According to a study (conducted by the Research Intelligence Group) we struggle with regret over financial decisions, argue over spending, feel pressure to keep up with friends or colleagues, and bend the truth to friends and family about our financial situation in order to save face. In many cases, the primary response of stress is denial. Unfortunately, putting off these financial conversations can affect mental and physical well-being and the quality of our lives. The longer we stay silent about challenging financial situations, the bigger the problem is likely to become. Often this leads to regret for not having created a financial plan (and good financial habits) early in our lives – but is it ever too late?
Without a financial plan in place it is difficult to know if you’re making the most of the resources you have. It is also difficult to establish financial habits that will support you regardless of what life throws your way. Moreover, it is difficult to annually monitor and adjust the various competing demands for your finances in a way that allows you to sleep well at night.
According to many studies women are significantly more likely than men to lose sleep over financial worries. Fifty percent of women admit losing sleep over financial worries and forty percent of men. It is these issues that bring out some of the differences in how women handle financial adversity. For women, financial planning is inclusive, focused on building and maintaining the family, community and even beyond, well into the future. For men (on average) it seems that the focus is less on the relationship and more on the short-term transaction. According to financial author Kelley Keehn, in the face of considerable stress, men release higher doses of adrenaline, activating a “flight or flight” response, while women produce higher levels of oxytocin, activating a “tend and befriend” response.
Keeping in mind how we tend to react to financial stress, a clear well-defined financial path and a trusted financial professional with whom you can maintain a sincere collaborative and communicative relationship can go a long way toward building confidence, and hence, peace of mind.
Here are a few things you can do to ensure that you’re not the one losing sleep over finances:
- Do your due diligence. Demand that those giving you advice have your best interest at heart and have the qualifications and experience to provide this advice (especially if you have very specific needs). Moreover, find out if your advisor has any real or potential conflicts of interest.
- Understand what fees you pay and what value they add to your ongoing and future financial needs.
- Be prepared when you meet with your advisor. Do your part, keeping track of your finances and letting your advisor know in advance of your meeting of any items that you would like clarified as part of the agenda.
- Get to know your financial and personal goals intimately and be sure that they are reflected in all your financial decisions.
- Seek opportunities to enhance your financial education. Keeping abreast of valuable (not hyped) financial news. Stay away from pundits and financial hype.
- Include your partner and your adviser in your process. Don’t try to “go it alone.”
At Aikapa, we choose our clients carefully to be sure that we have the greatest chance to add value to their financial lives and their portfolio. Our clients tend to be high achieving professionals/business owners with an interest in building solid financial habits that will lead them to a life they will enjoy.
Sleeping well is essential to good solid decisions and enjoying life. If you find yourself losing sleep over your finances or getting overly anxious, give us a call or drop us an email. It is our mission to educate and help you build a stress reduced financial life while maximizing your wealth. Let’s continue to remain in touch and let us know if we can help you with any financial issue.
Edi Alvarez, CFP®
BS, BEd, MS