Today we’re going to be talking about Getting Money In Perspective. I deal with clients every day and many of them have the correct perspective when it comes to relating with their financial situation. Others do not, and part of my job as a financial planner is to act as counsellor and try to adjust their feelings towards money towards a more healthy balance.

I’ve said before on this show that money is a means to an end and never an end in itself. By this I mean that the pursuit of money for its own sake is a hiding to nothing. If the accumulation of wealth is your main mission in life then you’ll never be happy, because how much is enough? I have refused to work with clients before because all they wanted from me was to help them make more money at the expense of pretty much everything else.

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After the main body I’m going to look at the most recent reviews that have been left by listeners, and announce the next session topic. If this show is of any use to you, it would help me massively if you would take the time to leave me a review on iTunes. This has a huge impact on keeping me near the top of the rankings, which in turns helps more people to find the show and to subscribe. I’ll remind you again at the end of the show, but if you want to do it right now go to meaningfulmoney.tv/iTunes.

But first…

Sponsor Message

This podcast is brought to you with the help of Seven Investment Management, a firm of investment managers based in London. They put their name to my show and to my site and videos because they believe in what I’m doing, and I’m very grateful for their support. You can see what they’re up to at 7im.co.uk

Introduction

I’ve heard it said that being rich is about having lots of money, whereas being wealthy is having the ability to fully experience life. That might sound a bit glib – I didn’t make it up! – And even just semantics. Sure, having money is a large part of that ability to experience life, but it isn’t all of it, far from it.

So let’s look at what you need to know first and then I’m going to give you some practical homework to help you put money in perspective in your life.

Everything you need to KNOW

1 – Money is an emotive subject

It’s important to know at outset that money has incredible power to build up and to destroy, depending on how it is used, and depending on how it is talked about. It is how we relate to it that matters – let me explain:

It’s fairly well documented that money is a major factor in many divorces. Arguments over debt or one partner’s bad spending habits are bound to eat away at the closeness of any couple.

Conversely though, a couple who regularly talk about money constructively, and who work together towards common financial aims are likely to have their relationship strengthened by this aspect of their lives.

Both cases have money in common, but the way the parties relate to the money is the difference. It is essential then to have a healthy relationship with money and to speak positively about it. I mentioned this briefly in Session 26 – Teaching Children About Money

An acknowledgement that money is an emotive subject is a good place to start. Also, it’s important to recognise that everyone’s money history is different. Again, I covered my own history in Session 26 and shared how it had affected my relationship with money right until the present day. So if you’re in a relationship, be aware that your partner is likely to think differently and for good reason.

Even if you’re single then being aware of the impact of your money history can only be a good thing.

2 – Money is both an enabler and a disabler

Just as money is the source of both positive and negative emotions it is capable of both creative and destructive power. But again, only when wielded by people. Money in the hands of the Red Cross can do great work. Money in the hands of greedy bankers came close to destroying the entire financial system.

On a smaller scale, if you handle your money right, you should be able to do anything you want to do in the future. If you let the money you earn slip through your fingers, you’ll always be on the back foot, getting deeper into debt.

The common factor again is you! It’s what you do with your money that makes the difference. This realisation will hopefully encourage you to engage with your money and not to blame it as some abstract force when things go against you.

Now I know that things happen that you have nothing to do with, like losing your job for example. But if you have an emergency fund in hand, this will have a lesser impact on you than if you don’t. So the person who has engaged with their money is better placed to handle the external factors.

For the most part, money things don’t happen to you, you bend and wield the money so that it serves your ends. In this it is both an enabler and disabler, with you as the deciding factor.

3 – Money doesn’t matter 

Ultimately, money doesn’t matter. Compared with family, health, happiness, love, peace, passion, joy, faith and relationships, money is irrelevant.

Yes, that’s a little trite. Of course money matters. I’ve never spent a night on the street, but I bet if I did I’d appreciate the fact that I have a roof over my head more than I do now. But money is relatively unimportant compared to those things.

