Scared of Financial Success?

At one point in my banking career I was in line for a big promotion that involved a panel interview, and I blew it. People who served on the panel couldn’t believe the same person showed up for the interview who showed up for work every day. Instead of feeling pride and confidence when I first heard about the opportunity, I remember feeling discomfort and anxiety with the new title and bonus potential. It made no sense. Because I thought I might be given the opportunity again, I spent the following year working on the internal and external sources of my fear of success. I improved my inner confidence by joining Toastmasters (see that story here); and I improved my external messages by consciously surrounding myself with people who gave me joy and support. It worked: the next year, I aced it, and got the promotion.

Research on our messages about money has uncovered that some people may have an inner upper limit they have set on financial success. Past that limit, they become uncomfortable. Unknowingly, they will begin to sabotage themselves.  According to Ken Donaldson, LMHC, an emotional intelligence expert in Seminole Florida and author of Marry Yourself First , the upper limit is set by “history, events, programming, parents, institutions and cultural messages.”

Financial professionals often see this with windfalls. When someone has been handed a great deal more money than they have had before, and are uncomfortable with their new position, they may spend it or give it away until they are back in the financial position where they first started. Still others allow the windfall to sit in an account, untouched, unwilling to acknowledge its presence. For some people, the windfall can represent a real or imagined radical change in lifestyle and in relationships. It may give them a new self-identity, and they need time to grieve their old one. Meanwhile, some in their circles will accept them as they are, while others try to drag them down.

To address fear of success, self-made or not, work needs to be done on both inside and outside factors. Two steps in this direction: First, write your feelings about your new position today, then imagine how you would like to be spending your life three years from now. Second, surround yourself only with people who bring you joy and support. This may mean saying “no” to people whom you previously said “yes” to, detaching from them in a loving way.

Keep the messages of confidence flowing – from the inside and out – to embrace success, rather than ruin it.

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Give Yourself a Break With Your Money History

When I was interviewing for my first job out of college, one of the vice presidents who interviewed me was Joy Turner. A woman on the move in her 30s, Joy seemed highly respected by her peers at the bank. She had a calm demeanor, and while reviewing my resume’, she noted my GPA was 3.2. Immediately assuming she disapproved, I blurted out, “Yes, I could have done better.” Her expression softened as she supportively responded, “Well, 3.2 is not bad, and considering you went to Davidson, don’t you think it’s actually pretty good? We don’t always want people with perfect 4.0’s.” I exhaled, relieved. I got the job, and later she became one of my favorite mentors.

No matter how good the financial statements look, many people I have met come in and say, “Yes, but, I could have done better.” When I ask, “Why do you think so?” the three most common reasons I hear are something like:

“I panicked and sold everything in 2008.”
“I trusted that financial person before I did my homework on them.”
“I haven’t paid enough attention to this stuff.”

I understand where they are coming from. It’s common to think we can always do better. I am just as bad at looking at my mistakes, my humanness, and blaming myself for not being “better,” as the next person.

But over time I have learned to reframe the question. Rather than play the “What if I hadn’t made that mistake” game, I can take inventory of many things I have done right that have led me to the life I have today. Why waste time inventing a future that never happened, where I had a 4.0, got a different job, or didn’t buy Enron in 1999? All you can do is resolve to be better and make better choices, now that you know the difference. Why not be glad that now you know the difference?

I am guessing Joy Turner thought someone who had learned that lesson, and was ok with it, would make better decisions in the long run. Try treating yourself the same way, and see if you don’t make better decisions, too.

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Financial Success: Too Hot to Handle?

Have you ever known someone who spent or gave away a windfall, seemingly believing they didn’t “deserve” it? Or were they scared to have more than they ever had?

In a recent meeting, a client shared stories of times when she committed financial self-sabotage. When she was on a tear, making what she considered to be “a lot” of money, she began to slow down. The success felt uncomfortable.

T. Harv Eker, author of The Secrets of the Millionaire Mind, talks about an “inner-money thermostat,” an inner upper limit we have set on financial success.  According to Ken Donaldson, LMHC, an emotional intelligence expert in Seminole Florida and author of Marry Yourself First , the thermostat is set by “history, events, programming, parents, institutions and cultural messages.”

