I have always maintained that my favorite color was purple, and that pink was lower down the list of likes. Until one day I counted the shirts in my closet. There were 8 variations of pink and 2 purple shirts neither which I wore regularly,
What does this have to do with financial planning you ask? Here is the background you need to know.
The ongoing oil price drama has Calgarians and Albertans concerned. Even if you have employment that is immune to its fluctuations it is the resource that presently drives the provincial economy. Of course we all feel empathy for friends and family who may be worried about job security. Or maybe you are yourself.
To succeed in your financial goals your beliefs must translate into positive action. You may think you are being careful with your money “just in case” but it always helps to check as I did with my pink shirts. My actions didn’t match my belief about myself.
So to cope positively with an unexpected event, here are 2 parts of a worry less kit. I will provide the first part, in the form of thought provoking questions that will help you assess your current money paradigm. The second part is up to you. You are going to, if you haven’t already, start a cash stash. This is money you will not touch unless absolutely needed. How much you ask? Three to six months of non-negotiable expenses. Non-negotiable expenses are the expenses that are the same every month and must be paid such as rent, mortgage payments, insurances, property tax, condo fees. Some of my clients have wisely saved more than 6 months of expenses.
Here are the questions:
If your job is potentially insecure, you have taken a pay cut, had your hours or days of work reduced, or are unemployed, have you adjusted your discretionary spending accordingly? These are the categories of eating and drinking out, entertainment, and shopping, for example.
Do you know how you spend your money each month?
Is debt repayment a priority?
Do you find more satisfaction in spending and consuming or saving and investing?
Have you ever judged the affordability of a desired purchase by the standards of your peers?
Have you ever said I will spend now and whatever is left I will save and invest?
Do you believe today will be the same as tomorrow, next week , next month or 5 years from now? Why or why not?
Questions and comments are welcome and if you want to discuss these topics in person please let me know.