Paul Ferraresi

A great percentage of the population has prejudices or “hang-ups” about money. Some have been inherited from childhood, and others acquired from peers. A better understanding of these “hang-ups” can help us all manage our financial resources more effectively.

• Lack of Confidence

“I can’t” (manage my money).

“I definitely can’t” (make informed investment decisions).

“I don’t know how to” (find out what I want to know – and even if I did…)

“I couldn’t trust myself” (to interpret the information correctly).

“I’ve never had to” (pay the bills on my own).

“I’m not sure if I can” (follow through).

A lack of confidence is not confined to one sex, but it has been more prevalent in women. Regardless of the changing roles, some women still feel that showing competency in financial situations is unfeminine. Many men still maintain complete control of the family finances, however poorly they may manage them. While these relationships are shifting, lack of confidence discourages learning new information and skills.

• Overconfidence

“I already know what I need to do” (there is little new I can learn).

“I’ve been managing my money very successfully for years” (I really do not need any help).

The opposite of underplaying financial competence is knowing all the answers. This is more common with men. They have been told they are expected to know it all – the masculine mystique. In many cases, the financial situation has been handled well, but can be improved upon.

• Sequential Thinking

“First I must take care of this and when that is done, I will take care of that….”

This type of thinking is typical of the couple who cannot plan for retirement until the children finish college, or the affluent young adult who cannot set aside money for emergencies and take care of paying current obligations.

• Procrastination

Desire for perfection. “Unless I can make X percent on this investment, I won’t go into it.” “Unless you can guarantee that I will earn X amount by this date, I just won’t act.”

Sequential thinking. “I will act as soon as I have all the facts.” “The economy straightens itself out.” “When I get a raise.” “When my spouse gets a job.”

Avoidance of painful subjects. “I can’t think about dying or buying insurance.” “I don’t want to think about becoming disabled.”

The perfectionist fears discovering a financial decision was not the best possible move. Sequential thinkers and procrastinators have an inexhaustible supply of reasons; there will always be another contingency.

The person avoiding painful subjects will delay acquiring adequate insurance because he or she is unable to think about death or the possibility of disability.

• Lack of Definite Goals

“I put long hours in every day; I just don’t have time for anything else.”

People without goals are not shiftless or lazy, just extremely shortsighted. Some continue to work 10 to 14 hour days both bragging and complaining about the long hours, but with no plans to change or upgrade their circumstances.

• Goal Confusion

“I don’t have enough money to travel.” “I can’t seem to plan for my vacation.” “I never have the money to do what I really want to do.”

Some people know exactly what they want – a vacation in Europe or Mexico, maybe the purchase of a second home – but they have never had the money to reach their goals. They allow secondary goals, eating at gourmet restaurants or buying expensive gifts to pre-empt their primary goals.

To help solve these six money hang-ups, talk with a professional. Recognition of the problem is the first step toward a solution. A financial advisor can suggest a number of ideas to help overcome money mismanagement.

The cost of higher education has increased dramatically, particularly at private colleges and universities. It may cost $15,000 to $40,000 per year in tuition, books, fees and room and board for a student to attend some private colleges. This does not include transportation, clothing, laundry and incidental expenses that frequently equal or exceed the basic tuition. This can result in a tremendous financial drain for a family with college age children.

HOW MUCH SHOULD I SAVE?

The size of the fund depends upon the number of children, their ages, educational plans, school selection, scholarships and student loans that may be available to them, student earnings and the amount of family income.

It also depends upon the attitudes of the family toward education. Some people feel they should provide their children with all the education they can profit from and want. Others, however, feel that children should earn at least part of their educational expenses themselves. If costs are substantial, it may even be necessary for a major portion to be financed by student loans.

HOW TO FINANCE A COLLEGE EDUCATION

Since loans must be repaid, many parents would like to avoid having their children start out heavily in debt. The payment burden can be substantial for a young couple, especially if both have education loans. There is also the idea that older children should help send their younger brothers and sisters through school after their parents have helped them. However, this is not a reliable source of funds because the siblings may not have the ability or willingness to provide this support.

The types of schools and graduate schools the children plan to attend also have a considerable bearing on the costs involved. An investment fund for educational needs is a relatively long-term objective, and it should be set up so the fund, hopefully, will not be needed in the meantime. Therefore, a less conservative investment vehicle seems justified in order to secure a more attractive investment yield. However, it would be unwise to speculate too aggressively with more than a small percentage of the fund.

“Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.” — Calvin Coolidge

I have worked with many successful people; people who have achieved the kinds of lives they have dreamed about. I have also worked with many people who are not anywhere near where they want to be in life. Many times those who are not successful resent those who are and believe that somehow success was handed to those who have achieved much.

