Most personal finance books advise you to save, cut, pay down, and save some more. But precious few of them ask the bigger, more important questions: What do you want to do with this money?
Most personal finance books advise you to save, cut, pay down, and save some more. But precious few of them ask the bigger, more important questions: What do you want to do with this money? What do you hope to achieve in your life? And how can the former help you make the latter a reality?
In the new book PICTURE YOUR PROSPERITY: Smart Money Moves to Turn Your Vision into Reality, financial professionals Ellen Rogin and Lisa Kueng draw on the latest psychological studies to help readers create financial plans that will help them meet their most important goals, whether those are spending more time with friends, traveling the world, buying a house, saving for college, starting a business, or retiring at age 65. Written with women investors in mind, the book walks the reader through a series of exercises to help unearth exactly what she needs, wants, and values in all parts of her life, and the timeframe for making these goals a reality. Then they go into greater detail with strategies for getting there, including investment plans, savings techniques, and more.
A Conversation With the Authors
Q: Why did you want to write this book?
A: All too often money, financial planning is discussed in boring or confusing ways. This has caused a lot of people to feel really disconnected and uneasy about managing their money. We think this is especially true for women who traditionally haven't been taught how to deal with money in ways that resonate with them. When financial education is geared to women it often starts with scaring them. They hear things like: "You know, women earn less than men," "When you're out of the workforce to have kids your retirement benefits are less," and "Women are too conservative when it comes to investing." This is so demotivating! It would be like a tennis coach telling a player "Your backhand isn't very strong, and you don't run fast enough, and your serve, well..." Women are awesome when it comes to money – and our book is a tool that reinforces that idea.
We wanted to offer a conversation about money that is engaging, interesting and even funny at times. People make bad decisions when they focus on fear. Instead we offer an approach based on resilience, calm, and possibilities.
Q: How is your book different from other similar personal finance books?
A: Instead of being granular and micro-focused on investing and financial planning tools, PICTURE YOUR PROSPERITY is big-picture, engaging and practical. We use brain science to give the readers an effective process to create their own visual financial plan. We call this a Prosperity Picture. It's a method of selecting images representing the life the reader imagines for themselves, their family, and their community. They place the pictures in a frame organized by time frame and the financial resources needed to accomplish their goals. (We include some images in the book to get them started.)
The Prosperity Picture helps the reader get clear on what they want to create for themselves both now and in the future. We then walk them through a process to turn this vision into reality. We cover both tactical investment strategies as well as the inner work people need to do to reach their goals.
do you feel are the most common roadblocks people have to managing their money?
A: The most common roadblocks are the ones people set up for themselves. From a very early age we develop our attitudes and beliefs about money. These beliefs may be supportive or they may be liabilities. And often people are unaware of their internal beliefs about money. For example, growing up someone may have heard over and over to "save for a rainy day." That's a helpful belief to have. But maybe someone else heard that "rich people are crooks". Well, it's hard to grow your wealth if you think "rich people are crooks"!
Q: We hear a lot about women becoming more affluent and financially savvy today—is this truly a new development, or are people just paying attention to it more?
A: Women's economic power has been growing for a while now. It's estimated that within the next 40 years, more than $25 trillion will transfer into the control of women. That's an enormous number (picture $1 bills laid end to end going from Earth to the sun and back...twelve times)! Women are clearly taking charge of their money and investments.
Q: Do woman have special considerations to keep in mind when it comes to finances?
A: We've found through our research that women think about their money more holistically than men do. They want to know what their money will do for them, their families, and their communities. They look for advisors who will care about them as a whole person, not just about their investments. This bigger-picture, longer-term view is quite helpful in actually reaching financial goals. There's a lot of attention out there focused on negative issues like the fact that women are likely to live longer and earn less than men, and therefore have to fund a longer retirement with less money. Those facts are true, but we have found that if, instead of focusing on those things, we focus on the positive, the things that women do well, those other issues get taken care of along the way. And it's much more inspiring!
Q: How did you first develop the idea of a Prosperity Picture?
A: Most people think in terms of pictures, and studies show that when you use visualization techniques, you increase your ability to hit your goals. So, we created the Prosperity Picture as a tool to train your brain, and to act as a foundation to build a financial plan. We've had wonderful response from workshop attendees when we walk them through the process of creating a Prosperity Picture. Not only is it fun and engaging, but it often elicits goals people hadn't thought of before.
