Overcoming financial hurdles
FARGO -- We know we should save more, spend less and pay down debt, but something stands in our way.
Financial hurdles can derail the best intentions with our money. They're the obstacles that cause us to say, "I can't save, because ..."
Often, these hurdles are in our heads instead of our pocketbooks.
Several financial experts were asked about financial hurdles, excuses they hear from their clients and tips to overcome them.
Terri McLean, a trust officer with First International Bank and Trust in Fargo, says some financial hurdles are largely a result of our culture.
"Our culture doesn't drive us toward discipline," she says.
McLean often compares personal finance to physical health and fitness. We all know that we should eat healthily and exercise regularly, but we still don't always make the best choices. And each small decision with our diet and our wallet can add up over time, she says.
"If you take control of your money, you will have it. If you don't take control, it will control you," she says.
To overcome a lack of financial discipline, people need to define their needs, McLean says. "You've got to identify what things are optional and what's luxury."
Parents should also empower children by giving them some money-management decisions, she says.
Here are other common financial hurdles, and how to clear them.
'I don't make enough money'
Financial advisers hear it all the time.
"I don't have enough money to pay my bills," clients say. Or, "I don't have any extra money to save."
Usually, they do.
"We live in a society with a lot of wants and material things," says Hannah Sorenson, a financial associate with Thrivent Financial in Fargo. "Going to Starbucks every day is a norm for so many people. It's priorities. Do you want to have that coffee now, or do you want to be able to do something when you're retired?"
Duane Emmel, a financial counselor with the Village Family Service Center in Fargo, has had clients earning $12,000 a month tell him they don't make enough.
"Usually it's not the amount of money we make, it's how we use the money we make," he says. "Whatever money we have, we just have to find ways to use it effectively."
'I don't have enough time'
In a fast-paced world, it's easy to say there isn't time to sit down and look at your money.
That's when Emmel suggests a two-minute budget.
Clients are immediately intrigued, he says, because everyone has two minutes.
First, clients list their take-home pay from all sources. Then, they write down their expenses in order of importance and subtract each one from the income. People's lists will be different, though housing, food, transportation and insurance will likely top most.
"It's a very quick assessment of where my money is going, and what actual money I might have left over for entertainment, eating out, clothes," Emmel says.
The exercise puts finances into perspective.
"When my priorities are paid, it seems like my life is working. It's when I get behind on my priorities that it feels like life unravels," he says.
'I hit a detour'
A job loss, injury or death can quickly devastate personal finances if we haven't prepared for life's unfortunate events.
"You end up not able to pay your bills so you have credit card debt," Sorenson says. "It's much more difficult to come back from these hurdles."
Overcoming this obstacle is best done in advance.
Stashing an emergency fund equal to several months' expenses, looking into supplemental disability insurance policies and life insurance can make those hurdles easier to leap, she says.
'I don't know how'
In some cases, the financial hurdle is a lack of knowledge.
People don't understand how a budget works. They don't know the difference between Roth and Traditional IRAs. They're not sure what the interest rate is on their new card, or how interest is calculated on a mortgage.
"Some people don't have the financial knowledge they should have before they get involved in these things," Emmel says. "Whoever you are, you need to ask a lot of questions. If you don't get the answer you're satisfied with, seek help. Find someone who can get answers."
Joe Larson, a senior credit counselor with Family Life Credit Services in West Fargo, says increased technology, like online statements and debit cards, have given people the excuse to not interact with their money.
He describes balancing a checkbook as a "lost art."
"There's a generation at this point that is losing the hands-on money management skills of just simply pluses and minuses," Larson says. "It's amazing the amount of money that's being wasted in our society based on simplicity and convenience."
He encourages clients to take a paper-and-pencil approach until they have a good handle on cash flow and expenses.
"The people who do that, they can see the results really quickly," he says. "We can't expect our apps to do everything for us."
'I'm bad with money'
Negative self-talk, like "Budgets don't work for me," "I'm a spender" and "I don't do well with numbers," block people from making progress with their money.
Those things may be true, Emmel says, but then it's up to the individual to make changes. Otherwise they are destined to live a life of financial stress.
"If you keep telling yourself you're bad with money, you're basically giving yourself permission to be bad with money. Sometimes there has to be an attitude adjustment," Emmel says.