Habits of Financially Empowered People
The Seven Habits of Financially Empowered People
If I had to sum up what the goal of “A Fresh Pair of Eyes” is, it would be summed up in two words – Financial Empowerment. Finance, accounting, and financial matters have an impact on everyone’s life on a day-to-day basis, as well the impact that broader macroeconomic trends can have on your personal financial plan. Let’s look at a few tips & tools that can help you achieve your own financial empowerment.
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Habit #1 – Plan
Coaches plan how to take on the opposing team, politicians plan how to win elections, architects plan how to design buildings, and businesses start planning their next product before the current one has even begun to ship. The long and short of it is that everyone who wants to accomplish anything significant plans out their strategy. This involves thinking through a process from start to finish, putting it down on paper, and documenting your progress towards that goal.
Write down a goal and 3 tactics to get there.
Habit #2 – Organize
You cannot embark on any ambitious venture without being organized – can you imagine the chaos! You wouldn’t start a cross country drive without organizing your car, would you? Then, why would you try and begin a financial planning process without having all of your data organized in a manner that works for you? Pay stubs, bank statements, major bills, and major receipts are all items that should be organized and filed in an easy-to-understand system before you begin.
Go through all of your financial information and take some time to organize it so you can find it when you need it.
Habit #3 – Research
You need to do your homework when you are putting together a personal financial plan. It’s that simple. Financial plans are not just Excel spreadsheets, statements from your broker, and numbers on a screen – this is your hard earned money, and it is essential to do the proper research before putting any of it into investment. It is important to never lose sight of the fact that your investment decisions are being made with the money that you are working hard to earn. It should work just as hard for you.
Start reading and asking questions.
Habit #4 – Ask Questions
Finance, budgeting, and investing can be a complicated process with a lot of pitfalls that can easily derail your plan if you are not careful. Fortunately, there are numerous financial resources that are literally at your fingertips. Publicly-traded corporations post their financial information on their websites, usually for free, and offer email notification services for people who are interested in receiving breaking information as it happens. Magazines, newspapers, and websites are also fantastic tools that provide a wealth of financial information to their readers; CNBC, Bloomberg, The Financial Times, and The Economist are just a few of the many resources out there.
Select a financial publication and begin reading it/checking its website daily.
Habit #5 – Form an investing team
Investing can be a daunting proposition, and having a team of equally motivated and goal-oriented people can make the process more palatable. In addition to the morale support that forming a team provides, your investing team also can provide constructive feedback on your investing ideas. This might bruise your ego initially, but the fact that your team is there to question your ideas will make the end result that much better.
Write a list of 5 people who you know whom you would like to be on your investing team.
Habit #6 – Take Feedback
We touched on this briefly in #5, but sometimes your initial idea just is not going to be that good of an idea. There is nothing wrong with having an incorrect hypothesis. When the facts change, your ideas and opinions should change as well. Building on what was covered in effective habit #5, your investing team has the ability to give you feedback of both a positive and negative variety. Feedback is good – if your idea can survive the questions and feedback of your team, it stands a better chance of surviving the marketplace.
This is more mental than actual – when someone gives you feedback, listen. Don’t just wait for them to stop talking so you can respond.
Habit #7 – Think!
I had a professor in college who said we could think inside the box, or think outside the box, as long as we were thinking. Thinking is something that is often overlooked. You have access to tremendous amounts of data and resources, but you must exercise critical thinking to help you analyze/interpret this data.