What is personal finance?
Most financial services are focused on the investment side of finance, from where to best invest your savings, to paying off debt, or building out a retirement plan. While all of these things are important, they are all a bit complex and ultimately are not something most people want to engage with on a regular basis. However, there is a whole other world of finance that every single human being on the planet interacts with on a daily basis - and that is personal finance. Every time you receive a paycheck or make a transaction, you are engaging in personal finance.
In its most basic form, personal finance is the process flow of how much money you make, how much money you spend, how much money you save, and where you keep the savings. While this topic may sound simple, it actually can be pretty complex, and while everyone engages with this topic on a daily basis, few take the time to fully understand its potential to impact your life - both in the short term and the long term.
Why should I care about personal finance?
Have you ever had money problems?
Have you ever taken out a bad loan?
Have you ever paid too much interest without understanding why and/or the tradeoffs?
Have you lent money out to friends or family and never seen the money again?
Have you not been able to pay bills on time?
Have you ever found yourself making an impulse purchase after having a bad day?
Have you found yourself putting off purchases or paying bills until the next paycheck hits?
Have you ever thought you were going to save more money, but did not?
Have you ever made an investment without understanding the risk?
Have you ever ended the year with a huge surprise tax bill?
These are all things that most people have gone through at least once in their life. These are painful experiences that teach us money can cause real issues if it is not managed properly. By investing your time in personal finance, you can better prepare yourself to understand the benefits of managing your money well and the risks that come with not.
What is a financial coach, and what benefits can they bring to my life?
A financial coach is someone who can help you learn how to build a relationship with the financial part of your life. How a person interacts with money is actually a behavioral and emotional event, and this is where it can be hard to deal with these events on your own.
Society teaches us to not talk about money, it is a personal aspect of your life only to be shared with those that are the closest to you. Most people do not even talk to their own parents or siblings about money, some even do not want to talk to their own partners about it! Personal finance is not a natural topic, and just like anything else, it is something that needs to be learned. However due to social stigma, most people do just enough to get by as connecting with someone who can help them, ultimately means opening up and talking about something we have all been taught for so long to not talk about.
Insert a financial coach! I am here to help you build a relationship with your finances and understand how your emotions influence money and vice versa. I am also a valuable resource to talk through money questions or issues, without needing to worry about social stigma or standards. While learning to build a healthy relationship with your money, there are a few concrete things you will get along the way:
Own and operate an annual budget: in order for you to have a solid relationship with your money, just like any other relationship you would have, you need to have a deep understanding of the person you are having a relationship with. We will set up an annual budget where you will understand where your money has been flowing, and decide on where to spend in the future.
Educational courses on curated topics: finance can be a daunting topic and there are a lot of subtopics within finance to get lost in! After the initial consultation, I will highlight some areas that I think we can spend more time on that you will get the most value from.
Ongoing support: personal finance is a lifelong journey, and despite how well you plan, you can never know what exactly will come up! For all of my clients, I am available to Twitter to answer any quick questions you may have at any point in time. I also offer one hour ad hoc sessions for more deep and/or complex questions.
Do a lot of people have money issues and/or trouble budgeting?
Having money issues? You are not alone! Here are some statistics that I remind myself every day:
62% of Americans say they are worried about their finances
Only 44% follow a budget
38% of households carry credit card debt from month to month
33% of American adults have $0 saved for retirement
61% of Americans don’t have enough savings to cover a $1,000 emergency
64% used a Payday Loan for the first time in the past year
61% can no longer afford student loan payments
Beyond these terrifying statistics, money issues can be a major cause for stress and emotional issues for the individual and the individual’s close personal connections.
The top cited money-related issue negatively impacting mental health is insufficient emergency savings, with 57% of respondents in a Bankrate survey citing it as having a major negative impact on their mental health.
Other top cited causes of financial stress include looking at their bank account (49%), paying bills (41%), making a purchase (34%) and having to talk about money (32%)
The rising costs of consumer goods have an even more widespread impact on people’s mental health, with 87 percent of respondents in an American Psychological Association survey citing it as a significant source of stress
63% of those with $50,000 or more in debt feel anxious about talking about their personal finances
94% of respondents who say they have a “great” marriage discuss their money dreams with their spouse