What Should You Do Differently?
Winter’s chill is ebbing and we look forward to the warmth and new life that spring brings with it.
We have also come through the winter of the Great Recession. It was a rough season, one that changed lives. Similar to the crocuses pushing through the hard packed earth, it has taken a few years for many to push through the challenges that thwarted their finances.
It is a moral imperative to look briefly in the rearview mirror to see where we have been, learn from it and “do our dollars differently” moving forward.
The four primary areas of your financial life are:
- How money comes to you,
- How you decide to give it,
- How you cultivate and protect it, and
- How you spend it.
What if you brought money into your life with integrity, competency, dignity and grace?
Daniel Kahneman and Angus Deaton of Princeton University found that when they looked at affective measures, happiness did not rise after a household reached an annual income of approximately $75,000. If more money doesn’t buy more happiness, what does?
Where Does It Come From?
Does money come into your life from work, a trust, Social Security, rental property, business assets, investments? Does it matter where the financial flow comes from or your attitude around and feelings about it? Does it affect the way you live and the choices you make? What would change if you looked at it differently?
How Can It Make You Happier?
What do you do with the money you have? Do you give of your financial resources with guts and gratitude? What would that look like? Elizabeth Dunn, associate professor of psychology at the University of British Columbia and co-author of the book “Happy Money,” discusses the paradox of money. Having more can enhance our well-being, but we actually become happier when we share with others. Dunn found that in countries as diverse as Canada, South Africa and Uganda, giving away money consistently made people happier, even when they themselves were relatively poor.
With food in your fridge and spare change in your pocket, you rank in the top eight percent of the world’s wealthiest people. Appreciating what we have will free us to give. What if we prioritize benevolence, stepping out of our comfort zone in new ways?
Growing Your Money Wisely
You need to nurture, grow and protect your financial resources with wisdom, diligence and care. The personal savings rate hit a peak of 11 percent in December 2012 and has fallen by more than half since, according to the Federal Research Economic Data. What gets your business through a prolonged off-season? What will provide you with your future spending? Savings and investing! The positive effect is more than self-serving. Domestic savings create a pool of money from which companies can borrow, creating the jobs that push living standards higher over time.
Do you want to invest differently? Do you want to invest in companies that do more than just earn a rate of return? Do you want your investments to reflect your values? The trend towards values-based, responsible, impact investing is growing. According to a report by the Forum for Sustainable and Responsible Investment, as of the end of 2013, more than one out of every six dollars under professional management in the U.S. was invested according to sustainable, responsible and impact-investing (SRI) strategies.
Boundaries and Joy
How can you spend within safe boundaries and with joyful intention? Do you make choices and feel good about them? The ski patrol sets boundaries for a reason—to protect us while we have fun. We need to do the same with our finances. Could we also look at “boundaries” in an expanded context of the world’s natural and human resources? In Tom Shadyac’s documentary “I Am,” he points out that indigenous cultures look at people who consume more than they need as mentally ill. Have we asked ourselves: how much is enough?
We will experience another financial winter. It may occur in your personal life, or it may a worldwide event. Look forward with wisdom rather than trepidation. Take one area of your financial life and begin to make changes there. Like shedding our winter layers, you will enjoy the freedom that change brings.
Danielle Howard is a Certified Financial Planner™ practitioner. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a registered investment advisor. Cambridge and Wealth by Design, LLC are not affiliated. Visit Danielle at WealthByDesign4u.com.