At one point in my banking career, my thermostat got too hot, too. I was in line for a big promotion that involved a panel interview, and I blew it. People who worked with me couldn’t believe the same Holly showed up for the interview who showed up for work every day. Instead of feeling pride and confidence in the opportunity, I remember discomfort and anxiety. It made no sense.

Because I thought I might be given the opportunity again, I spent the following year working on the internal and external sources of my thermostat. I improved my inner confidence by joining Toastmasters; and I improved my external messages by consciously surrounding myself with people who gave me joy and support. It worked: the next year, I aced it, and got the promotion.

What if you know someone who seems uncomfortable with what they have either earned or been given? Try asking five questions:

1) What money messages do you remember from childhood?

2) Imagine you freely embraced all the financial success that comes your way for the next three years. When that occurs, how will you be spending your life?

3) What would you think about keeping a journal of every unexpected windfall and success you experience for the next 12 months?

4) What one thing could you focus on for those 12 months that would go the farthest toward your financial success?

5) What could you change in order to surround yourself only with people who bring you joy and support?

With awareness, time, and the right support network, financial thermostats can be reset so that no matter how hot it gets, you’ve got it handled.

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What We Worry About

It always happens right before I head to the airport.

Butterflies in my stomach.

Little waves of nausea.

Tight chest.

I have to tell myself to breathe deep.

“Calm down.”

“It’s going to be ok.”

What am I so afraid of? Unlike many, I am not afraid of flying. I am afraid of missing the plane.

If I could translate into dollars, I would calculate that my time and mental energy equate to a very high insurance premium (three hours of time and life-shortening worry) for a highly unlikely event (I will be so late I will miss the plane).

It seems we are hard wired to worry about things beyond our control. I cannot control when the plane leaves. It is leaving with or without me. We cannot control when a teenage child wants to get their driver’s license. Nor when a parent turns 90 and wants to keep it. These are somewhat scheduled events that we can fairly expect to happen, no matter what.

Scarier yet are random events. Market meltdowns, tsunamis, cancer, dementia, elections, terrorists, bonds, hackers…have I got your heart rate up? Butterflies? Tight chest?

Breathe.

Remembering and accepting what we cannot control…wasn’t there a prayer about that? My flying experience shows I still have a ways to go putting the Serenity Prayer into practice. In the meantime, I have an irrational need to leave home at least two to three hours ahead, to get to the gate at least an hour before the flight, and, when I get there, to sit where I can see the gate agent and the boarding door.

But the most overdramatized things I hear about (such as the Fed is too loose, hyperinflation is inevitable, or the dollar is doomed) tend to come from advertising-hungry news sources. All of these worries I am able to a) discount and b) ignore.

How can you do the same with media-induced angst? Pay attention to those butterflies. When you feel them, try asking yourself:
a) Where are they coming from? And breathe.
b) Can you do anything about it? And breathe.
c) Who is the source? And breathe.
d) Does that source have an economic incentive to create some drama/worry? And breathe.
e) Give yourself a gold star for getting this far. Then, of course, don’t forget to breathe again.

If you are still worried, see a financial professional about what kind of costs – money, time, or energy – you are willing to pay to offload your perceived risk. Or, see a mental health professional about getting to the root of the worry – it might be stemming from something else. Do whatever you need to to find the serenity to accept what you cannot change, the courage to change what you can, and the wisdom to know the difference. Even if it’s only about your money.

And when you get there, let me know. I might need a ride to the airport.

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Market Froth and Making Meringue

market froth

For Thanksgiving, I had one goal: to make a lemon icebox pie that tasted just like my grandmother’s.  I had tried before, but half the battle with lemon icebox pie is the meringue. My grandmother’s meringue had stiff white peaks. Denver’s airport, with the manmade rooftop peaks mirroring the real ones in the distance, reminds me of her lemon icebox pie. My first try with meringue several years ago ended with a gooey white puddle on top of the filling.

“You didn’t beat it long enough,” one family member said.

“You need to add cream of tartar,” a restaurant-owner friend told me.

“You can’t have ANY water in the bowl,” Mom said.

Determined to get it right the night before Thanksgiving, I made my filling, heated my readymade graham cracker crust in the oven, and waited for it to cool. Then, it was meringue time.

