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Common Financial Crossroads & How to Get Through Them



Are you trying to improve your financial situation, but feel stuck? Are you wondering if you should pay down debt or start saving? Even if you had money to invest, where would you invest it?


You are not alone in this situation. Although most people don’t like to discuss this problem, it is a common experience for many of my clients.


The good news is that there’s a way out of your situation. Keep reading to learn the 3 common financial crossroads and how to get through them.


#1. Where should you start investing your money?


Congrats! You have earned and stored away some money. Now, it’s time to figure out how to invest it. Before you start investing, ask yourself:

  1. What is your intention with investing?

  2. What is the timeframe you are using?

  3. What is your risk level?


Then, consider your circle of competence. This includes the products, companies, industries that you know best because you are familiar with these goods and services yourself.


If you don’t know what is within your circle of competence, talk with investors you know or a financial coach, like myself. We can brainstorm what is within your knowledge, and you’d be surprised how many companies you know are available on the stock market.


It’s important to invest in companies that are within your circle of competence because this will allow you to stay on top of your investments. For example, if you were investing in the stock of a company and you have always been a fan of their products. But one day, you notice a huge decline in their quality.


You can use this first-hand knowledge to determine whether or not you’d like to exit this investment. This is why it’s important to invest within your circle of competence, so you can be aware of the performance of your investments.


#2. Should you start budgeting?


If you’d like to control your expenses, then budgeting may work for you. Or, it may not. It all depends on your personality. Before you start budgeting, I would ask yourself:

  • Have I budgeted before?

  • Did it work for me?

  • What has worked for me?


There are a lot of financial gurus that advocate for budgeting. Personally, I have no preference whether someone budgets or not. At the end of the day, it is whether or not budgeting is sustainable for you.


Is budgeting something you can implement into your daily lifestyle?


Some people like budgeting. They like numbers and tracking every cent. They like working towards a goal. Some people hate it. Some people prefer the big picture and don’t like budgeting details. Looking at their bank statements every month is unnatural for them.


There’s not a one size fits all financial strategy. The goal is to know your personality and lifestyle, and build habits around your natural behavior. This will allow you to incorporate financial habits that will work in the long-term.


For me, I prefer a hybrid approach. I’m a numbers person, but I don’t like tracking my money down to the cent. For anything I spend below $50, I don’t track. For anything above $50, I place it into an Excel sheet to track.


Know what works for you and set limits for yourself.


Think about it: if you start a habit that causes stress and anxiety, then there’s no point to even consider it since it is unnatural for you. Work with the current, not against it.


Don’t beat yourself up for not keeping the same financial habits as someone else. Their habits are irrelevant for your success.


Understand your own lifestyle and incorporate financial habits that work with your lifestyle.


#3. Should you pay down debt, or start saving?


One of my clients has student loans and credit card debt. She asked me if she should pay down her debt first, or start saving.


If you are in this situation, I want you to start thinking about how you have functioned before. What’s motivated you to achieve a goal?


People achieve goals in two main ways: AWAY from something, or TOWARDS something.


Let’s think about savings goals. Some clients are motivated when they see they have saved $1,000 or $10,000. This motivates them to keep saving. Whereas some other clients are motivated by clearing debt off their credit cards.


So, which one is a bigger motivator for you? Does saving or paying down debt motivate you more? Pick one and prioritize it. This will give you the momentum you need to reach your financial goals.


You can also use a hybrid of both, too. Again, it’s all about knowing what motivates your personality. There is never a one size fits all financial strategy.


Be aware of your motivators and put a strategy into place that fits your unique personality.


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