Again, it is how you relate to money that matters more than money itself. So don’t give money an unnecessary weight. Instead, think about how you relate to money, how you think and talk about it and how you deal with it. These things have a great deal of importance, even if money itself does not.

Summarise KNOW

#1 – Money is an emotive subject

#2 – Money is both an enabler and disabler

#3 – Money doesn’t matter, but how you relate to it does.

I wonder if you agree with that? Let me know if you don’t – I’m up for constructive debate even though I’m right 😉

But we need to put this in context and apply it practically in our lives, so let’s look at what we need to do.

Everything you need to DO 

Actually, there’s only one thing you need to do this week, and that is to ask yourself the following three questions. These questions were devised by a guy called George Kinder. He is an American financial planner who has blurred the lines between financial planning, counselling and life coaching so comprehensively that a new profession has been spawned which is gaining traction in the UK and is generally called Financial Life Planning. Kinder has written two books, one is the Seven Stages of Money Maturity [Affiliate Link] which is a consumer-oriented tome and then Lighting The Torch [Affiliate Link], which is a manual for advisers looking to adopt his methods.

Kinder talks about identifying what is really important to his clients, and his three questions have become famous in our industry for getting right to the heart of what makes clients tick, and helping them put money in its rightful place, in a true perspective.

So I thought it might be helpful to put these questions to you this week to get you thinking about all this.

I suggest you take some time, maybe crack open a bottle of wine, and write down your answers to these questions. If you are in a relationship, I would answer the questions separately to start with and then discuss your answers. In a facilitated environment with an adviser present it can be fascinating to see how different a couple’s answers to these questions can be. It is essential that each partner feels like their answers have equal weight and the the naturally more dominant partner makes room for the other’s view to be heard.

OK, let’s look at question number one:

1 – Imagine you are financially secure, that you have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything? Let yourself go. Don’t hold back on your dreams. Describe a life that is complete and richly yours.

Hit pause now and answer that question.

This question removes money as a limiting factor. By framing the question in financial security, you are set free to imagine and to dream. So many people don’t ever allow themselves to dream big because they believe that money will always be in limited supply.

What will your perfect life involve? Travel? Charity work in Africa? Freedom to make music or to paint? Or to build or renovate your perfect house. To adopt children or animals? To set up a new business either for yourself or with your children?

Or all these things. Or none of them. It is your life, remember. There are no rights or wrongs, except maybe if your dream is to set yourself up as a brutal dictator in a poor country somewhere. That is objectively wrong. But seriously, there are no limits to this question, so let your dreams fly.

You may never achieve some of these things, or you may achieve far more, but when doubts creep in as you answer the question, push them out of your mind. Don’t let British stoicism creep in – “there’s no point writing that down, it’ll never happen” – instead take a leaf out of the book of our American cousins for whom anything is possible.

And yes, write down the answers so that you can refer to them later. There is power in writing things down…

Here’s the next question:

2 – Now imagine that you visit your doctor, who tells you that you have only 5-10 years to live. You won’t ever feel sick, but you will have no notice of the moment of your death. What will you do in the time you have remaining? Will you change your life and how will you do it? (Note that this question does not assume unlimited funds.)

Hit pause and answer that question.

The purpose of this question is to remove the immortality complex that we all have. Also, in limiting your life, but not your health, it turns your mind to what is really important and gives you chance to do something about it.

The time given to you is limited, but long enough to put things in order so that when the end comes you can be satisfied that all is well. Except for the fact that you’re dead, of course.

You have a limited amount of time, but the question is clear about not assuming unlimited funds. So this is a question based on your current financial position. This makes it real. What would you do, right now if this scenario were true?

What would you change? What would you set out to do as soon as you could? Would you keep working? Would you stay in your current relationship? Who would you call?

Again, write down the answers and chew them over.

