Almost everyone hates to talk about their personal finances. It’s really uncomfortable. Asking how much money someone makes is basically the equivalent of calmly asking them to text you a nude photo of themselves #thesehipsdontlie. But why is it so uncomfortable?
I believe the reason is because so many people consider that their personal finance situation is a direct reflection of their worth as a human. We judge other’s worth based on their finance situation and by how much they earn at their job. As a result I believe many of us try not to think about finances, avoid financial planning, and push off the responsibility of managing money to an “expert”. This is all ridiculous. It shouldn’t be uncomfortable to talk about money and I’m going to take a swing at it now.
I read a book when I was 18 named Rich Dad Poor Dad, by Robert Kiyosaki. This book totally changed the way I view money and my relationship to it. I learned that managing my money and my financial future are solely my responsibility, not to be blindly pushed onto others. I learned that everyone should gain a certain amount of “financial intelligence” which is the understanding of ways to earn, save and invest money. It doesn’t matter if I’m a banker, architect or fire alarm salesman, it is still my responsibility to take the driver seat in securing my financial future.
The only person that has the unbiased interest to help you achieve your financial goals is yourself (or spouse). Because of this it is important to at least educate yourself in the investments you plan to pour your money into over your working career. Should you invest in stocks or mutual funds? How about real estate, whole life-insurance, or silver bricks? Should you put all your money into a 401k plan? When Robert Kiyosaki, a multi-millionaire investor, is asked by a random person “I have $10,000 to invest, what should I invest in?”, Robert replies “I don’t know, what investments are you educated in?”.
On paper every investment option in the world sounds great. A financial advisor will gladly recommend his/her personal favorite investment options but you give up all control once you don’t truly understand what they’re recommending.
One personal example- I always thought that investing in my employer’s 401k plan was a great idea and I put as much money away as I could (15%). Once I chose to educate myself, I picked up a book on 401ks, and stopped contributing to mine almost immediately. This doesn’t mean that contributing to a 401k is bad, just bad for me.
Over the years I’ve read too many books about the stock market, mutual funds, real estate, life insurance, IRAs and starting a business. I’ve learned that I don’t understand the stock market even after reading seven heavy equity investing books. I learned that I do understand real estate and can invest in rental properties and tax liens. I also like life insurance as an investment alternative. I now work with my financial planner to come up with the best plan and I have to truly understand what I’m investing in prior to doing so.
Talking or learning about money should not be uncomfortable. It’s just about making the most educated decision of what’s best for you, just like every other aspect of life. The less you know the poorer decisions you will make- even if the expert is telling you it’s a great idea.
Best of luck as you take back control of your financial future! Would love to hear your thoughts.