3 Steps to Financial Peace of Mind

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3 Steps to Financial Peace of Mind

“Sharon, you make it sound as if getting to financial security and staying there is all about doom-and-gloom!  Sounds so restrictive …”

So started a discussion with a friend—and regular reader—about my “system” for women to become financially secure.  Especially those nearing or already into their fifties who don’t feel they’re making enough progress.

“Not at all,” I answered.  “But you can’t get there without a dose of reality.”

The Millennials’ Reality

I recently watched a video mini-course by a financial leader to the younger crowd.  He ridiculed “65-year-old financial advisors” who he said prescribed “cutting out lattes.”  He proposed that instead of using up willpower to cut out $5 cups of coffee, that willpower should be used to demand higher salaries or to generate higher income.  Doing so makes it possible to continue buying $250 shoes and vacations in Bali.

People in that age group are still in the heady space where everything is possible and time is not an issue.  They also enjoy a greater chance of having job and salary flexibility.  Most of all, they have 30+ years ahead of them to save for retirement.

The Boomers’ Reality

Boomers today are 50 to 68 years old.  The early fifties are when most women who are unprepared for retirement wake up to that fact.  And the time horizon is shorter, maybe 15 years left to play catch-up before retiring—by choice or by necessity.

For those women, I have a system that can get (1) their finances under control, (2) their path to security defined and (3) their vision clear about what their specific long-term dream will look like.

The Three Faces of Time

I digress to share my concept of time … and money.

How we look at time depends on how much money we have—compared to the financial obligations we carry.

1.    Time as a Stressor:  When our expenses are greater than our income, what we dread most is the passage of time.  We dread every day that passes—every day that takes us closer to the end of the month—or to whenever the next bill comes due.  Checking off each day on the calendar makes us sick to our stomachs.  The chatter in our heads is non-stop.

2.    Time Neutral:  When our expenses equal our income, we’re “time neutral.”  It doesn’t matter that one more day has passed, because we know that we can meet our financial obligations when they arrive.  Even if just barely.

Suddenly the huge burden of passing time (which we can’t stop no matter how hard we try) is lifted off our shoulders.  Our anxiety level drops.  And without that one burden, we have breathing room that lets us be so much more creative about our lives, our challenges, our solutions and our goals.

3.    Time as a Friend:  Next, imagine what happens when our expenses are smaller than our income.  Now we relish the passing of each day because we know that each one represents more ‘extra money’ in the bank.  It has nothing to do with wishing time away.  It has everything to do with the attitude of looking forward with glee—rather than dreading tomorrow.

The Three Steps to Financial Peace of Mind

Where a woman starts on her path to financial peace of mind depends on where she is in the same “Three Faces of Time.”

1.    First Step to Financial Peace of Mind:  If a woman is under financial stress, the first step is to get income equal to or greater than expenses.  (So many of the tips I write about address ways of achieving this, which may be why it seems like doom-and-gloom.)  The goal is to quiet the head chatter and lower the anxiety.  Anyone in this phase knows what that feels like.  It’s devastating, distracting and exhausting.

Here we work mostly with numbers, expenses, all the boring, nasty stuff.  We cut back.  We give up lattes.  But the goal is never to stay in this constrained space for long.  It is just a stepping stone, but a necessary one that might require some temporary tough decisions.

2.    Second Step to Financial Peace of Mind:  If a woman can just barely cover her basic living expenses, she may not feel she’s where she wants to be, but she can think clearly and creatively about what she wants her life to look like going forward and what she can do to fund it.  Her mind is quiet.

She can reassess her priorities today (as opposed to those she’s carried forward from when she last did a lot of dreaming—in her twenties—and that no longer fit).  What was once important may not be anymore.  Real lifestyle choices may be different, so a Lifestyle Spending Blueprint is developed than reflects what brings her joy today.  And it can change as priorities and resources change.

3.    Third Step to Financial Peace of Mind:  Envisioning a realistic, fulfilling long-term lifestyle comes next.  Motivating beliefs make it easy to make good monetary decisions.  And with each day, a funded future starts taking shape.

