How to improve your relationship to money?

When I was young I thought that money was the most important thing in life; now that I am old I know that it is.

Money will always motivate people in doing so many funny things and there are so many ways in this world to make money and so many more to loose it.

But there exists room for everyone to improve his relationship with money as there is scope in any relationship on this earth.

Money is the opposite of the weather. Nobody talks about it, but everybody does something about it.

The answer to how to improve your relationship with money can be well understood the same way as the answer to how you would go about improving ANY relationship and that is through more love. You can't enjoy a good relationship with money unless you're willing to love it, through thick and thin.

Love is a choice and an intention—not only an emotion, but also a behavior.

To love is to suffer. To avoid suffering one must not love. But then one suffers from not loving. Therefore to love is to suffer, not to love is to suffer. To suffer is to suffer. To be happy is to love. To be happy then is to suffer. But suffering makes one unhappy. Therefore, to be unhappy one must love, or love to suffer, or suffer from too much happiness. I hope you're getting this down.

We know we've invested our love in the right way when our relationships continue to improve. And, our relationships with money will continue to improve too, as long as we honor it in the same way that we honor the other important relationships in our lives.

Pay Attention to It:

When your loved one comes into the room, you acknowledge him or her. Even if you don't have time or your hands our full, you still pay attention. You would never roll your eyes and tell them, "I'll deal with you later!"

Money requires attention and serious attention if you wish to have more of it, just like any relationship demands attention.

Money is a headache, and money is the cure.

Make Time For It:

With attention money also requires time to nurture it, time to take care of it and time to understand its dynamics.

Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.

Prioritize It:

As we get older and our lives get fuller, we must choose how we spend our time. Whether this is conscious or unconscious, our priorities create our value system. If you want to place more value on money in your life, you have to make a conscious choice to prioritize it.

Most of the time we may have to forgo many a good things in our life to make money and most of the time we get into such situations unconsciously.

But a stable value system can bring the required balance, it is difficult but not impossible to achieve.

Celebrate The Good:

When a kid achieves something, you put the medal, certificate or piece of art on the fridge. When you feel like you've made some progress with your money relationship, you must allow yourself the same moment of recognition.

Take time to pat on your back and celebrate the moment when you made good money and you will feel better about it, share it not only with your family but friends and employees too.

Forgive The Bad:

When a loved one makes a mistake, you don't flip out on them (I hope you don't!); you acknowledge they did their best, forgive them and move on. When money doesn't come soon enough, or you find yourself earning less than you hoped for, you need to remember that this is one blip in a relationship that may not last a lifetime . . . and move on.

Any set back or loss it to be taken with all humility, learn the lesson and move on.

Keep A Sense of Humor:

Have you noticed that it's more fun to be with someone when they are willing to laugh at themselves? Those characteristics of self awareness and the willingness to not take them so seriously is a killer combination for successful relationships.

Money doesn't have to be super serious; in fact, it's better when it's not. Money or no money life goes on.

You don't have to die in order to make a living. So it is always a better option to have fun and make money.

Respect It:

With loved ones, you don't simply take their voice or presence for granted—or if you do, you're not going to get the kind of relationship you want.

Your money is always trying to tell you something, so you need to pay attention and look for the clues.

No matter how hard you hug your money, it never hugs back, still respect what you have and it will respect you back.

Don't Manipulate It or Try Power Plays:

With people and things you really love, you don't really think about the balance of power. And if you love someone, you'd never want them to do something just because you manipulated them into doing it (unless you're money codependent).

If you're hoping to get money from someone who you perceive to be in a power struggle with you, it will come very slowly. Eliminate the ideas of power from your thoughts about money and it will flow much more easily.

When it’s a question of money, everybody is of the same religion.

Don't Blame It For Your Bad Mood:

Money is never the reason you're in a bad mood; it's your perception of the situation that causes you fear and pain. When you think you're mad at money, you need to pull back the lens and try to understand how your thinking got you to this place. You can’t heal your emotional life with intellectual thought, but you can start to understand your triggers.

