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Your Personal Financial Crisis – and Two Good Questions to Avoid It

how-to-avoid-personal-financial-crisis

I’m writing a short rant about money tonight. The reason is not just what you might think: it’s true that the global events, and the crisis in Greece, causes me some concern. But I’ve more reasons to worry, and so should you. Do you know what is the state of your personal finances? Really?

The bad news: you think you know money, but (in the UK) you don’t

There was a study quoted the other day in the Guardian, and the short story behind it is: we don’t know as much about our money as we think we do. When it comes to big life events (raising kids, retiring, starting a pension pool) our estimates are way off. And this brings us down: the same article suggests that the emotional equivalent of such poor financial awareness is that of being unemployed. So even whilst earning good money, we can feel like we’re losing our job – which, with poor financial planning, may not be too far removed from the truth.

Good Question One: Where can I learn more about my money?

This has never been easier. I remember a financial advisor I spoke to, back when it was really hard to get good research done about these things online. It felt intimidating and dodgy – mainly since the advisor was on commission with investment companies. Now you can learn a lot more. Quality impartial advice is available to you online. I enjoyed Khan Academy’s courses on economics: they were explained so that even I understood things!

This is the obvious starting point. The more you know about money and finances, the better your chance of avoiding own financial crises.

Good Question Two: Am I surrounded by people who are good with money?

You can keep banking with companies which needed to be bailed out, fined and sold off – if you choose to. Or you can switch your accounts to people who care more about how they do business.

You can hang out with people who make a virtue out of maxing out their credit card debts. Or you can spend more time with folks who are a bit more frugal than that.

Look, I know it’s not always even a choice. Sometimes there’s just one lender, just one offer, just one bunch of guys around you, and whatever they do, you’ll end up doing.

But if there is a choice, think about it. Money decisions are made dozens of times every day, and month after month, year by year. It’s not about being mega-brainy about budgeting. It’s about being in a situation where financial choices are made in positive contexts. To put it bluntly: an advert yelling at you four times an hour on every radio station is not a positive context.

Guys, this was more of a rant than a blog post: how would you tackle the problem of impending personal financial crises? How are you doing? Answers on a postcard (or Twitter, whichever you choose.)


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