Tag Archives: investing

Working with financial risk takers

How to Work With Financial Risk Takers as a Financial Advisor

Most financial advisors have worked with clients who take more risks than they should. These people will stop at nothing to get the power, wealth, and influence they desire. Often, high rollers are portrayed in a negative way and there is some truth to this portrayal; being a risk-taker can be a hindrance financially. However, with the right guidance and advice, risk-takers and high rollers can see high rewards. 

Of the nine Moneymax personality types, high rollers are the biggest risk taker. They desire power, influence, and wealth and aren’t afraid to take big risks. They enjoy the thrill of risky money decisions and in spending their money instead of saving it. While their risks can have high reward, their emotional decision-making can sometimes get in the way of their financial success.

There are five distinct traits you must understand about working with high roller clients. Once you understand these traits–and how to mold them into financially healthy traits, you can help your risk-taking clients see the ROIs they crave. 

Trait 1: Risk-taking isn’t something they are afraid of

You might have guessed high rollers are comfortable with, well, taking risks, but what exactly does this mean for their financial health? It can be a double-edged sword. Being comfortable with risk is good for making money–as long as it’s paired with well-calculated logic behind the risk. If your client is a risk-taker, they need to learn the difference between taking a meaningful risk that is goal-oriented and taking a risk for the thrill of it. 

Trait 2: They like being challenged

Risk-takers usually spend a lot of time out of their comfort zones and aren’t afraid to jump into a new challenge. At worst, this can lead to risky financial behavior if a client hasn’t acquired financial knowledge and skills. If they are educated on finances, this can lead to a high level of investment and effort from risk-takers who wish to acquire wealth. 

Trait 3: Risk-takers like things to move quickly

Often, high rollers get frustrated when they don’t see an immediate return on their investment. As a financial advisor, you need to be able to articulate why a balanced, slower plan might pay off in the long run. A good talking point with risk-takers is that a balanced, more moderate financial plan will give them more control in the long-run and allow them to take bigger, more calculated risks down the road. 

Trait 4: If they develop strong risk-calculation skills, they are likely to succeed

Often, we think of risk-taking as a dangerous personality trait. Yet, when a risk-taker can make calculated decisions and can evaluate the risks, they can be extremely successful.

 Trait 5: Refocus high rollers on achieving your goals

The image of a high roller is often a person who spends much of their time gambling, racks up credit card debt, and in involved in other risky endeavors. When risk-takers learn to refocus that energy on productive goals, they can find increased financial, professional, and personal success. In order to do this, risk-takers need to discipline themselves and only take on risks that are calculated and goal-oriented. 

Have you ever worked with a risk taker? What other advice would you give to help financial advisors with this client type? 


Financial Psychology provides services and tools for Financial Advisors to add some personality to their advising. Their signature tool, the Moneymax Personal Profiling System, reveals someone’s financial psychology in less than fifteen minutes and enables financial advisors to give customizable advice. Located in Ohio, Financial Psychology has empowered advisors over the last 30 years in the United States, Canada, Europe, Japan, Australia, and beyond. 

Man looking at stock market on computer

How to Get Over the Fear of Investing in a Nervous Market

If you listen to the news, you’re probably aware that many people are predicting the stock market might take a dip soon. Warren Buffett, for example, has been warning of a stock market crash since 2018. But that doesn’t mean you shouldn’t invest. Eliminate the fear of investing in a nervous market with these tips.

Often bull markets, like the one we have now, are like blinders. Investors begin to believe in the fantasy that the market and our equity investments will always take good care of us and never disappoint. Yet time and time again, bull markets collapse with the most extreme and famous example being the collapse of the bull market in 1929.

Since the recession of 2008, the market has reinforced such fantasies. It has been a bull market for the past ten years with few exceptions, even during the pandemic. But that doesn’t mean the unprecedented stock market growth will last forever.

What’s an investor to do to remain calm, avoid knee-jerk reactions, and prevent emotions from potentially sabotaging all the gains realized in good times by prematurely pulling out of the market when it may not make sense?