No Quid Pro Quo:

Quid Pro Quo means a more-or-less equal exchange or substitution of goods or services—you scratch my back, I'll scratch yours. Can you imagine setting up this kind of arrangement with a loved one? With a monetary situation, this kind of dynamic is bound to make you feel like you got the short end of the deal, regardless of the arrangement.

Seek To Understand:

When something happens in your family or friendships that you weren't expecting, you find out all of the details before moving forward. When something happens with your money, you need to devote the same attention to understanding the dynamic before jumping to the wrong conclusion. You may find your knee-jerk initial response to the situation is wrong, once you review the facts calmly.

Discuss the situation with a professional if need be, after all a session with a counselor helps you in reclaiming your disturbed relationship, so why not get some help in case of money, its important and will do you good.

Don't Lose Yourself:

This is a tip from conscious spending; you need to know exactly how you feel about all of the different ways your money leaves your accounts. If you're not happy about any one of them, you need to stop. If you're unconscious about your money, then your relationship is on the decline. Another name for this is money fog.

Recognize Difference Between Want and Need:

You WANT your child to be a superstar, but you need him to be kind, thoughtful and compassionate person. If this is a romantic relationship, one is a deal breaker and one isn't. With your money, you WANT to go on an African safari, but you need to meet all of your expenses. There is room for Wants, but they need to be in alignment with your current life and not just driven from your ego.

Seek Clarity:

If you're not clear about what is happening in a relationship with someone or something else, chances are they don't know either. You always have the choice to let a situation remain ambiguous or to choose clarity. The results of clarity may not be pretty (and you may have to move past some shame-filled thoughts), but it's far better to be clear about the ugly truth than to be uncertain about an attractive ambiguity.

With money be very clear on why, where, how much, legal/illegal, realistic/unrealistic, it’s always good to be clear.

Have Faith In Long Term Vision:

Relationships are seasonal; sometimes they are exciting, and other times they just quietly exist in the background. Nothing is static. The same is true of your relationship with money—it can't be all rainbows and parades. That's when you must make the choice to love it anyway.

Bottom line, if you haven't made a choice about how you feel about your financial life, it's the same as when you put off making a decision about whether or not your current beau should stay or go. You think you're on the fence because of something external, when in reality; it's you, refusing to accumulate the data needed so that you can make an informed choice. Change can be painful—but on the other side of the pain is a money relationship full of love and freedom; it's only waiting for you to decide. Otherwise you will be nothing but a poor man with money.

Why do Financial Planning and who need it?

Many people think that financial planning is only for a small number of very wealthy families.

Lets see why planning is needed and how is helps.

I believe all of us agree that any resource which is available in limited quantity and we have to maintain a balance in supply and demand, planning come into play, be it money, water, space, health, life, relationship, etc.

If you want to accomplish some thing with limited resource, within a limited time period and the cost of failure is huge, again we planning can be of great help, like we do for our annual exams, job interviews, etc.

If you want to prevent any undesirable outcome, where there is a probability of facing some, planning helps like, vacation, travel, house building, etc.

Planning is the best way to prepare for future,

Planning makes any journey, smooth and worth enjoying,

Planning identifies problems and points the way to solutions,

Planning help in prioritizing, thereby helping us to do first thing first,

Planning helps in coordination of parts, in working for a single goal,

Planning helps in educating and helping people in understand the benefits,

Planning helps in smooth transition from one phase to other.

Now personal finance is a subject most of us care for but most of us fail to plan.

I hope all of us will agree, that if we work hard 8-10 hours a day and 5-6 days a week to earn money; it does make sense if we sit down for at least 3 hour a month or 3 hours every 3 month to take stock of what comes in and where it goes.

Try to make it a regular activity to sit with your financial planner regularly and talk about your dreams, goals, plans and concerns.

You will see a lot of clarity coming to as many issues that had been bothering you for so long.

Your knowledge about the complexities of financial world will increase and so will be your confidence of attaining most of the goals in your life.

A written Comprehensive financial plan is a document which will take out the uncertainty factor and bring in confidence with respect to understanding the priority of your goals and achievability in terms of time value of money.

