The Sit On Your Hands Money Strategy

Money Strategy

I have a memory from elementary school where my teacher would tell me to sit on my hands and be quiet when I disturbed the class. I was a pretty restless kid as I recall.

The “be quiet” part of this sentence seems pretty obvious, but today I’d like to focus on “sit on your hands” and its benefits when it comes to your money.

Your money is a lot like a bar of soap: the more you handle it the smaller it becomes. So sitting on your hands, figuratively speaking, is an important aspect of preserving and growing your money over time.

Yet this advice most often goes against every instinct in the most primitive part of our brains.

Whether it’s the anxiety associated with living paycheck to paycheck, or the stress of watching the investment markets seemingly toss your hard-earned savings and investment to and fro, money issues can trigger fear responses in our brains. This can lead us to a hardwired “fight or flight” reaction. (more…)

The Best Investment A Woman Can Make

The Best Investment a Woman Can Make (1)

When I write about financial advice, I often include statements like “of course, it will depend on your personal situation” or “you should first start with your own financial plan.”

These qualifications address the personal nature of financial advice and the fact that great advice for one person can be inappropriate for someone else.

As I’ve shared before, personal finance is more personal than finance.

But there is one investment I can, without reservation, recommend to you regardless of your personal or financial situation.

The BEST investment you can make is an investment in yourself.

Many of you will immediately assume that I’m suggesting getting or finishing your college degree. Or going to grad school for an MBA or other advanced study. But that’s not what I’m suggesting at all.

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The Importance of Specific Goals

The Importance of Specific Goals

You may be familiar with the acronym “SMART” as it relates to goals and goal setting.

SMART refers to specific, measurable, achievable, results-focused, and time-bound. Each of these is an ingredient in setting – and pursuing – any goal that is important to you.

But I’d like to focus on the “S” in SMART, and talk about the the importance of being specific with your goals.

A financial plan of any value involves the exploration and setting of goals, among other things.

Your financial plan might include goals like retirement, education, travel, charitable giving, volunteering, a vacation home – or any number of other possibilities.

But most goal planning and setting starts and ends with lumping all these grand ideas into one, labeling it “retirement,” and calling it a day.

Today, I’d like to ask you to go further. (more…)

Investment Risk: Tolerance Versus Need

Investment Risk- Tolerence vs. Need

I’ve written many times before about investment risk and its role in your financial plan.

And I’m amazed at what continues to persist as the predominant method of determining the level of investment risk you should expose your portfolio (and your lifestyle) to. It goes something like this:

You meet with an advisor or are sent a questionnaire with somewhere between 5 and 25 multiple choice questions on it. These multiple choice questions ask you things like:

If my investment portfolio begins to drop in value, I will

  • sell all of it
  • sell some of it
  • hold and do nothing
  • invest more into the portfolio

When making an investment, I plan to keep my money invested for

  • 1-3 years
  • 4-7 years
  • 8-12 years
  • 13+ years

Generally, I prefer investments that

  • have a higher potential for return even if their value can fluctuate widely
  • have a lower potential for return in exchange for less fluctuation in value
  • have little potential for return and little fluctuation in value

What these questionnaires are designed to do, although they’ll never admit it, is ask you to determine your tolerance for risk. In other words, how much “pain and suffering” are you willing to experience with your investments in exchange for the promise of returns? (more…)

Why More Divorced Women Should Consider Renting

Why More Divorced Women Should Consider Renting

It’s not surprising that you hold a strong opinion – and strong feelings – about your home.

Owning a home is a big piece of the American Dream for many people, if it’s not THE American Dream itself.

But for women facing change, especially divorce, what to do with the home – your home – needs careful consideration.

You may have lived in your home for 5, 15, 25 or more years. You may have raised children in this home. And even if your marriage is ending, you likely share some happy memories of your home with your soon-to-be-ex.

Considering the time spent and memories collected in your home, it’s understandable that it’s an emotional topic.

When you also consider all the added emotion, drama, and change associated with divorce, your life can feel like it’s spinning out of control. It’s natural to want a solid foundation in the midst of the chaos. Your home feels like a familiar, safe haven in an otherwise stormy time in your life.

But be careful not to let your emotions lead you to a potentially costly decision surrounding your marital home. (more…)