Learning how to read transforms a child’s world. Learning how to speed read can transform an adult’s life for the better, as the time saved and the skills learned can be immediately applied to ways to get ahead in the workplace: improving office communication, enhancing a project portfolio, competing for a raise. And once that self-improvement work has started paying off in terms of a higher salary, learning how to invest and manage money will guarantee that all of the effort leads to long-lasting results. One person who’s familiar with the power of transformation and the importance of money management is certified financial planner Neal Frankle, who runs the website WealthPilgrim.com.
7SR: For many people, the terms “investment” and “financial planning” don’t have much real-world impact; when you’re struggling to make ends meet, it might seem as if there’s no extra money to spare for investment, and the only financial planning necessary is how to stretch each paycheck to cover both groceries and rent. How can someone make the mental step over barriers like these and really think about the future when it comes to wealth?
I appreciate this situation. It is difficult to think about the future when the present is difficult. The thing is, the future is going to become the present soon enough. It may be tough, but you have nothing to lose by trying. You may not be able to completely transform your financial situation – but you can improve it.
I suggest that people in situations like these break down their current pressures into bite-sized parts. Right now, are you dealing with:
Too much debt?
Out of control spending?
Sit down for 30 minutes with a trusted friend who will act as your accountability partner. Be as objective as you can. List each challenge and work out a game plan to deal with one issue at a time. Then, set up weekly meetings with your accountability partner to report on your progress. Once you’ve worked your way out of the current stress, build a game plan to create the financial future you want.
This approach costs you nothing and moves you forward towards improving your financial life.
7SR: Do people need to talk with someone who specializes in financial planning, or do you have some books that you can recommend?
I think most people do benefit by speaking with a professional planner but I am biased. At the same time, many people don’t need a financial advisor. If your problem is debt or a bad credit score, you might want to consult with experts in that field. If your challenge is spending, take advantage of an accountability partner as I suggested above.
Even if you do eventually speak with a professional it’s to your advantage to educate yourself as much as possible so you can ask good questions and better understand the advice. One of my favorite books is “The Wealthy Barber” by David Chilton. Also, I’ve written two books and I am very proud of each of them. “Why Smart People Lose A Fortune” and “Money Academy for Couples” (available on Amazon). The first explains how investments work and the second is a resource for couples to get their financial lives aligned and on track. Again, I’m biased so please take my advice with a grain of salt.
7SR: Credit is important when it comes to things like car loans and mortgages, and even in some job applications. When should people start thinking about establishing their credit: in high school, in college, or after they have a steady job?
On the one hand, the earlier you start the better. Having said that, it’s important to begin building on a strong foundation. If you start using credit cards, make sure you can afford to make your full payments every month. It is never good to carry credit card debt and rack up expensive interest costs.
7SR: Your “Ask Neal A Question” website option is a great way to have people connect with you and share information. How many queries do you get each week, and what’s the most common topic?
I usually get about a dozen questions a week. The inquiries are usually split between how to invest money and how to collect on a loan the readers made to friends or family.
7SR: What does “appropriate spending” mean to you?
Your financial strength is a balance between spending, income and assets. If you spend more than you have coming in, that might be out of balance. But if your assets are sufficiently large such that you can sustain yourself and still spend down some of your assets, that could be OK too.
So if you want to understand “appropriate spending” first look at what your means are. That includes income from wages, pensions, Social Security, rents and investments. As long as you spend less than that (and your “spending” must include what you set aside for the future) you are going to be in great shape.
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