Paul Ferraresi

Most people do not realize that small changes can add up to “big” gains. For instance… if you saved $100/month, that is, $3.00 per day (3/4 of a Starbucks coffee), from the day you started work, until age 65, at the stock market’s average return, you would accumulate $1.2 milllion.

Let’s take a look at 3 friends…Larry, Moe and Curly. They all live in the same neighborhood, all earn around $50,000 per year, have average health and body weight.

Larry:

o Goes along with his everyday routine.

o He is happy.

o Complains that nothing ever changes.

Moe:

o Makes some small, seemingly insignificant changes that are positive.

o He reads in the evening and listens to 30 minutes of something instructional or motivational.

o He read an article from Doctor Oz and decided to cut 125 calories from his diet each day. Also, he started walking a couple of thousand extra steps a day.

Curly:

o Has made a few bad choices.

o Bought a new big screen TV so he can watch more of his favorite shows.

o Is trying out new fattening recipes from the Food Channel.

o Installed a bar in the family room and added 1 drink/week to his diet.

After 5 months:

No difference seen in the 3.

After 15 months:

Still no noticeable changes.

After 25 months:

Changes showing.

After 27 months:

Expansive differences show up.

After 31 months:

o Changes are startling.

o Curly is fat; Moe is trim. By cutting 125 calories per day, he lost 33 pounds.

o Curly only ate 125 calories more than Moe and gained 33 pounds. Thus, Curly weighs 66 pounds more than Moe now.

o Also, since Moe has been reading, he has a new job, and a happy marriage. Curly is unhappy at work and in his marriage.

o Larry is about the same as before.

You can and must make changes in your financial life immediately. It can be small but the payoff is great.

Ah yes, discipline or regret.

“Some people succeed because they are destined to, but most people succeed because they are determined to.”

A man I truly admired was John Wooden. He coached the UCLA basketball team to a record number of National Championships. I wonder if his record will ever be surpassed.

He had a unique philosophy and attention to detail. (Like teaching his college players how to properly put on their socks. If done incorrectly, it would lead to blisters and make them unable to play).

He followed a creed for happiness. One of his principles was in a poem:

Making the Most of Oneself

Be true to yourself.
Make each day your masterpiece.
Help others.
Drink deeply from good books.
Make friendship a fine art.
Build shelter against a rainy day.
Pray for guidance and give thanks for your blessings every day.

He had high ideals for excellence and a code of conduct to find happiness. He said happiness comes from making and keeping nine promises:

1. Promise yourself that you will talk health, happiness and prosperity as often as possible.

2. Promise yourself to make all your friends know there is something in them that is special that you value.

3. Promise to think only of the best, to work only for the best and to expect only the best in yourself and others.

4. Promise to be just as enthusiastic about the success of others as you are about your own.

5. Promise yourself to be so strong that nothing can disturb your peace of mind.

6. Promise to forget the mistakes of the past and press on to greater achievements in the future.

7. Promise to wear a cheerful appearance at all times and give every person you meet a smile.

8. Promise to give so much time improving yourself that you have no time to criticize others.

9. Promise to be too large for worry, too noble for anger, too strong for fear and too happy to permit trouble to press on you.

John suggested everyone should recite these every day and he believed that you will have lifetime happiness. John is now deceased but I can still say…Thanks, Coach.

“You cannot win if you do not begin.”

Everyone starts the New Year with high hopes and dreams. We all want to set high goals in all areas of our lives. One major area that people demand of themselves year in and year out is … “this year I am going to get my finances in order”.

I have had the honor to help thousands of individuals and couples in their comprehensive financial planning. I have found that money problems always come about due to a person’s view on money. Some people run, hide or abhor money. Others allow it to be their “master”, while others use it as a “score card” or, some other tool.

When working with an individual or couple, I find, after exhaustive probing, that a person’s problems, issues or insights about money all relate back to some childhood experience, or, recalling childhood money experiences with their parents, or, avoidance about the thoughts of money altogether.

To help start the New Year off correctly, may I invite you to set aside a little time to find out your view on money. The National Endowment for Financial Education has provided access to a quiz about the subject.

Here are your steps:

1. Visit www.smartaboutmoney.org/lifevaluesquiz.
2. Take the quiz now to establish a baseline. Then, take it every time you have a major change in your life: marriage,divorce, birth of a child, purchase of a house.
3. Ask the financially important people in your life also to take it: spouse, partner, parents.
4. Be open to the fact that you and your significant other(s) are going to have different life values.
5. Read the analysis and use it to understand your financial decision preferences (or if you are a financial educator, the preferences of your learners).

What to Expect:

Questions on the Life Values Profile Quiz may surprise you – they’re not all about money. Here is a sampling of the multiple choice questions you’ll encounter when you take the quiz:

• The definition of “health” most appropriate for me would be…
• When I hear the word “security” I automatically think of…
• When people visit my home and see my lifestyle they…

I think you will find it very helpful. You have nothing to lose and everything to gain. Or, are you going to wait another year to promise yourself that this will be the year you fix your finances?

Ah, discipline or regret.

We have just passed the halfway mark for this year. Those “Lazy, hazy, crazy days of summer” seem to take over our entire lives. The kids are out of school and vacation time is on people’s minds.

Just six months ago you made out a list of your goals for this year. You were filled with enthusiasm and an unquenchable thirst to complete every one of them. It has been shown that just “making a list” does ensure some of your goals will be completed. Unfortunately, for most people, life just gets in the way. Too many people have so many goals with no set timetable that your brain just shuts down and nothing gets done.

Rather than following the “typical” year, and lifetime, for most people….how about trying something else….a different approach. Heck, you have nothing to lose.

1) Pull out your January 1st list of goals.

• Cross off those that you have completed – congrats!
• Next, cross off those that do not seem to strike your fancy anymore

2) With the remaining list, choose one, just one, of your short term goals that you wanted to complete this year. Let’s say it is….lose 12 pounds by year end.

3) Now write that goal on 4-5 index cards. Place the cards on your desk, mirror, office, etc. so you constantly see it.

4) Now break the goal down into small parts (How do you eat an elephant? Hmm one bite at a time). Let’s see, 12 pounds over the next six months is two pounds per month, or ½ pound per week.

5) Now weight loss is easy math….simply…..less “guz-in-tahs” into the body (food) and more “guz-out-tahs”, namely, exercise (burning calories).

6) Now, lay out your plan of the little changes you will do each day to reach this goal. Let us say, eliminate 200 calories per day and burn, say, and extra 200 calories per day. Look at your food consumption daily, google to find out the calorie amount and decide upon the tiny change that is needed to eliminate 200 calories. None of these starvation diets are needed!!!! Lastly, find out how much brisk walking (or other exercise) is needed daily to burn 200 calories.

You will be shocked how your goal can be met.

Now before you start this program, you must write out….”Why” you are trying to reach this goal. Maybe it is to get into a new outfit, or because you want to get in shape and live longer. Whatever the main “why” is….write it down. You see, when the “why” is strong enough, then the “how” is easy.

The “why” will be the inner path that will get you up early to “walk” on the days you want to hit the snooze button and not “exercise.”

Ah yes, discipline or regret.

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.