Q: How do you suggest readers undertake the visualization of their financial goals?
A: The first step is to actually create their Prosperity Picture. We wanted to make this as easy as possible, so we've given them a set of 32 images to begin the process. The next step is to spend time thinking about each image. Picture in your mind's eye what it represents to you. Where are you when you think about this image? Who are you with? What are you talking about? What do you smell in the air? Add as many details as possible. The next step is to imagine what it will feel like when this experience is actually happening. All of this helps to bring meaning to the pictures and gives people the "why" for planning their finances. We suggest people hang their Prosperity Picture where they can see it several times a day, such as on their refrigerator or in their closet. And we encourage them to spend a moment or two each time they look at it to get in touch with their goals and how they feel when they imagine them.
Q: How can couples use your book together?
A: People are so busy that many couples never spend the time to talk about where they really want to go in the future. Couples can start by creating their own Prosperity Pictures and then sharing them with each other. (In the book we give readers a password to use on our web site to download images to share with their partners.) Between us we've been married for 32 years and we both learned things about our husbands that we didn't know before by going through this process! Couples can also create a joint Prosperity Picture. Once their collaborative plan becomes clear there are specific action steps in the book they can walk through together such as setting up automatic saving and giving plans.
Q: What are the top things people can do today to start reaching their financial goals?
A: We've talked about gaining clarity through creating your Prosperity Picture. Another important step is to look at where you are right now in your financial life and consider whether you are satisfied. For example, do you know what assets you own and what money you owe? Also, do you know what money is flowing in and what is flowing out? Most people have no idea what it costs them to run their lifestyle.
One of the best steps people can take—after they are clear where they want to go and what their starting point is—is to set up systematic savings plans. Money comes out of your checking account or paycheck on a regular basis and is automatically sent to a bank account, investment account, or retirement plan. Everyone we've ever met does better with savings when it happens automatically. Most of these plans can be set up with as little as $25 per month.
We also suggest people set up automatic giving plans. This means taking a percentage of your income and donating it to people, causes, or organizations that are important to you. When you focus some of your attention and financial resources on helping others, you open yourself up to more prosperity. This is a wonderful way to reduce worry about money and there are often tax breaks as well.
Q: You describe financial goals very broadly in the book—it's not just about saving for retirement. Why is that?
A: Certain goals get the lion's share of the attention when it comes to financial planning. Retirement is always on the list, as is saving for college for people who have kids. We see money as having a much bigger role- it's really a tool to help create a wonderful life! This may very well include saving for retirement, but it also may include exploring the world, using your money to make a positive difference to people and causes you care about, or having enough saved to let you explore a particular passion. Everyone has their own individual definition of prosperity, and thinking about your money is so much more exciting when it is tied to creating an amazing life. All too often people look at their money as something separate to be managed, like eating your vegetables. But when it's viewed as a tool to be used for good, it's much more motivating to take charge of your finances.
Q: Your book in some places encourages the reader to work with a financial advisor—is it necessary?
A: Working with a financial advisor can very helpful for many people. There are a lot of different areas that come into play when it comes to managing your financial life. There are investments, taxes, insurance, estate planning, perhaps company benefits, and charitable giving strategies, just to name a few. You may be someone who loves to do research and learn things on your own, in which case you can certainly handle your money without an advisor. But many people don't want to do all of this on their own. For example, Ellen's a CPA, but she doesn't do her own taxes. There are lots of changes in the tax code and this is not her area of interest. She's happy to pay someone qualified to help her with this. In fact it may actually save her money in the long run as she can count on her accountants to find deductions and avoid mistakes. It can be similar with a financial advisor.
Q: In your workshops and meetings with clients, you feel that they get a lot just out of the process of creating their Prosperity Picture. Why do you think that is?
A: The process of creating a Prosperity Picture is fun, engaging and enlightening. It's also unexpected – many people expect to be bored when it comes to talking finances. We show them that an important part of being successful with money is being clear on where you want to go. This process gives them insight into themselves. In the workshops they can share with others. It's about changing the conversation when it comes to finances from a jargon-filled, anxiety-inducing, confusing topic to one where people know they are in control and already have much of the information they need.