I cleaned the bowl and dried it. And dried it. And dried it. I carefully cracked and separated the eggs. Pouring the whites into the automatic mixer bowl, I added the sugar, vanilla, and cream of tartar. After turning on the mixer, I watched the whites swirl in the bowl as the blades scooped and blended the sugar.

Then my phone rang.

It was a friend. I really wanted to talk to her but the mixer was noisy. I explained what I was doing, and she offered to hang up, but I decided to go in another room.

Absorbed in our conversation, a while later I realized I had forgotten about the mixer. I muted the phone and hurried into the kitchen. As I turned the motor off and pulled the blades out, I wondered if meringue could be overbeaten. But it was still gooey.

When I first ran into the kitchen, I was worried about how long it had been beaten. But when I saw the goo, I wondered if the peaks would ever come. What if I messed it up again?  What if I make it worse by continuing? Or the first advice was right, and it hasn’t been long enough? How will I know? Little panic attacks burst through my stomach.

Meringue is Like Markets

Returning to the phone conversation, I stated with an air of false confidence, “Well, you know, with meringue, you have to wait what seems like a long time for it to turn out right.” And then I added, “It’s like….money. You have to…just… WALK AWAY.” She’s a financial planner and she thought that was funny.

But it is true. Particularly with market conditions in what might seem like froth, many begin to wonder how they are supposed to know when “it” is ready. What if this is the peak? What if it’s not? What if I regret whatever I decide? What if I regret not deciding? Little bursts of panic arise from uncertainty, whether it’s markets or meringue.

In times like these, it helps to have a recipe, and a professional, to keep emotions from ruining the plan. It also helps not to look too often at the results.

In the case of my meringue, I decided to stick to the prior advice and wait it out. Rather than hover over the mixer, I walked out of the kitchen to give my friend my full attention.

When we were finished, I returned cautiously, turned the mixer off and lifted out the blades. The bowl of goo had frothed into white peaks rivaling the Rockies. Browned a little in the oven and refrigerated overnight, the pie turned out as I remembered.

You know, we might not need so many financial professionals if we could make achieving financial goals taste that good.

Check out our suggested Resources, books by Holly, or schedule a call to learn more.

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Come On In – The Water’s Fine

It’s summertime, which, for many families, means time to go to the beach. Being a Florida kid, summers at the beach were almost mandatory for me. Every year we saw the same families at the same beach and played with their kids. All day, every day we kept busy making sand castles, collecting coquina shells and sand dollars, fishing with sand fleas, and swimming in the bathtub temperatures of the Gulf of Mexico. I enjoyed playing with my sisters and the kids, but it was really cool when the moms and dads would get in the water, pull us around on rafts, bait our hooks, or race to the sandbar with us.

“Jaws” came out in June 1975. Because I was only nine years old, I was not allowed to see it. When we got to the beach that year, the kids were in the water, but not as many adults. We asked them why they wouldn’t come in, and some admitted, laughingly, that they were scared because they had seen the movie. “BUT IT’S JUST A MOVIE,” the kids screamed. Yet, because the adults were so scared, I began to worry if I should be scared, too.

Later in life, I came to know the source of the adults’ fear as “probability neglect” stemming from “availability bias.” In better words, if it is emotionally intense, vivid, and easy to imagine, we view it as far more probable than it really is. When we obsess about its possibility, we reinforce our imagination, and make the problem worse. I also came to know the source of my own fear as the herd mentality – if they are all running from something, then I better run, too.

Movies are in the business of vividness and emotional intensity. So is much of today’s media. The danger in this is that many of us are led to believe that unlikely events are far more likely than they are, simply through the suggestion of a scary image or scenario. While shark attacks still loom larger with beach goers than they statistically should, what other fears do Internet bloggers and some media outlets prey upon? World domination by China. Collapse of the dollar and widespread mayhem. Hyperinflation.

Remember the markets in 2008? Many retirees sold their portfolios in a panic, believing the financial world had truly ended. Media didn’t give them much else to consider. Herd mentality – how could the rational thinkers have had their voices heard? It was nearly impossible. Some days, it still is.

