Your Money: Taking Care of You

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What happened to the American Dream?  What happened to that place where it was so easy to start a business, or hold a good job, where the wind was always at your back …?

Someone finally put a finger on it.  That was Niall Ferguson in his new book The Great Degeneration.  In short, he’s shown how we’ve allowed the institutions that made this country the pinnacle of opportunity (especially entrepreneurial opportunity) to go to ruin.

•    Our much-loved “Democracy” has deteriorated into nothing but political bickering.
•    Our fair “Regulatory Environment” has become the tool used by unelected bureaucrats to hogtie us.
•    Our “Rule of Law” has become the “Rule of Lawyers,” strangling us with too much litigation.
•    Our considerate “Civil Society” has become totally uncivil.

Gone are the institutions that had grown over the centuries and that made it possible to succeed by taking a good idea, putting together a good plan, gathering up a little money and putting hard, honest work behind it.

Entrepreneurialism Isn’t Dead

It’s just much harder to earn a living than before.

Some businesses can still be started with minimum intervention, if well-conceived and well-run, especially if they’re kept to a modest size.  (Once they grow to a certain size, they start being more affected by those deteriorated institutions.)  Among the possibilities are internet-based businesses that primarily offer services.  But you can’t run an entire economy with virtual service providers …

According to George Packer in his book The Unwinding: An Inner History of the New America, what has changed the most from last generation to this generation is the loss of certainty.  We used to believe that if you held a job and worked hard, you would have a place in society, be respected and be able to offer a better future for your children.  Life was relatively predictable.

Today that certainty is gone.  In the absence of the old supportive institutions, people in the middle class are far more on their own.  The ties that held us together as a people have loosened.  There are far more winners and losers.  Some people thrive in the new environment (the winners), but many don’t.

You and Your Money

So what does this mean for you and your money?

It has become more important than ever to fully engage and to take personal responsibility.  Whereas there was more room for distraction or delay in the past, today we need more clarity.  We need to have a clear picture of our finances, how they work, where our money is going and how it is best used so we can still build that life of comfort, fulfillment and peace of mind.

One important element is being proactive.  In the past, we could have reacted to changes as they came.  We didn’t have to worry too much about those changes disrupting our lives as they do today.  (The sweeping disruptions that started in 2008-2009 are proof of the new economy.)

Here’s my recommendation for today:

1.  Take out a piece of paper.

2.  Write down answers for these questions:

•    Where do I live today?
•    How much do I make each month?
•    How much do I spend each month?
•    How much do I have saved today?
•    What am I trying to build in terms of security for myself and my family?

3.  Next, envision yourself two years from now, in mid-2015.  Answer the same five questions.

4.  Lastly, imagine that you’re five years in the future, in mid-2018.  Go through the same process of answering the same questions (using today’s dollars, just to keep it simple).

If you have been living only in the moment, dealing in reaction to the day-to-day and not projecting forward, it is very unlikely you will be one of the “winners” in what’s referred to as the New America.

However, just this one exercise can start you on the path to taking control of your future … and creating for yourself and for your loved ones the security you deserve.  Visualization and putting numbers on paper are that powerful.

Let me know in the Comments section below if doing this exercise brought you any valuable “aha’s.”

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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.

  • Alexandra McAllister

    Great recommendations as always, Sharon! Thank you. I’m starting over from zero so every bit of info is important to me…to do it right this time around! 🙂

    • And you know I’m happy to help in any way I can, Alexandra. If something is holding you back at some time, please do reach out and let me know what I can do …

  • Norma Doiron ´*•჻.

    I began a few years ago to take “control of my financial future.” It hit me!
    I am making huge progress and I just love your posts. Keep them coming, Sharon. Thanks!

    • Oh, Norma, phrases like “huge progress” make my day! 😉

  • Tom Holmberg

    Really great exercise Sharon! It made me think about my budget and what would happen if Daniele or I lost our job in the next three years. O

    • And those kinds of events are far less devastating if the rest of your finances are solid enough to deal with the disruption. Glad it tweaked some thoughts, Tom!

  • Barbara Becker

    Great post Sharon. Yes, keeping our focus forward keeps us in the flow of positivity and trust.

    • Barbara, you’re right about the energy that surrounds a forward-thinking attitude!

  • This really hit home. Yes, the loss of certainty has been a really big problem in so many areas. Because when we don’t have that security, it reaches out and touches all aspects of our lives.

    • We’ve all felt a little uncomfortable about “something” these past five years, Sherie. I found these two books really nailed what it was: the old predictability that had been lessening over the years … was gone. 1 + 1 no longer equaled 2!

  • Great article, Sharon. I’m one of those over 50 women who is in your target market. Thankfully, I have a husband who is in the financial field and who has forced me to learn how to think for myself and plan wisely for the future with or without him.