As savings accounts, financial instruments and investments grow, satisfaction comes from knowing that her finances are under control.  She also knows she is headed towards a future she has designed herself, not one she borrowed from magazines, television and other people’s fantasies.  Yesterday’s joy morphs into today’s joy, as she builds tomorrow’s joy.

You see, wealth is not just about having money.  It’s about having a plan for a lifestyle that excites you.  And it’s about having financial peace of mind.

Let us know in the Comments section below if you’ve thought through and planned financially for your future years.

xxxxxxx

Bio: Sharon O’Day fixes financial lives. She is a tell-it-like-it-is money expert with a successful career in global finance, plus an MBA from the Wharton School. Today she specializes in getting entrepreneurial women over 50 back on their game so they can have more money, less stress and more joy. With her “Over Fifty and Financially Free” strategies, they take actions that lead to their ultimate goal: financial  peace of mind.

  • http://www.definitelymustloveaccents.com Lorii Abela

    Thanks, Sharon, for your very interesting article. Great tips for life great matters. Approaches to help develop successful and peaceful financial living.

    • http://sharonoday.com/ Sharon O’Day

      I’m glad you noticed that the focus was on “financial peace of mind” and not just on money, Lorii! Most people miss that, although it becomes more and more obvious the older we get! But then, you have a long time before you get there … ;-)

  • Kung Phoo

    Lots of great advice here. Will definitely consider these. Thank you! :-)

    • http://sharonoday.com/ Sharon O’Day

      You’re very welcome, Robert …

  • Meryl Beck

    Financial stability and success is important in living the kind of lifestyle anyone may choose. Your article shares great ideas and tips. A peaceful financial situation is key and you touch on that with great steps to getting there! Thank you, for sharing your concept.

    • http://sharonoday.com/ Sharon O’Day

      I hope something in that concept description offered you a nugget that might reinforce what you have built for yourself, Meryl. As you said, “peaceful” is the key word!

  • Alexandra McAllister

    Thanks for sharing your concept, Sharon. I also believe a peaceful financial situation is key. I enjoy all your tips as I am able to incorporate them…one step at time. I can totally relate to this: ” The goal is to quiet the head chatter and lower the anxiety.” It is what I am doing at this very moment. :)

    • http://sharonoday.com/ Sharon O’Day

      Don’t you agree, Alexandra, that we can be far more focused and creative when we’re not doing financial gymnastics in our heads at 3 a.m.? That’s the chatter I’m talking about. And the silence once we reach the balance between outflow and inflow … is golden!

  • Carmen M Perez ELO

    Love what you say about “wealth is not just about having money. It’s about having a plan for a lifestyle that excites you. And it’s about having financial peace of mind.” So true. I used to feel like saving money was a punishment. :-) Thanks to my mom for encouraging me to save, when I needed money it was there.

    • http://sharonoday.com/ Sharon O’Day

      Thank your mom for me, too, Carmen! We need more like her! Once someone starts saving, there’s something very gratifying … probably because it is proof that we are finally taking care of ourselves. From “punishment” it often becomes an “satisfying activity” …

  • Veronica Solomon

    Thanks again for more of your wisdom. I have to admit that I use to have my financial house in order before embarking on entrepreneurship. These days, I have had to make some sacrifices and lifestyle changes to help me accomplish the dream I see for my family. I know it’s temporary, but necessary. I learn so much from your posts, thanks so much

    • http://sharonoday.com/ Sharon O’Day

      If you know why you are making the sacrifices, Veronica, and your entrepreneurship offers you and your loved ones something better after that, you will have done the right thing. No one ever died of “changed lifestyle.” ;-)

  • Scott Glaze

    Terrific advice as always Sharon. I am trying to get to the “Time is my friend” point.

    • http://sharonoday.com/ Sharon O’Day

      A nice, clear goal, my friend! ;-)

  • Nate Leung

    Hello Sharon –

    I appreciate your insights. Very helpful to me. It’s very sad that many of the baby boomers are not ready to retire. The fact that a lot of them do not have money that will sustain their lifestyle if they were to retire. Now is a perfect time to start looking elsewhere for a plan B instead of hoping something will fall in their lap!