Most of us will find that our current resources and their allocation are not matching with our needs and goals.

Financial planning can be very helpful in understanding our net worth and under-performing assets.

Financial planning can point to the gap and suggest re-balance assets allocation to align it with your needs and goals.

Financial planning is an efficient tool in optimizing the return of your portfolio.

Financial planning will also give you a reference point to regularly monitor the progress of your portfolio with the desired outcome.

To put it more simply financial planning concerns all of us and the more time we give to understand it the more our life will become easy.

So contact a certified financial planner today make him your best friend and spend some time with him, all married people should include their spouse in financial planning sessions.

We at Neoledge Planners LP are committed to the cause of Financial Freedom for our clients with the help of Financial Planning as a tool.

Personal and Wealth Planning Needs for All

All of us, regardless of their age, health, marital status, assets and income, should understand that there are some planning needs we all must address in order to protect us from personal, legal, tax and financial problems.

The FIRST step is the realization of the need in our life.

Once we realize the need the next step is to search for a professional and establish a relationship.

Both the things are important the realization part covers most of the problem and the rest is covered when you engage a profession to assist you with the need.

Let’s talk about the issue of identifying the problem.

We all have most of the following needs to be addressed:

Accumulating Wealth for Retirement Needs

We all retire at some point, and that is when wealth accumulation normally tapers off and we begin to consume our accumulated wealth in order to fund our retirement needs.

Never overlook the importance of retirement planning because, if ignored, the demographics of retirement, aging and income cash-flow needs can be devastating.

Life insurance statistics show that a 50-year-old now has at least an even chance of living to 100!

Assuming the average retirement age is somewhere between age 60 and 65, that means many of us realistically face the prospect of living 35 to 40 years after our wealth accumulation phase has ended.

In estate planning, we often talk about preserving wealth and passing it on to the next generation. But given the demographics of aging, inflation, health care needs, etc., it is easy to have our wealth run out before we do.

Another study by Bureau of Labour (US)
At the Age 65, 1% were wealthy, 4% were able to maintain their standard of living, 23% were still working as they could not afford to quit, 9% were dead and 63% were dependent on children and charity.

Appropriate Tax Planning Should Always Be Considered

We all face a multitude taxes (along with income tax and wealth transfer tax), which must be addressed at each stage of life as well as at each stage of the planning process.

A proper planning of TAX can not only save us with hassles with Tax authorities but also help in deploying and growing our wealth at higher rate.

Every one of us needs to Understand That at Some Point or Another We All Die

It is critical that appropriate estate planning documents are in place, including wills, trusts, appropriate beneficiary designations, designations of guardians, etc.

90% of all property related cases pending are because there was no WILL or beneficiary identified by the creator/inheritor of wealth after him/her.

Avoiding Guardianships

If we all die some day most of us may also be old or disable at some point in future.

Unfortunately, because of age, accident or illness, we may face the prospect of being unable to take care of our own finances or to make our own health care decisions. Therefore, proper documents need to be put in place to allow someone else to make appropriate decisions on behalf of us.

Most of us do not plan for such situation but with family structure going nuclear it is very critical to appoint a guardian for such time.

Long-Term Health Care Costs

Because of health and aging, all of us faces the prospect of financing long-term health care needs; including the possibility of assisted living and full skilled-care living. These costs can be financially devastating if they are not planned for.

They can set us back and all our planning can go for a toss.

10 investment mistakes to Avoid

The markets are likely to remain volatile considering the uncertain global and domestic environment. But for long term perspective and tolerance for volatility there lies an opportunity to capture not only earnings growth but also some improvement in valuations over time.

Remember ‘Best returns are typically on investments made in bad times!’

At the same time if we remember certain things and avoid making mistakes there is no doubt you can benefit from the market and successfully achieve planned goals in your life.

There are ten common mistakes made repeatedly by investors. You can significantly boost your chances of investment success by becoming aware of these typical errors and take steps to avoid them.