This question should really focus the mind. If you would do the things you have written down in this scenario, why wouldn’t you really do them in real life?

Here’s the last question:

3 – Finally, imagine that your doctor shocks you with the news that you only have 24 hours to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What did you miss? Who did you not get to be? What did you not get to do?

Stuff just got real. 24 hours. Sheesh.

That’s not enough time to sort out your will, to reorganise your finances or to do anything much really. You would have time to go see some people who are important to you or to call them up and say goodbye.

But you would have time to reflect on the life you have lived. How does that make you feel? What have you always wanted to do that you will now not get the chance to do. Travel? Learn to Salsa? Learn Mandarin? Did you always mean to lose weight but never got round to it? What are the things you wish you had done. What is the person you always wanted to be?

Are there things you need to say to someone before it’s too late?

I don’t want to depress you, but as a general rule we do tend to breeze through life, passively reacting to the things which happen to us. Sometimes it is good to take stock and consider what we could be doing differently and to get things in perspective.

Revisit these questions regularly

I’d be interested to know how you get on with this. We’re all different and some of you will dismiss this exercise as Californian Zen-like nonsense. But if you take 20 minutes out of your day, turn off all distractions and really ponder these questions, it’ll give you a focus about your life which you may not have had before. Certainly it will put money in its right place, way down the list of important things.

Revisiting these questions every now and again will re-focus the mind. We all tend to drift, erring towards our default patterns of thinking, doing and being. Life is best lived intentionally, and these questions will help you with that.

Question:

If you choose to do this, then answer this question for me: What one thing have you decided to do or to change as a result of asking yourself these questions?

Let me know in the comments section below

This week’s reviews

This is where I read out the reviews left in the last week…

If you like what you hear on this podcast, please leave a rating or review on iTunes by going to meaningfulmoney.tv/iTunes just like Tonks1984, Missmoneypocket and Stevea782 this last week. This helps others to hear about the show and to subscribe, because it keeps me near the top of the rankings.

MoneyMeaning Glossary

Term: Annuity

An annuity is a product which, in return for a lump sum premium, pays you an income for life.

These are usually used to convert an amassed pension fund into an income when someone retires. But they can also be used for long term care planning, or any occasion where a guaranteed income is needed, either for life, or for a fixed term.

Annuities come in many different flavours – probably a topic for another session – and are provided by life insurance companies or specialist annuity providers.

Simple as that. If I’m a life insurer, I can take your £100,000 lump sum and give you an income of £5,000 of rate rest of your life. The actual amount of income you will be paid depends on many factors, including age, gender, health, smoker status and postcode.

News

Totally forgot to weigh this week, which is probably a good thing as I’ve been to London and probably taken on a few too many calories. Normal service will resume text week.

But some great news: I won two awards last week! The first was from Unbiased.co.uk which is the premier directory of professional advisers in the UK. This was for my use of Social Media which is pretty cool. There are still relatively few advisers I the UK as active online as I am, so it is good to be recognised in this way.

The second award came from Professional Adviser, a leading industry magazine. This award was for Best Client Engagement for this very podcast. This is actually the third time I have won this award, though it was previously called the Financial Education award. So it’s nice to have a hat-trick 😉

This is all grist to the mill as they say in Yorkshire. It’s good PR and helps my profile. It should also have an impact on my other site which aims to teach other advisers on how to replicate my success online. That site is called Advisertech – check it out.

Next Session Announcement

Next time we'll be talking about Financial Planning versus Financial Advice. I read a great article on this this week which inspired that session topic, so I look forward to digging into that next week. If you have a question on this subject, or any other financial query that you want answering here on the show, then the best way to do that is to leave me a voicemail at meaningfulmoney.tv/feedback

Outro

That's it for this session of the MM podcast, I hope it was helpful. Did I miss anything? Do you have any questions? If so, please leave them in the comments section below

I hope you enjoyed this session. Thanks for listening – I'll talk to you next time.