Here's a secret: your finances are like your lingerie. How so?
This article sets out four principles for understanding how your approach to lingerie and your approach to your finances are related.
I've also thrown in four secrets of financial planning designed to, well, uplift and support you in this area of life.
Principle 1: Just like your lingerie, your finances are intimate.
Our current environment is one in which almost anything is fair game for public display and comment. But even in an era of persistent, pervasive TMI ("too much information" -when everyone knows Britney Spears'...um, personal grooming preferences, if you follow me), talking openly about money is one of the last great taboos.
Our current environment is one in which almost anything is fair game for public display and comment. But even in an era of persistent, pervasive TMI ("too much information" -when everyone knows Britney Spears'...um, personal grooming preferences, if you follow me), talking openly about money is one of the last great taboos.
When's the last time you sat with a friend over a glass of wine and answered each other's questions about whether you are saving money and how much, how your money is invested and how your investments are performing, or how much household debt you are carrying and how you feel about it? (I mean, if you even know the answers to some of those questions in the first place.)
The thing is, your finances are intensely personal. But if you want support in getting or keeping your financial world on track, you need to be able to discuss those intimate details with other people, whether it is your friends, your partner, or a financial advisor.
Part of what it takes to be powerful in the area of money is a willingness to be vulnerable in this area of our lives - to be able to talk about our financial "unmentionables:" that's our first best-kept secret.
Principle 2: You probably have a portfolio that doesn't fit.
You likely know by now that most of us are wearing the wrong bra size. Oprah did a whole hour on this!
You likely know by now that most of us are wearing the wrong bra size. Oprah did a whole hour on this!
Here's the comparison with money, gleaned from my work as an advisor: most people have investments that are a poor match for their circumstances. To the extent that they have a"financial plan," it isn't one that fits with their lives.
For example: there are couples who say they are "conservative" investors who cannot emotionally handle a lot of volatility but whose investment portfolios contain only individual stocks (gulp!), with no cash or fixed income to buffer stock market swings.
Then there are others who say they are expecting an annual return of over six percent (or more!) but who are invested mostly in bonds producing returns that top out at four percent or so.
Just like Oprah's bra-fitting tips, you may benefit from some portfolio-fitting tips- but instead of cup and band size, you want to look at whether you are saving appropriately to your expected future needs, whether you are investing tax-efficiently, and whether the proportion of stocks or mutual funds you have is balanced against the allocation to fixed income, and so on.
That's secret number two - you need to take some time to consider how well your investments fit your life.
Principle 3: Like your bra size, your financial needs change over time.
How many of us figured out our bra size at some point in the past and have continued, year over year, to blithely buy that same 34B that fit us before kids and before, erm, gravity made its effects known on our bodies?
How many of us figured out our bra size at some point in the past and have continued, year over year, to blithely buy that same 34B that fit us before kids and before, erm, gravity made its effects known on our bodies?
Same thing with your finances: the mix of approaches, strategies and investments that fit you at 20 is not the same as the right mix at 30, or when your first child arrives, or when that same child hits post-secondary education, or when you approach retirement.
You need to review how you handle your money at each new stage in life, making changes that reflect your new realities. Secret number three: there is no fix-it-and-forget-it strategy that works either for buying bras or for handling your approach to investing over time.
Principle 4: You deserve a personalized fit.
You really do. Maybe you picked out that first "grown-up" bra on your own, peeked over your shoulder in the fitting room, decided it was a "good enough" fit, then plunked it down on the counter and paid. But every woman I have ever known who has been through the professional bra-fitting experience comes out a changed woman. Their clothes fit better. They stand up straighter. Their...assets are optimized.
You really do. Maybe you picked out that first "grown-up" bra on your own, peeked over your shoulder in the fitting room, decided it was a "good enough" fit, then plunked it down on the counter and paid. But every woman I have ever known who has been through the professional bra-fitting experience comes out a changed woman. Their clothes fit better. They stand up straighter. Their...assets are optimized.
How well your investments fit your life and how well they perform for you deserves at least the same level of care and attention as the fit and feel of your bra. And here is secret number four: getting that fit right can make a whole heckuva difference in how well you are setup to handle what life throws at you.
If you aren't confident about how to judge how well your investments fit, consider working with someone who knows - someone who can cast a professional eye over your assets, help you understand your options, and suggest alternatives to empower you in achieving your own individual goals.
In future columns, we will explore how to find and work with a financial advisor, how various kinds of investments work, and more. But for now, pull up a chair, grab your glass of wine, and breathe: you've got four new secrets to share.