1. No Plan for investment
People do invest in products but there is no plan. In the name of insurance, mostly investments are made. Even in case of mutual funds, there is no strategy; it is just a clutter of products which does not carry any meaning when seen together.
No wind is right unless you know which harbor you have to reach.

2. Too Short of a Time Horizon
People forget that the most important tool of wealth creation is time in hand (TIME IN MARKET and NOT TIMING MARKET). People want quick money and even though their financial goals like retirement, kid’s higher education etc are far off, they still want quick return. At times to make quick money, they take undue risk like Futures and Options, trading etc.

3. Chasing Performance
Investments are made in funds which has given the highest performance is last year. Investor should look at past track record like 5 year, 10 year return and that too just as one of the tool to select the fund, not entirely depending on that also.

4. Watching the Markets and Predicting Them Is the Key to High Returns
One of the most common mistake investor makes. Market is complex animal and cannot be predicted by anyone. Even the professional managers can’t predict it. The more investor tries to do it, the lesser are the chances of good return. In stock market, inactivity plays more role than activity.

5. Mixing financial vehicles: insurance with investment
Insurance is for present planning– “what if the bread earner is no more today” and investment is for future planning – “after 10 years, I need to marry my daughter”. Mixing these two makes no sense and investor should keep it separate. Buying Term Plan for insurance need is the best policy.

6. Following the herd
Investment is not a game of football where team work is required. It is a game of chess where each individual has to plan for his unique need and situation.

7. Churning your investments
A frequent change in portfolio without any plan or just to increase the return is not a right strategy. It only brings cost of taxation and other charges. Also, many distributors and banker advise you to churn very often as they meet their sales target and you are no more than just a TARGET.

8. Unrealistic expectations
Return out of any asset class depends on economic condition. If inflation is high, FDs give more return and if inflation is low, they give less. Equity funds will give returns which are more or less in line with the growth of the economy. Investments made just to make high returns are usually unsuccessful.

9. Refusing to Accept a Loss /mistake
What would you do if you have taken a wrong route? Obviously you will return back, though it may have cost you time and money. But the same thing does not apply with most of the investors when they have chosen a wrong investment. Correct yourself, if you find that there is a mistake, don’t hand up with that investment.

10. Over monitoring Your Investments
Many people look at their portfolio so frequently that they in a way become addicted to it. One should always give time to investment to grow and then reap the benefits. Over monitoring would mean that investors are emotionally attached to market movements and this is one of the biggest reasons of people not making good returns.

“A pessimist sees the difficulty in every opportunity;
an optimist sees the opportunity in every difficulty”
~ Winston Churchill

Have you got some plan for Life’s Biggest Risks?

How many times have you thought seriously to list out Life’s BIGGEST RISKS and have done some type of worst case planning?

Let’s talk about the 10 biggest risks that we may have to deal with in life.

When I ask my clients this question for the first time, they usually respond with a little bit of a quizzical look and ask something like: You mean losing money, being in a bad economy, or seeing their portfolio go down in value?

In other words, they think that when we mention the word risk, it is automatically about money.

In reality, good financial planning is mostly about your health.

In my Top 10 List of Life’s Biggest Risks, seven of them are about health and relationships, and all of them may be life-changing:

1. Death – This of course will never be an impediment for those who die as you don’t need a whole lot of money after you’re dead. The problem becomes what happens to the family that’s left behind. What happens if there is unexpected Death, the family has to live, has to pay bills?

According to data available out of a total population of 121 Crore, 40 crore are insurable and out of this number only 8 crore have some type of Insurance plan. We all know most us have Insurance plans for reasons other than insurance or suitable safety cover.

2. Human Capital – Otherwise known as your job, career, occupation or bread winning role. Some place I have read that four out of 5 people are just three paychecks away from being broke. The important thing to remember is that if you viewed yourself as a machine that was designed to create wealth for your family, (just like an ATM) it would be the single largest capital resource that you have. Make sure you’re taking care of the machine physically and mentally.

3. Disability – Some people refer to this as living death, meaning you can’t do the things that you want to do but you still have to pay for them!

