In honor of Financial Literacy Month we have rolled out 2 new Global Call-In Coaching programs that address some of the most critical financial issues we may face in our lifetimes. While we recognize that there is still a way to go for some folks to re-establish the financial foothold they held pre-crash of 2008 - 2009, we also would like to point out the tremendous resilience of our economy as today we watch the stock market continue its 72% advance from the frightening March 9th lows of 2009.
Just a little over a year ago, I remember sitting with a client who was ready to capitulate to the panic and fear mongering that was at its zenith in the headlines. The client was also getting advice from her CPA that it was time to throw in the towel.
Read on to see what financial lessons can be learned from this story with regard to Financial Literacy Month...
The first lesson is a lesson in behavioral science and that lesson being: when the hysteria over a crisis is at its greatest climax, that is usually an indicator that things are about to turn tide for the better. Unfortunately, this is where most of us mistakenly capitulate to our fears, only making matters worse by following the lemmings right off the cliff.
The 2nd lesson, and one that may seem counter-intuitive if not downright heretical, is that CPA's are notoriously poor market experts. Just because they crunch numbers all day doesn't mean they understand markets, market psychology and the fundamental economics of 'what goes down must eventually come up'.
The 3rd lesson is one of statistical analysis or probabilities. What's the likelihood that anything so disastrous will occur on the heels of something ...well, .. so disastrous? For those who recognized the March 9th low as a turning point and were able to commit new money to investments, they have now enjoyed the ride of the 72% advance, making for some snappy profits on those investments.
The 4th lesson is: Experience Makes a Difference. My client who had never lived through a market crash is now well-versed in the experience. While not a welcome experience, she knows now where the pitfalls are, and she knows a little more about what to do and what to expect in the event of a financial disaster striking again. Those who were counseling her to "jump" from the proverbial window were either too young or too inexperienced to possess that frame of reference as well. Always evaluate and scrutinize carefully your sources (and their sources) - even the media mostly had it wrong, owing to their collective lack of long-term experience with market behavior.
The 5th lesson is to be filed under: Eyes Wide Open. There's no room for complacency when it comes to your money, investments, and overall financial health...ever! Financial awareness, education, engagement and empowerment are a life-long journey. They're also your responsibility and no one else's i.e. your employer, your financial adviser, the government, etc. This can be as simple as having a regular game-plan that you follow for vigilance and learning. Even if you have professional management, we teach clients the importance of managing their managers.
There's a saying borrowed from the Old West which still timely resonates in the new Millennium: "Talk is cheap; It takes money to buy whiskey". When it comes to your money, make sure the person doing the talking has their own stake in the game and one that's equal to, if not greater, than yours. Develop your trusted sources and stay involved. The most oft-repeated phrase I hear from my financial coaching clients is: "What Was I Thinking? I wish I had stayed more involved!" So make your plans for financial preparedness right now - no matter how small the steps may be. You don't have to become a financial expert in order to mitigate some financial damages, but you do have to become an engaged and proactive participant
And, lastly, please remember: It's Your Money- Own It!!
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