    • http://sharonoday.com/ Sharon O’Day

      Nate, Boomers were the first generation where people didn’t work at the same company for life and retire with a watch and a pension. It also is facing much longer life expectancy after retirement age. So there is more to it than just “do not have the money that will sustain their lifestyle…” Granted, there are irresponsible people in every demographic cohort, and those are probably expecting their government to save them or, as you say, “hoping something will fall in their lap!”

  • Gillian ~ Gilly

    Sharon I really enjoyed this post! Financial freedom for me is the end of worrying. Your last two sentences say it well, it’s not the money that will free us, it’s having the plan that brings this freedom to us. Thank you Sharon :D

    • http://sharonoday.com/ Sharon O’Day

      Glad that resonated with you, Gilly! Hope you’ve got your plan clearly in mind …

  • Wingate Wyndham Sulphur

    I am definitely on my way. And owe a lot of it to your weekly posts. Such a blessing you are to me Sharon! Keep up the amazing work.

    • http://sharonoday.com/ Sharon O’Day

      Love hearing that what I write makes a difference, Heather. As a new mom, financial clarity is that much more important … ;-)

  • Tina Ashburn

    This is wonderful advice. Thank you so much for allowing me to admit I am 1) a baby boomer and 2) preparing nicely for old age.

    • http://sharonoday.com/ Sharon O’Day

      Tina, I love that you’re NOT part of the statistics that are touted to the point that some think ALL of us Baby Boomers are financially irresponsible! ;-)

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  • http://xeeme.com/CarlyAlyssaThorne Carly Alyssa Thorne

    Thanks for yet another wonderful article Sharon…

    • http://sharonoday.com/ Sharon O’Day

      You’re welcome, Carly!

  • http://www.definitelymustloveaccents.com Lorii Abela

    This is a welcome article which teaches us different steps or approaches to help us develop successful and peaceful financial living. Thanks Sharon for this article.

    • http://sharonoday.com/ Sharon O’Day

      Thanks for stopping by, Lorii! As you can imagine, the younger people start, the better. But there’s always something that can be done!

  • Diana Foree

    Good steps for the young people today. The boomers unfortunately may have gotten caught in the continuing financial crisis. Lessons to be learned.

    • http://sharonoday.com/ Sharon O’Day

      There’s still lots that can be done, Diana, but it DOES begin with a realistic assessment of numbers and lifestyle …

  • Roslyn Tanner Evans

    I remember having lots of chatter when my husband and I separated but a visit to a financial planner who also did our taxes and financial aide forms helped me figure out the future. I got peace of mind and have held on to it ever since.

    • http://sharonoday.com/ Sharon O’Day

      Having an advisor who you trust — and being open to hearing and integrating the information that comes from that advisor — are huge steps in the direction of peace of mind, Roz. Thankfully, that was your case!

  • Susan Schiller

    There’s a joy down deep inside when I read your third face of Time, Sharon…. that’s the only one that makes sense. The first is a prison sentence. The second is hopeful. But the third is real life… I feel like I’m starting to get there. I’ve left the first one far behind, but I’m still in the 2nd. Just facing into the 3rd brings me to tears… of joy.

    • http://sharonoday.com/ Sharon O’Day

      Hey, she GETS it! ;-) So happy to hear that you’ve made such progress, Sue. You should be very proud of all your accomplishments, especially eith what you’re doing to help others. Congratulations, my friend!

  • Robin Strohmaier

    Excellent article as always, Sharon. I know a few of baby boomers that have had their lives fractured by the recent financial crisis over the last 10 years. Their once secure future and pensions were taken away as the auto companies struggled to stay in business. Some are working well past the time they had planned to at different jobs. – Not by choice, but by necessity. I am working on # 3. Again, Sharon, great post. I love reading your articles and learning so many valuable nuggets,

  • http://twitter.com/MarviaDavidson Marvia Davidson

    Enjoyed reading this Sharon – there is wisdom to save where we can – like cutting back on $5 coffee of which I’m so guilty, but I’m working it through. It seems the older I get, the faster I get there. I don’t want to look up one day and have nothing.