According to a study on Disability Awareness, because of an accident or illness-

• One out of five among us would miss work for at least a year,

• One in seven can expect to be disabled for more than five years, and

• The average long-term disability absence lasts 2½ years.

This obviously is a lot more important for younger people than it is for those approaching retirement with accumulated assets. The younger you are the more you need this to replace your human capital.

4. Health – As most of us know, it isn’t cheap. When you get sick and don’t have coverage, lookout!

5. Long-Term Health Care (Mediclaim) – Is something that usually doesn’t cross the minds of most people under the age of 40 unless they’re dealing with a parent who is struggling with health issues. It brings to light one of the scariest diseases of old age, Alzheimer’s. This is truly a terrible affliction affecting more than 50 Lac people. It’s the seventh leading cause of death in this country. We sympathize with those who have this disease but the hidden tragedy is that it tears apart the next generation of family relationships as the caregivers struggle to figure out who does what for the parents.

In next decade India is going to be known for most diabetic and heart patients.

6. Being Sued – It’s one of the top concerns for those of means as they accumulate more wealth and worry that frivolous lawsuits may cost them dearly.

90% of all money related cases pending in Indian courts are related to property, defaulters and Misselling.

7. Lost Relationships – If you really want to feel a life-changing event, talk to anyone who has lost a loved one, gone through divorce, has a new boss that they hate or your own kids who left you for greener pastures. Some of these situations you can see coming and some you can’t. When ever they occur, it can totally turn your life upside down. The only answer to this is to continue developing new relationships and have more people you can count on in those tough times.

8. Bad Advice – Comes in all shapes and sizes whether it’s about your finances, workplace issues, health issues or relationship issues. When you’re in the heat of the battle, it’s tough to figure out the right thing to do. You can usually look back and see where your mistakes were, so try and stay away from those that steer you in the wrong direction and develop relationships with those you feel whose judgment you can trust.

Learn by your mistakes. I found that’s my best learning tool (because I think I’ve made more than most!).

Choosing a right advisor is as difficult as finding a good neighborhood.

Some of the things to look at while choosing one are: Integrity, Knowledge & Expertise, Availability, Age, Commitment to work, communication skills and compensation model.

9. Fraud –Today fraud has risen to a whole new level. Be it the Ponzi schemes or the Builder-Broker nexus, 7 years Highest NAV Guarantee Plan, assured monthly return or Free Service trap that has came out when the markets were in the process of melting down in 2008 was truly the salt in the wound of investors.

It seemed no matter how smart or wealthy you are you may be taken for a ride (even unknowingly by your friends and peers.)

It is a tragic story about how a rich, senior and reputed Defence Officer swindled Crores of Rupees from his Friends, colleagues, mates & customers and they had no idea what happened. Even when it’s close to home it may be hard to detect.

10. Negligence – I think one of the biggest problems we all have is benign neglect. We don’t address the issues that we know we need to address because we don’t want to or don’t have the courage. When you finish this blog (don’t even think about stopping now!) do three things with your money that you know you have to do but have been putting off. Do just one right now and give yourself a time frame to complete the others. If you do it, reward yourself and if you don’t penalize yourself somehow. If you don’t do this then I guarantee the long-term penalty will be much worse than whatever you impose on yourself.

How do you like that list of life-changing events? I didn’t even include the stock market crash and having all your money in fixed deposits. I have mentioned earlier that seven of those items pertain to health and relationship issues. In fact, a lot of these issues can be taken care of by writing a check to an insurance company. I will admit right here that I have never written a check to an insurance company that I liked, whether it be death, disability, nursing home expenses, healthcare costs, or an umbrella liability policy. It’s just that the alternative of not having insurance is worse and I’m willing to give up a little cash flow to protect myself and my family.

I certainly can’t solve these 10 big risks but I am hopeful I can at least get you to think if you’re protecting yourself from them. Whether you buy some insurance, foster your relationships with family & friends, steer clear of bad guys and advice, or improve your career chances, just do something to better your situation with life’s biggest risks. Then you will get to answer the ultimate question in the end. Did you take too much risk in my life or too little?