How do we check our fears at the door and strive for wise, rational decisions? One way is to gain experience. The best experience is the kind that repeats similar sequences of actions and provides immediate feedback on outcomes. Think of firefighters and emergency physicians. They get repeated exposure to similar events, with constant feedback on their progress. After a while, they know too much to be scared.

What are you scared of? Can you jump in the water and gain enough experience to learn about it?

Another way to reduce fear is to tune down the mainstream media. Check their sources. Choose your channels mindfully. Do your own research. As a nine year old bookworm, when I got home, I looked up “Sharks” in my Encyclopedia Junior Brittanica. I also read “Jaws.” Great whites are rare in the Gulf of Mexico. There was extremely little chance that one would darken our warm, shallow swimming zone. But on my first beach day the next summer, toes inching from the sand to the surf, I still thought about it.

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Nudging Time and Money

Many people have a spare change jar, where they accumulate change until the jar fills and then take it to the bank or change machine to turn into bills. For them, this works as a kind of forced savings. Banks’ keep-the-change programs, where debit charges and checks are rounded up to the nearest dollar and the difference is transferred to a savings account, are based on the concept that saving in small increments adds up to big balances over time.

Ricardo Young, a 55 year old assistant grocery store manager I met recently, found the jar works better than a bank account. Every week, he purchases ten-dollar rolls of quarters from his employer, takes them home, and empties them into his change jar. For Ricardo, this works as a way to save an extra forty dollars a month. At today’s interest rates, he is hardly missing out on having the money in the bank. If this kind of discipline is what helps him not spend it, I am all for it.

Many of us have tricks we have used to keep us from doing what we should not do, and to encourage us to do what we should do. Richard Thaler and Cass Sunstein wrote a book on this subject: Nudge.

In the 2000s, a bank in the Philippines offered a quit-smoking nudge. Smokers who wanted to quit would open an account with a dollar, then for six months would deposit the money they would otherwise have spent on cigarettes. At the end of six months, the account holders were given a urine test. If the test was negative, the smoker got the money back with interest. If the test was positive, the money was donated to charity. A study by MIT’s Poverty Action Lab showed those who wanted to quit were 53 percent more likely to achieve their goal using the bank’s program.

A simple but powerful example for me was a time management nudge suggested by my husband, Skip. I used to have a big long To-Do list that I carried with me everywhere I went, like luggage. One day I was complaining about how long it was and how I never seemed to get everything done. He took one look and said, “Well no wonder – you have a year’s worth of work there.”

He suggested I calendar each task, and schedule more time for each item than I think it will take. I had more than 120 items and started trying to put them on my calendar. I found out I could realistically only put 3 to 5 per day. This forced me to prioritize, but also to recognize that many of the tasks were not that important. My time was my limiting factor.

Now when a calendared task is staring me in the face, I am more likely to do it. I think his exercise helped me recognize I have to choose my tasks wisely, because I don’t have forever. Funny how all my life I have recognized money is finite, but often failed to remember that time is, too. In fact, we can find ways to make more money, but we can never make more time. We can only make more life with the time we have.

Are you as good at saving your time as you are at saving your money, or could you use a nudge in one direction or the other? What time or money nudges have worked for you? Comment here or drop me a line at holly@hollydonaldsonfinancialplanner.com.

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You Have the Right to Ask the Doctor to Wash His Hands

According to David Lazenby, Ph. D., the rate of medical professionals’ hand-washing in one hospital rose to nearly 100% when the following sign was posted in waiting areas and patient rooms: “You Have the Right to Ask Any Medical Professional to Wash His or Her Hands Before Treating You.”

When I heard this from Dr. Lazenby at a conference recently, I thought about a sign that could be posted in any financial professional’s office: “You Have the Right to Ask Any Financial Professional to Understand Who You Are Before Making Recommendations.”

One reason doctors need to wash their hands is to protect you, and them, from the last patient’s potential problems. Part of practicing a profession is crafting diagnoses, prescriptions, and advice that is unique to each presenting patient or client. Yet the financial industry has chosen largely to mass produce diagnoses, prescriptions, and advice.

