Does everyone have the potential to be rich? Theoretically, yes. Will most people become rich? Unfortunately not.

Like mastering any profession, building wealth requires focus, passion, and a certain set of skills. It’s not for everyone. Still, in America more people have the opportunity to build wealth than to become major league sports players, movie stars, or Broadway actors.

Knowing when you’ve reached your goal is obvious in sports or acting. It’s less clear if your goal is becoming rich.

I would not consider a retired couple who have saved all their lives and have a net worth of around two million dollars as rich. Continue Reading »

“While financial net worth and financial self-worth are sometimes used synonymously, they actually are very different. Financial net worth is made up of our monetary assets minus our liabilities. Financial self-worth is the ability to feel positive about who we are and to be comfortable with our financial situation and the amount of money we have.”

This quote is from a blog post on “financial self-worth” by counselor Dave Jetson of Jetson Counseling. He offers financial therapy workshops and also includes money issues as one of the areas he addresses with clients.

You can read the entire article here.

“I’ve never made money in the stock market, so I don’t want to put my money there.” Investors with this belief are not alone, according to the latest research from Dalbar, Inc. Many people, including some investment advisors, don’t make much money investing in stocks and bonds. Dalbar has figured out why.

Dalbar, a leading financial services market research firm, conducts an annual survey called the Quantitative Analysis of Investor Behavior (QAIB). This measures the effects of investor decisions in buying and selling securities over short and long terms.

The latest QAIB found that investment results depend more upon the investors’ or advisors’ behavior than their knowledge of markets or investment strategies. Continue Reading »

This is a guest post from counselor Dave Jetson, who consults with KFG to provide financial therapy and who offers financial recovery workshops.
Many of us have heard the term codependency and may be familiar with how it plays out in one’s life. Fewer of us are familiar with the term financial codependency.

Financial codependency occurs when we make the financial needs of others greater than our own financial needs. When we focus on the financial needs of another person, expectations and resentments develop on both sides. Financial codependency can be seen in many different ways in a person’s life.

Typically, financial codependency plays out with family members and can also be seen in relationships with friends or significant others. Among friends, it commonly takes the form of one person continually loaning money to friends and seldom getting paid back. With couples, one partner may concede all the finances to the other and be unaware of their financial status or situation. Typically parents give to their children and may continue this giving pattern well into adulthood. Some parents give until they die, which indicates how large an issue financial codependency can be.

Many parents realize they have made mistakes and feel guilty around the way they may have raised their children. As a way to compensate for the inadequacies in their parenting, they create ways to help their children financially to relieve some of that guilt. Different ways that parents may present financial codependency to their children include: giving money for no reason, buying as gifts items the children cannot afford, paying for cars, trips, or household bills because children cannot afford them, making sure they always pay for meals even when children can afford and want to pay, helping children through difficult financial tight spots they placed themselves in, paying for college, paying for a house, etc. While all of these can be supportive ways to help children financially, if the motivation is to enable, tension can be created and the opportunity for the child to learn and grow to become financially independent is lost.

When we attempt to help another person financially, we are denying them the opportunity to grow from their own financial situations. We enable them to rely on us financially. Unless the pattern of financial codependency stops, it becomes a financial enmeshment that is difficult to change.

Looking at financial codependency at a deeper level typically uncovers strings associated with the giving. Conditions like “I want you to love me,” or “Now you have to do what I say,” are a couple of unspoken strings associated with financial codependency.

To create freedom from financial codependency it is important to recognize the underlying motivation for the financial codependency and the underlying feelings that drive this behavior.

While we want the best for our children and will do whatever we can to give them what we believe will be the best for them, we actually are doing a disservice by enabling them. The best way to help our children is to teach them at a young age about money and the role it plays in their lives. As they learn and grow, it is our responsibility as parents to be mentors and supporters while they walk through their own financial obstacles.

Financial Independence. It’s the time in our lives we retire from actively earning a living. For many of us, it’s way out there in the future, something to plan for “someday.” We’re too busy with our lives, our families, and our careers to pay much attention to it.

In some cases, that inattention lasts until people are in their 50′s or even 60′s. All of a sudden it hits them that “someday” is getting closer fast and they aren’t ready. They don’t have anywhere near enough in savings and investments to provide a sufficient income when they are no longer earning.

If you’re in this situation, it’s time to get serious about planning for financial independence. But don’t panic. Before you start pricing cat food at the grocery store and hinting to your kids about moving in with them, try these strategies first:

Continue Reading »

“Given how fourth-quarter calendars have a way of filling up, it’s important to put all of your financial to-dos for the end of the year on the calendar now. This will prevent  important tasks from slipping through the cracks.”

This is some advice at the Business Insider website from Christine Benz of Morningstar, who has a list of some of the key financial tasks to tackle if you’re retired. She notes that “they’re  not discrete–some of the tasks, such as bucket maintenance,  rebalancing, tax-loss selling, and meeting RMDs–are intertwined with one  another.”

Read more here.

It’s been years since I took dance lessons, but as I remember it, an evening of dancing has an overall rhythm that’s separate from each individual song. A good band will vary the tempo of the dance by playing a variety of music. Too many slow songs, and dancers get bored doing one foxtrot or two-step after another. Too many polkas or fast jitterbugs, and half the crowd might end up a bit too literally “on the floor.”

A dance band might play mostly country-western music, have a big band sound, or focus on oldies rock and roll. But no matter what type of music it plays, in order to be successful it needs to have a diversified repertoire.

And no band would be invited back if it played nothing but novelty dances like the hokey pokey or the chicken dance. These might be fun for a few minutes, but nobody—except possibly a three-year-old on a sugar high—wants to do them over and over and over.

Unfortunately, some investors use what we might call the “hokey pokey” method of investing. Continue Reading »

Catey Hill, a reporter at SmartMoney magazine, says “this week’s stock market slide has been particularly cruel: After a record rally in October that put many nest eggs back in the black, those portfolios are once again getting punctured.

Most advisers predict the wild swings that began in August to continue through the end of the year, thanks to the debt drama playing out in Europe and plenty of economic headwinds at home.”

Hill goes on to discuss some options for retirees to cope with volatile markets. As one of the advisors she interviewed for this story,  I told her this volatility may be the new normal.

Click here for the whole article.