, OK start now. It is never too late.
  2. Stay invested. Hondo didn’t try to time the market. He learned early that markets go up and down but over time he would benefit from the historical growth of the market instead of potentially missing some of the best days by pulling out when things look bleak. Consider that 95% of the market gains between 1963 and 1993 resulted from the best 1.2% of the trading days during that time! If you missed 90 of the best performing days your return would have dropped from 11% to 3%. Stay invested!
  3. Don’t overspend – Even though $15,000 a year in 1962 was considered a good income Hondo knew his career was not infinite so he had to prepare for the long –term. If you put a budget together now and start living within your means and find some extra dollars to invest it can have a huge impact on your retirement income.
  4. Find a financial manager you can trust. This was critical to Hondo’s success as he relied on expert advice early on especially when he invested in several Wendy’s hamburger franchises. Many pro athletes go broke because they pick an advisor who enables their bad spending habits instead of providing the “tough love” advice that is necessary especially at a young age. You should find an advisor who you trust and who provides good overall financial advice not just investment advice; financial planning advice. A good place to start is with a CFP – a Certified Financial Planner.

Unfortunately we tend to hear and read about the financial misfortunes of athletes. So it’s refreshing to hear of a success story like that of John Havlicek. What makes it even more meaningful is the fact that each of us can and should relate to his financial story and heed his advice. It’s much more difficult to relate to the mega millions being paid today to athletes and to comprehend how they can lose it all within a short period of time. Take these four tips to heart and you too can retire on your terms. Plan well. Live better.


Time Out! Which of the four steps John Havlicek embraced for his sound financial plan is most important to you? You can leave a comment here.