Kathy and Kyle walked into a brokerage office with questions about a seven-figure inheritance from her father. Not knowing where to turn, they chose the national firm that already held her father’s account. The representative asked some questions, then produced a laminated pie chart suggesting how to allocate the cash. Kathy and Kyle asked a few questions of the broker. He answered them. They were going to consider his proposal. As they stood to leave, Kyle reached for the chart. The broker, panicked, grabbed it back, and said, “Oh, no, you can’t take that. I need it for my next client.”

When a financial representative shows the same laminated pie chart to every client, they are not selling professional advice. They are selling a professionally assembled financial widget disguised as advice.

Why, as a society, do we tolerate medical staff who don’t wash their hands and financial staff who assume all clients look alike? Why do we expect professional service but tolerate something less? The next time someone offers you advice but has not clearly understood you and your issues first, then demand better, or find someone else.

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The Painting Gene

I did not get a painting gene.  By painting, I do not mean the artistic kind, requiring creative talent and the ability to synthesize the world as you see it into a one-of-a-kind colorful expression.  I don’t have talent even close to that. No, I mean the kind of painting you use on a wall in your home.  One color, applied with a roller and brush. How can I manage to make a simple task so hard?  I discovered the answer this week.  My financial gene usurped my painting gene.  This means I am genetically incapable of putting enough paint on the apparatus, whichever it is.  Unconsciously and automatically, I want to use as little paint as possible so I do not have to buy more.

Experienced paint-people know this is a disaster waiting to happen.  When you do not use enough paint, your wall becomes a collage of streaks and stripes of varying shades and shapes, instead of an uneventful homogenous surface. To fix it you practically have to call in a professional.

Thank goodness I was not painting a wall.  I was only priming our subfloor to prepare for carpet.  My husband of 25 years knows better than to put a roller in my hand to paint anything other than something that will be covered up shortly.  He got the painting gene.

So we both know (after some trial and error) where I am at my weakest.  But that does not mean my financial gene does not serve me well in other venues.  The trick has been figuring out when to let it do its thing, and when it needs a leash.

With all of our money habits and attitudes, in fact, there are times when they contribute to our success, and times when they hinder us.  Before we recognize that difference, we risk painting a financial collage like my subfloor –  varying streaks, stripes, shapes, and shades.  Instead, rather, a financial picture could be an uneventful backdrop to simply living a life.

Sometimes it is hard work to discover and admit when we are getting in our own way, but my husband and I have learned that once you map your “talent” genes, you require fewer professionals to fix the mess you made.  It costs less overall, and you stay married longer.

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New and Improved?

Over a century after the invention of the electric washing machine, why do marketers still put “New and Improved” on laundry detergent?  Because…. it still sells laundry detergent.  Which says what about us as consumers?  We like New and Improved.  In our innovative culture, we do not just like it.  We expect it.  When something actually is New and Improved, our world gets better.

Do we expect the same of ourselves?  Becoming New and Improved?

Looking for this answer myself in 2012, I asked, “What seems to bring the most happiness in my job?”  and resolved to do more of that.  From time to time, people tell me they sleep better, or have fewer arguments about money, because of some simple reminders about the plans we have developed together.  To get feedback like that makes my whole year.

It seems that people appreciate reminders to not let emotions hijack a well-laid program.  Despite our best preparation and planning, we all have moments of doubt, where we irrationally fear that we are missing something in our financial plans.  At those times, we are at risk of doing something we will regret.  Not immune from emotions, I have those moments, too.  To get through them, I take a few minutes to run my fears through a program that constantly tests new assumptions. You could call it the “rational wringer.”

Occasionally after a big news story about the economy, I receive an email, a phone call, or a question expressing doubt, fear, or outright panic.  We run the fear through the wringer program, remembering that emotion, not the markets, is the biggest risk to the well-laid plan.

However, even though I know fear, doubt, and panic are normal and human, I feel like I have missed something when I get that phone call.  Maybe there is a way to create “constant coaching,” so those moments might not happen as much.  Perhaps, the coaching could be more accessible, more frequently.  In 2012, I’ll be looking for and creating New and Improved formats for clients, newsletter and blog readers, and even people whom I may never meet.  Hopefully everyone can use them and sleep better, too.

New and Improved Holly P. Thomas, LLC:  Now with scrubbing reminder bubbles!  Coming to a website near you….

What could you do in 2012 that would reinvent your life, or, perhaps recharge your batteries?  I would love to hear from you.

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