by Susan Zimmerman, ChFC, CLU, LMFT
More often than not, the real work of financial advice is helping clients reach acceptance about their financial realities. This is not a technical issue as much as it is a psychological one. Let’s say you have prepared a detailed written cash flow statement, budgeted realistic expenses and calculated the needed savings amount to accomplish the clients’ stated future goals – all with their input. A few months later you find they have more of a knack for sabotaging their own plans than securing them.
So what is going on here? Their plan is based on their goals and resources. Why do they sabotage it? Is this a cultural challenge, a family challenge, or an individual one? Americans do face the challenge of abundant surroundings and many ways to acquire the immediate material goods that dance before them in thousands of weekly commercial messages. The messages to spend far exceed those that preach savings.
What is often never discussed is what clients expected of their financial life when they first became working adults. What did they picture in their adult financial life? Did they see themselves as being wealthy, middle class, or struggling endlessly? What values did they embrace? Were their thoughts about the future barely a flicker, or were they detailed mental visualizations? Has financial management been about what they expected, or has it been easier or more difficult?
What often underlies clients’ apparent inability to live within their means or fund their goals, is the unconscious expectation that money matters will take care of themselves. By the time they realize money does not take care of itself, their lifestyle expense makes it exceedingly difficult to squeeze in adequate savings or even manage their debts.
What is going on is a cultural, family and individual psychological challenge. All too often, adults carry unrealistic expectations about money management. Within that bundle of expectations are beliefs that steer decisions in an unhelpful direction. Beliefs such as, “I deserve this because I work so hard” or “There’s never enough money” or “I’m supposed to know how to do my own investments” all can lead to overspending or poor investment decisions.
This is a sensitive issue, but an important one that can be brought up without igniting defensiveness. Therapists ask questions of clients that are labeled “taking their temperature.” The simplest way to “take their temperature” is by asking a 1-10 scale question. An example would be to ask, “On a scale of 1-10, how important is it to you to eliminate this problem?” Or you could fill in several financial planning needs to help prioritize implementation recommendations. Examples:
- On a scale of 1-10, how important is it to you to start adequately funding your retirement savings?
- On a scale of 1-10, how important is it to you to insure your dependents’ financial security in the event of your death?
- On a scale of 1-10, how important is it to you to reduce your debt?
- On a scale of 1-10, how important to you are your emergency cash reserves?
- On a scale of 1-10, how important are vacations to you?
I recommend picking three categories that tend to compete with each other in cash flow management, to help clients prioritize which area they are willing to commit to first. It also helps them fight their own temptations to sabotage their plans. If things are going well in implementing your recommendations, it can be both fun and helpful to ask a final 1-10 question. It can be done in a light-hearted way, and then add a serious comment:
“On a scale of 1-10, how committed are you to NOT sabotaging the plans you’ve put in place today?” Give them your friendly but serious smile. Pause.
Then let them know that it’s the consistent “care and feeding” of their plans over time that makes reaching their goals a reality. Compliment their actions and commitment to maintaining their plans, not giving in to temptations that upset the projections, and establish a next meeting time to review progress. Congratulate them and tell them to celebrate by expressing gratitude for the things going well in their lives.