    • How fortunate you are, Lisa, especially if your husband helped you “catch up” from not having grown up with financial literacy and comfort. I hope you share that comfort and knowledge with any women around you, as appropriate. This is such a crucial topic …

  • Joanne Greco

    Good advice and tips as usual. The last few years have been hard on everyone, but we always stay focused on what we have, not what we don’t. 🙂

    • That shift can be such a stress-reducing one, Joanne. Many of us have had to redefine what is important and what is superfluous. And from that new solid place, we have so much more energy to build back as we can …

  • Wonderful advice.I agree with you that entrepreneurialism isn’t dead a. It is just damn hard to earn a living these days!
    Thanks,
    Seun

    • Indeed, Seun. Feels more like headwinds these days than having the wind at our back!

  • Pat Moon

    Very good points about how things have changed and what we can do to move forward in this changed business environment. Thanks.

    • Pat, I know you know very well what I’m talking about. So many were taken by surprise by the drastic economic shifts around 2008 … and are still trying to get out from under the consequences. While those two books were not “doom-and-gloom,” I found they provided a valuable reality check of what it will take to turn things around …

  • kathyrobinson

    It’s the same in Australia. There is no permanency in the workforce. You are only on contract for 3-5 years then have to reapply. Or else you’re employed as a casual on an hourly rate. This makes managing money and planning for the future so much harder.

    • Kathy, my European friends have always criticized America for its lack of a job security, and for the fact that people can be let go pretty easily from a job. But that accountability is part of why our productivity, innovation, etc., have been so high as a nation. The difference today is that, when let go, there is no longer a vibrant job market for them to find the next job.

  • Susan Schiller

    Projecting forward… I’m guilty of not doing that… this article is very helpful, Sharon, along with your 5 simple questions to ask ourselves. I’m going to make myself complete the homework…. thanks for the gentle nudge!

    • It’s so easy to get focused on the present, dealing with the day-to-day, Susan. But a forward-looking attitude is what allows us to dream, envision, project … and plan! 😉

      • Susan Schiller

        I procrastinated again, but right now I’m copying and pasting your 5 questions and I’m dedicating 20-minutes this afternoon to completing this exercise. I know if I don’t, I’ll forget – and I don’t want to be disappointed 5-years from now. I want to look back to today as a turning point!

  • MamaRed

    Great explanation of how things have changed…and I hadn’t thought of this way. Your questions, and approach, is so gentle and yet so on point!

    • Oh, MamaRed, there are so many other issues out there that beat us up these days; we don’t need it from our friendly money mentor as well! 😉 My goal is to get as many women as possible to give their financial situations more thought than they do today. That’s a start!

  • Some great questions to keep us on track Sharon. Thank you for the reminder that it’s not just today we have to manage our finances, but planning for tomorrow is just as important.

    • Carolyn, I know you are very attuned to the yesterday-today-tomorrow continuum as a result of all the personal healing you have done. This is no different; it’s a matter of “healing” money beliefs and habits … 😉

  • daniele holmberg

    Thank you for the article Sharon.:) I believe it is equally important to prepare for tomorrow. I have been pretty good at saving money since my teen years when I worked at Taco Bell. You never know when you will need a rainy day fund:)

    • You never cease to amaze me, Dani! So now my next question: how well are you treating the money that you save? Is it making money for you while you sleep? 😉

  • Robert Manea

    I envision being on top of the social commerce and marketing world by 2015! my website is gaining more and more everyday!

    • Congratulations on your clarity of vision. I trust the growth of your website is following a solid (and well supported) plan …

  • Carmen

    Great article, advice, and information. As always, thank you for sharing your wisdom. Xx

  • Yetunde

    This article is definitely for me. Circumstances have not allowed me to save for the rainy day. Savings have been dipped into. I however believe that one can be given second chnaces……to answer those five questions – I go.
    Thank you, Sharon

  • Jessica Stone

    Another great one! And you are so right about what has changed in our country. I’m glad the entrepreneur can still thrive and that the internet is a great place to do it.

  • Excellent article Sharon and a good strategy to help people feel a wee bit more on control of their current status. Things have changed but I feel blessed to be flexible and capable of shifting and changing too!

  • LizB4

    Thanks Sharon! This article is spot on and a great reminder of what we are striving for in the US today!!!

  • jennyshain

    Love the questions you posed to help us figure out where we are now, & envisioning where we want to be 2 year & 5 years down the road. Entrepreneurialism is alive & kickin!

  • Robin Strohmaier

    Another great article, Sharon, with golden nuggets of advice. I absolutely agree that “It has become more important than ever to fully engage and to take personal responsibility.” Thanks for the great advice!

  • Such an excellent article, as always, Sharon. I’m definitely going to read Niall Ferguson’s book – the points you’ve shared from it are so true!

  • Sue Glashower

    Love your proactive approach! Having goals and a plan for the future is so important – your questions are a great place to start!

    • They are deceptively simple, Sue. If you think about it, answering into the future forces vision and answering for today requires that you have a handle on your income and outflow. As for how much you have saved, having to write it down is an eye opener!

  • fredmcmurray

    prescient

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  • Regina Bright

    Love this approach – always good information from Sharon!