Five Talent Financial Series: Introduction

Share my Talents With You

Over the next several posts I will be presenting a mentoring series on money management and what I have come to understand over my banking career as the 5 principle talents to financial success. In this post I will summarize those five talents and each one will be fleshed out in their own unique post in the days and weeks following. I stand on the shoulder of giants that have come before me in the industry and understand that one of the main ways that a community can thrive is if its members are able to disseminate best behavioral practices to solidify their spiritual, mental and physical conditions. In an era of market, geo-political and personal life instability we must all build our houses on a foundation of stone and not sand, and this series aims to provide the bricks to do so.

Talent 1: Your Mental State Does Matter

The first Talent underpins the whole process and allows us to look at how our personality, behaviors and beliefs are obstacles to our own success. The obstacles that are presented to us in life are given to us for a reason. Just as silver is refined by the refiner with intent to remove impurities, we must first recognize the burden that our own defects press on us and those that are in our area of influence. The bad things that happens to us are often a consequence of our need for refinement, and although we go through this refinement kicking and screaming we come out the other end in a place of abundance. I will focus on providing tips on how you can manage your material abundance in this series yet this is not done in a vacuum and ones’ mental state is the basis for all good decision making.

Talent 2: Budgeting leads to Savings

I have included both budgeting and saving under the same talent as from a financial perspective everything flows from your budget. People make and lose fortunes based on managing or mismanaging this talent.

1. The most important point of budgeting is to give every dollar a job. What I mean by this is that unless you consciously look at your budget and allocate your resources to some specific ends you will waste money. The larger the budget the more significant the wastage will be, so this guideline is universal in nature. Secondly for those of you that have partners in your financial affairs whether they be personal of business, you must always agree on the budget and hold each other accountable to it. We will go into more detail of the actual process of budgeting during the series posts addressing this talent, and I cannot stress enough how many people mismanage their budgets and how budgeting should be mandatory High School accreditation.

2. There are very important steps to follow in a successful savings plans specifically if you are trying to save while paying down debts and restructure finances. The best advise I have read on this topic comes from Dave Ramsey’s The Total Money Makeover. Saving for an Emergency Fund of at least 1000.00 dollars should be the first step in any financial plan according to Dave. Over the long term we should have 3 to 6 months of salary put away for emergencies and have savings strategies for achieving larger required purchases. Household saving rates where as high as 20% in the 1980s but have since dropped to under 5% in 2018 as seen here. This further shows that we live in a culture that has abandoned the basic principle of saving and we will explore this in greater detail in our full post to come shortly.

Talent 3 Investing Should Always be About the Future

Deferred gratification is a pillar upon which all investments stand on. Without the sacrifice of present consumption through budgeting and savings excess capital for investment would not be formed. I will focus on the Canadian investment market as this is what I am most familiar with. We will touch on investing in higher education for your children, retirement investment and investing for project specific objectives.

Talent 4: How to Approach Using Credit and Managing Debt.

Using debt to achieve an any objective adds additional risk, and this risk is very difficult to quantify in terms of its possible impact on your financial objectives. Our culture is one that is obsessed about instant purchases and monthly payment and living on leverage is something we have all become accustomed to. I will focus on debt management and how to modify behavior to get out of debt. We will also go over under which circumstances it may be necessary to get into debt for the purchase of an asset.

Talent 5 Giving is Better Than Receiving

Giving is addressed last in my series as it is the apex of financial accomplishment. To be able to give what you have decided in your heart to give another without reservation is indeed the biggest freedom one can have. Many feel compulsion and obligation to give, but our intent when we give is of vital importance. Giving is a behavior and must be practiced to be mastered successfully. My focus on giving is important as many people focus on what they are going to do for themselves with the money they have accumulated. Don’t get me wrong spending if you have prudently saved, invested and managed your wealth is well deserved, yet the rush you get from giving a waitress a 500.00 tip is well beyond the rush you can get as a multimillionaire spending 500.00 on yourself.

To Be Continued

The aim of this series is to provide beneficial information to the community in a way that can be easily digested and revisited by members. This series will ultimately be made into a practical guide that can be accessed in such a way to provide much needed community resources related to financial management. Your feedback will be appreciated if you believe that certain concepts require additional clarification. If you have a specific financial situation related to one of the topics of the daily blog that you would like to get some feedback on, please do not hesitate to share so that others can learn from our experiences.