What I have found however is that actually the reverse is true. Those who have achieved much have worked much HARDER than those who are not successful. You wouldn’t believe the stories of struggle that I hear from those who now appear to be on “top of the heap.” Yes, they are successful, but no, it wasn’t handed to them! And I find that most of the unsuccessful people who come to me actually haven’t been tenacious at all. I find that with many of the people I speak to who complain about their lack of success simply have not persevered and have not been tenacious. When I ask them questions I usually get excuses. Yes, there are exceptions on both sides, but I find this to be almost universally true.

If you are one who finds yourself dreaming of a better life, or looking at someone who “has it made,” I would ask you to take a long, deep look inward and at your life to find whether or not you have actually been tenacious in pursuit of your dreams. How long have you gone for it? Many people who achieve much go for YEARS before they achieve what their hearts long for? How hard have you gone for it? Most people who achieve much have given up much. They have sacrificed much. They strive valiantly for what it is that resides deep in their dreams. They just plain ol’ work hard!

So what are the principles of tenacity? What do you need to know in order to take your turn at the tenacious? Here are some thoughts to start your fire and get you going!

1. Sometimes you just have to outlast the others.

“Success seems to be largely a matter of hanging on after others have let go.” — William Feather

I have found that many people start on their dreams but most never finish. Then those who stop resent those who make it. The truth is that most people who become successful have simply mastered the art of keeping on keeping on! I myself can remember early on in my career when I would get discouraged and I literally said to myself, “One more week. Just give it one more week.” Quite frankly, this is what got me through a couple of years of my work early on. I hung on as others let go.

It is easy to get disheartened. Ask those who have achieved success if they ever got disheartened and you will find some of the most amazing stories you have ever heard. Give it a try: Go to the most successful person you know and ask them if they ever thought about quitting. Ask them how they kept on going. You will be amazed at what you hear.

2. Sometimes you just have to hold on at the end.

“When you get to the end of your rope, tie a knot and hang on.” — Franklin Roosevelt

I wonder how many people have quit just as they would have begun their entrance into success? Sure there are many who quit at the first sign of hard work, but what about those who, after the tenth time of trial then give up, just as fate would have seen them go through one last hurdle and then into the promised land? How many people were on their last hurdle and decided not to jump? How many people had just one more mountain pass to go? Or just one more river to cross?

Of course we will never know, but certainly some of the people who quit are doing so on what would have been their last trial, right?

So what does this mean for you? For me it means I do not quit because I would hate to find out later that all I needed was just one last effort and I would have achieved my goal. What if it isn’t my last trial? That’s okay because as long as I keep going, eventually I will get to my last trial, I will overcome it, and I will enter the Winner’s Circle.

3. Sometimes the most beautiful results come from dull things under pressure.

“Diamonds are nothing more than chunks of coal that stuck to their jobs.” — Malcolm Forbes

If coal wasn’t an inanimate object it would certainly scream, “Stop! I want out!” But that coal, when facing incredible pressure, is turned into one of earth’s most precious possessions. Ugly, dirty old coal is transformed into beautiful diamonds.

Instead of looking at pressure and trials as the reason to quit, get tenacious and see them as the very thing that will make your life the beautiful thing that you desire it to be. See it as your opportunity to learn, to grow, and to be transformed. See these trials as the very things that will enable you to have the life that you dream of!

Trials will surely come. Life will get hard. You will want to quit.

Then you will have a choice: Will you give up? Or will you take your turn at tenacious. The choice you make will determine much of the rest of your life.

My advice? Take your turn at tenacious. You will become stronger and you will end up living the life you dream of!

I have worked with couples in their comprehensive financial planning for more than 37 years. It is amazing how “money struggles” emerge and create conflict with our money partner for life.

Men were once the main “bread winners” and many today feel they should have complete decision making authority about the couples’s spending, saving and life goals. Women, typically, are socialized to share decision making, no matter who makes more money.

These conflicts may come about as opposites attract. (Funny I always have seen a spender marry a saver. Rarely, do you see two spenders marry or two savers marry).

Research has found that couples may be polarized in seven behaviors.

Conflict No. 1: Saver vs. Spenders
The market meltdown, credit crunch, and job insecurity all give Savers an edge today. However, a more frugal lifestyle will increase Spenders need to soothe or reward themselves for the stress it causes them. As a result spenders in power-struggle relationship may well feel even more judged and controlled. Instead of continuing to sacrifice for a day that may never come, they may rebel and sneak gratification now.

Conclict 2: Worrier vs. Avoider
The financial crisis will intensify the stress modes of these money types, a common couple’s polarization. Right now, many Worriers are cringing at the latest market news and losing sleep to visions of bankruptcy, while Avoiders blithely ignore financial headlines and file their 401(K) statements unread.

