10 money monsters, and how to tackle them

starting with one that stops you tackling the rest

10 money monsters

Do you ever get the feeling that your money is a monster – and one that’s best avoided?

Don’t worry; you’re not alone, and this NEW series of Insights will help you take more control of your money, rather than have it control you!

One monster at a time, please

In this Insight, I’ll focus on the single biggest reason that I believe we avoid tackling any of our money monsters.

I’ll also list ten types of money monster that people have told me (over many years) that they struggle with.

Then, in a series of future posts, I’ll explain how you can tame all of these monsters.

You see, Money Monsters come in all shapes and sizes, so they’re best understood (and managed) one at a time.

Sign up to newsletters to be sure of not missing these future insights.

 As a thank you, I’ll send you the first chapter of my book, ‘Who misleads you about money?’ and an outline of my 5 steps for planning your financial freedom. 

Give me the honey money mummy

Honey MonsterSorry, couldn’t resist that. All this talk of money monsters reminded me of the honey monster, the character in the 1970s marketing campaign to get children to eat more ‘sugary’ cereals!  

Now, to be clear up front, this is not yet another blog about a honey money monster character which eats all your money today – by tempting you to spend what you don’t have.

Sure, those monsters are real enough, and we all need to control our spending, but as Stephen Covey said, I want to ‘start with the end in mind’ and focus on those money mind monsters that completely block us from making progress on our most important, longer-term life goals.

Life goals

How we spend our money in the short term is important of course, but getting clear on our longer-term life goals (what we want to have, be or do – for ourselves or our loved ones) is what will motivate us to stay on the journey when the going gets tough – as it sometimes will.

Most of us have some bad spending habits, but let’s not assume all non-essential spending is wasteful, it’s not.

We all need to ‘cut our coat according to our cloth’ but it’s nice to have the occasional expensive experience in life too, right?

I don’t buy the idea of ‘going without’ any treats in your younger years, just to have the freedom to stop working altogether later on.

Many of life’s greatest experiences are best enjoyed while you’re still young!

Each to their own of course, but it’s clear that some of the FIRE gurus are coming round the same conclusion. Spending nothing now to retire before you’re 50, is not the best idea for everyone – especially if you have or you’re planning to have children!

That said, if you want more ideas for no/low-cost ways of having fun, take a look at my ‘Happiness List’ Insight which I’ve recently updated to take account of the Coronavirus lockdown.

Lockdown is causing immense financial and mental strain for millions right now and that’s likely to get worse as the temporary support measures are withdrawn.

However, it has at least given us some perspective on what really matters in life – and it’s given us more time – which if we’re smart, we can spend on those FREE happiness activities

What’s on your list – and how has lockdown affected it?

Okay, so if your spending is largely under control or, at least on the way to being so 🙂 , let’s focus on how you can tackle your longer-term money monsters – including the people who’ll mislead you about money – I wrote the book on that!

The big monster is the obvious one

Elephant in the roomLet’s be honest,  long term financial planning was not at the top of (most) people’s lists of fun things to do before the Covid crisis.

And even if you’ve learned my fun way to plan your money (which I recommend you do, BTW) I wouldn’t expect this to be your (number one) favourite activity after this pandemic has passed.

Financial planning, for many people, is unique in being the one essential job they simply refuse to do.

The question is why?

I mean, we all have plenty of jobs (like washing up) that we might not enjoy, but these jobs must be done. So, we get on and do them… eventually, right?

What’s so different about financial planning?

Well, in a moment, I’ll list those 10 (action blocking) money monsters that people have told me about over the years.

First, let’s deal with the obvious one – that big elephant in the room.

Long term financial planning is… about the ‘long term’!

Long-term financial goals are simply not a problem for today.

Normally*, there are no, immediate, consequences if we put off this job, so, that’s exactly what we do.

We put it off till next week, next month, next year or… right up to the day we realise we’ve run out of time to build the funds we need for those important life goals.

* I say ‘normally’ because some shocks to our personal finances can arise suddenly and unexpectedly, as when a breadwinner (or childcarer) in a family is struck down by illness, accident or death.

Thankfully, because these are rare events, it costs very little to insure our lives or health to be sure of providing for loved ones (or our own needs) in these situations… as long as we insure against these disasters, while we’re relatively young and in good health.

The ‘do it later’ issue I’m focused on here is with our longer-term savings because these financial crises arise slowly and imperceptibly over time.

Yes, it’s true that it doesn’t matter much whether we start saving this month, or next for a big financial life goal (like building a fund to escape from work in our later years – aka a pension) if that goal is 40 years away.

