I can sum up almost 20 years of experience in the world of personal finance in four words.
In my business I travel a lot to speak at various functions. When I speak, it can be for anywhere from two hours to two days. No matter the venue or the duration of the event, the question I am most asked is, “What’s one piece of advice you have for someone just starting out?" This is a great question, and I actually have a great answer.
First, in order to take this advice, you need to understand that it is not advice about portfolio building or insurance planning per se. The biggest challenge I see with people’s finances is they are caught in traditional conversations about money. This means they listen to the media for financial advice even though the media have never produced good results in personal finance. If you listen to this advice you will get the same results that everyone else gets. Even more damaging is to have financial conversations with people who are friends who have no education in finance. The advice they will give you is the same advice they have been getting from the media. It is a vicious cycle.
It’s all about behavior. There is not one single piece of advice that can out run poor behavior. Poor behavior will destroy the best investment advice, the best debt advice, the best insurance advice, the best MONEY advice. If you are 20 years old you better work with an advisor who will help you with behavior. If you are 80 years old you better work with an advisor who will help you with behavior. Just think for a minute about all the people who have made a lot of money but have nothing to show for it. Actors, Athletes, Business Owners…these people had access to the best advice money could buy but they have nothing.
It is a new year and a good time to take inventory of life. Many people will put money at the top of their list of things they want to get a better handle on in 2016. If you count yourself as one of those, then please take the best advice you will never hear from financial folks…address your behavior. Once you learn how to work on your financial behavior, the rest is easy.