Conflict 3: Planner vs. Dreamer
In a Couple whose stored-up resentments typify the power struggle dyamic, Dreamers will fantasize about life where work is no longer central. They may want to travel to exotic places, sell the house and buy an RV or start a whole new direction. Meanwhile, their Planner spouses are trying to calculate a retirement budget, estimate portfolio yield, or, chart their Social Security Options.

Conflict No. 4: Money Monk vs. Money Amasser
This is one of the hardest couples’ oppositions to heal. Money Monks tend to look forward to retirement as an opportunity to simplify life and give it more meaning and purpose, far away from the corrupting influence of money. Their Amasser partners, on the other hand, will be focused (possibly even obsessed) with growing their assets so they can feel more successful, powerful, happy, and secure.

Conflict 5: The Risk Taker vs. The Risk Avoider
In the The Third Age, The Risk Taker (often male) may want to sell everything and buy a boat to sail around the world. The Risk Avoider, by contrast, may prefer to deep her attachment to home, family, and friends rather than radically changing her life.

Conflict 6: Money Merger vs. Money Separatist
When a wife inherits money from a relative she may want to keep some or all of it separate. If her husband has been the primary breadwinner so far and the couple has totally merged the rest of their money, his reaction is likely to be hurt and anger: “All these years when I made most of the money, you were fine sharing it. Now you finally have some money to share, and you want to keep it to yourself?” He may perceive her as selfish and unfair, and fear that she doesn’t trust him or is even planning to leave him.

Conflict No. 7: Polarizing and Different Priorities
Most people are a blend of these money styles. In addition, just about any couple will take the opposite stances on individual priorities. This may be because of their different goals. For example, he wants to go to graduate school and she would rather contribute that money to a Third World Country.

Whatever their polarization, both spouses need to become equal partners for the sake of a successful intimate relationship. Power and decision – making should be shared, no matter who is still working and who isn’t, and no matter who makes or made the most money.

Will Social Security be there for you when you need it? Will the total amount be taxable income to you? Presently, up to 85% of the Social Security payment is taxable to most people.

The Social Security system is a “Ponzi scheme” system. That is, present workers have money deducted and said funds are sent immediately to the recipients. So, the trick is you need more and more workers into the system to pay the retired ones. There is NO money set aside in a “lockbox” as Al Gore promised many years ago. Congress over the years has taken excess monies in the Trust Fund and used it for other purposes, depositing an IOU into the Trust Fund.

So let me get this straight…you had Social Security tax money deducted from your paycheck to supposedly have it set aside for your retirement, but instead your money was sent to a retired person (Social Security is not set up like a pension or 401(k)). Now, since there is no money in the account for you when you retire, the Government’s system is that any payment you get will be taxed in order to pay back the IOU that Congress took out without asking your permission. If any other person or company did this scam, they would be in prison…Let’s see…Bernie Madoff, the Keating Five, Enron executives – on and on! Now, tell me again why you voted for these legislators?

Congress has known that Social Security is in a mess, but they have not had the guts to tell you. Yet, you are told every year that things are bad when you get your annual Social Security statement.

Here is a paragraph from the front page of my statement dated February 18, 2009:

“…Now, however, the Social Security system is facing serious financial problems, and action is needed soon to make sure the system will be sound when today’s younger workers are ready for retirement.

In 2017 we will begin paying more in benefits then we collect in taxes. Without changes, by 2041 the Social Security Trust Fund will be exhausted* and there will be enough money to pay only about 78 cents for each dollar of scheduled benefits”… (*These estimates are based on the intermediate assumptions from the Social Security Trustees’ Annual Report to Congress.)

Now look one year later at the February 12, 2010, statement:

“…Now, however, the Social Security system is facing serious financial problems, and action is needed soon to make sure the system will be sound when today’s younger workers are ready for retirement.
In 2016 we will begin paying more in benefits then we collect in taxes. Without changes, by 2037 the Social Security Trust Fund will be exhausted* and there will be enough money to pay only about 76 cents for each dollar of scheduled benefits”… (*These estimates are based on the intermediate assumptions from the Social Security Trustees’ Annual Report to Congress.)

In just one year, from 2009 to 2010, notice that the payout in benefits versus tax intake drops by one year; the fund become exhausted four years earlier, and the payout drops from 78 cents to 76 cents.

Social Security has been printing these reports yearly. So, some years in the future when there is no money to pay out to you, or you have reduced benefits…you can’t say…”but no one told me.”

I remember George W. Bush trying to push Congress and Americans to do something about Social Security in 2005, but everyone rejected his ideas to privatize part of the system, and 10-15 other remedies that he proposed.

As for your planning…well, I have all my clients develop their own “social security plan,” with their own money that they control.

Do not count on this system for your retirement.