However, if we leave it 20 years (until we start getting interested in retirement) before we start saving, we’ll need to save about three times as much (in today’s money terms) to achieve the same result.

Sounds incredible perhaps, but it’s true, I’ve run the numbers.

So, starting early makes an enormous difference to your longer-term savings.

And I’ve tried to illustrate the two extreme choices here.

Two roads to a pension

We can choose to follow the ageing climbers (in the bottom right corner of that picture above) who saved nothing in their younger years and are now scrambling up a cliff edge of savings to get to the nice big balloon fund of money, to take us up and away and escape from work.

Or we can choose the route of those on top of the hill and enjoy a much easier (albeit longer) stroll (of saving) to reach our financial freedom goal.

If we choose the climber’s path, we must accept that it’s a dangerous one.

Yes, we might make it up the cliff if we enjoy super steep returns on a few years of last-minute saving, but to achieve those returns means we will have to take super high risks.

So, there’s a good chance we’ll fall and lose any chance of reaching our financial freedom goal at all.

Of course, if mountain climbing is your weekend activity of choice, this analogy might not work well for you;-)

So, I’ll just mention the dentist analogy too.

Fancy visiting the dentist for a filling?

Afraid of dentistIgnoring the need to save for our longer-term goals, is like ignoring the pain of a mildly sore tooth.

Yes, we can put off the visit to the dentist, but the problem will only get worse over time and eventually, we’re going to lose the tooth and possibly suffer other complications as well.

While we’re talking about dentists, did you know that c.15% of us say we’d rather visit the dentist for a filling than talk to a financial adviser?

Or that a quarter of us find the idea of planning and managing our finances, literally terrifying?

Source: The psychological forces and barriers that influence people’s financial management. [Research compiled for AXA, by Karen Pine and Ben Fletcher]

Well, that’s what a lot of people thought at the time of that survey – and I doubt those feelings have changed much since.

In short, you’re not alone if you see your (long term) money challenges as a monster,

Why do we struggle with this?

The reasons are neatly laid out, in academic terms, in the research linked above and they all align perfectly with the (plain English) reasons I’ve heard too – about why people struggle with their (longer-term) money (and adviser) relationships.

The reasons, as ever on money matters, are different for everyone.

What does your money monster look like?

What stops you from having a good relationship with your money, or your money adviser?

Here, in no order, is what others have told me.

I don’t know enough about pensions, investments and all that money malarkey to know how to approach this, and I feel too embarrassed to talk about it to others.

I feel anxious about my uncertain financial future, so I tend to avoid talking about it.

I’m afraid of repeating a mistake that I (or a friend or family member) made in losing a lot of money on investments (or property) in the past. 

I don’t earn enough to save for a pension. I’ve looked into how much you need to save, and those numbers are completely out of reach for me.

To be honest, Financial Planning bores me and I’ve got better things to do with my life.

I’ve tried to sort this stuff out, but I feel baffled and defeated by all the complexity and jargon, so I’ve now given up.

I don’t trust financial advisers to work in *my* best interests.

My adviser is honest enough, but not very bright or technically competent. I think a lot are like that.  

I’ve looked into this – and I can’t afford the price for good financial advice.

My partner is the real problem. He/She won’t work with me to develop a financial plan or do what’s necessary to make it happen.

Do any, or all, of those issues chime with you?

They’re simply the reasons people have told me that they don’t like to engage with longer-term, pension and investing money matters.

I’ve been recording these reasons for 30+ years whilst working both inside (and now, as a writer, educator and consumer champion) outside the Financial Services Industry.

And what’s really interesting is that, with the exception of the Covid crisis, these reasons haven’t changed in all that time, so I’d be surprised if some of them don’t resonate with you and your friends.

That said, if you have a different type of action blocking money monster, please let me know in the comments below – and I’ll try to find a way to help you with that.

You see, my mission is to help millions of people to tame their money monsters – with solid ideas that are FUN to learn.

I’m pleased to say, I’m making good progress with that… but there are millions more I still want to reach.

So, please let me know which of those 10 money monsters (above) hold you back from tackling your longer-term money challenges.

And, if you stick with this series of Insights, I’ll do my best to help you tame all of them – and others if you have any.

See you next time – and thanks for dropping in,

Paul

For more ideas to make more of your money and earn more of it too … Join my Facebook Group or sign up to my Newsletter and…

as a thank you, I’ll send you my ‘5 Steps for planning your Financial Freedom’ … and the first chapter of my book, ‘Who misleads you about money?’
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