Manage Your Emotions

There are certain important relationships which we must understand before we can achieve a consistent degree of success in the world of investing and in the marketplace. The first and foremost of these is that most losses in the marketplace result not from poor trading decisions but rather from emotional and attitudinal causes.

Investing by its very nature is an emotional business. Few investors have the self-knowledge, emotional stamina or self-control to make rational, intelligent and profitable decisions, particularly in times of anxiety and stress.

We can become better and smarter investors by looking at history and developing a sense of perspective. Economic conditions have always fluctuated at previous times of national and global crises, but the underlying strength of the American financial system has always shone through in the long run. Any hardships caused by recent events will not last forever.

Managing anxiety well during volatile times is a competency of successful investors. We all must be reminded from time to time that not making dramatic financial changes during these nervous market times can be a sign of patience and prudence, not cowardice.

Helping your clients get a current sense of control and clarity is not a bad idea. Helping them step back and see what they can realistically, financially and emotionally afford and then make decisions based on thoughtful reflection vs. impulse. In the long-term they will remember your prudent advice and help during such volatile times.

Don’t Believe Everything You See Online

Younger clients in particular are inundated with financial advice on TikTok, Youtube, and other social media outlets. This influx of information has led to questionable financial advice.

Many financial influencers online create their wealth through scamming their followers. They’ll predict to their followers that a certain stock (which they have purchased a lot of) will do good. Their followers will invest in that stock and then the influencer will pull out their own investment, making a generous return at the expense of their followers.

It’s best to steer financial advising clients away from online financial gurus who try to encourage this sort of trading, often with emotional and convincing content.

But it’s not just influencers promoting this idea. Earlier this year, Reddit users teamed together to invest in GameStop and other unprofitable companies as a joke. This messed with the market and artificially drove up stocks which weren’t valuable.

If clients do tend to get financial advice online, remind them to check the advice with a credible source instead of acting on the emotional pleas of influencers.

Overcome Your Fear of the Stock Market

Depending on a client’s Moneymax type, they may fear investing in the stock market. To some people, the stock market is an ambiguous and confusing financial institution and they have no clue where to start.Woman looking at stock market on computer

However, with money mindset work and the counsel of a financial advisor, even the most nervous and fearful clients can invest.

The first step to overcoming these fears is being able to identify your clients’ fears. One way to discover this is to run the Moneymax assessment on all your clients. Moneymax gives you a holistic view of a client’s money personality including traits such as how trustworthy they are with their money, how eager they are to invest, their risk level, and more.

Once you use Moneymax and have your client’s or potential client’s profile, you are able to address their fears about the stock market and create a customized plan to help them get over those fears.

Hold Your Investments

Another modern investing trend is day trading. With the rise of the app Robin Hood and similar companies, anyone can day trade. It’s as easy as playing a game on your phone.

However, trading stocks on a day-to-day basis hardly ever leads to long-term financial success, especially for those without a finance background.

A good rule of thumb to share with clients is that they shouldn’t move their investments for at least a year. Holding investments leads to long term financial success.

If one is constantly acting out of fear and changing their investments whenever a certain stock dips, they will not make a profit. Investing in the stock market is not the place to act out of fear. It’s the place to plan ahead and hold onto your investments even through the natural dips.

Of course, some people might like the risk of trading stocks more frequently. If this is the case with your clients, you could make a plan to help them do this while also allocating other funds for longer term investments.

While we don’t know what the future of the stock market holds and many short-term predictions are ominous, clients can still find success in investing. Managing investments, overcoming stock market fears, only listening to sound advice, and holding your investments are four ways to be a successful investor even in a nervous market.

Signing a new client

How to Get More Financial Advising Clients in 2022

If you’re looking to grow your financial advising practice in 2022, you need a tactical plan to get more clients. Getting more clients should depend on one thing: creating authentic connections with prospects

In order to do this, you most likely need a marketing strategy and need to use financial psychology. Neither has to be complicated. Here are five easy ways to get more financial advising clients in 2022. 

People, financial papers, and coffee

1. Utilize your LinkedIn 

Social media marketing is all the buzz and all professional service providers should have a presence online. However, that doesn’t mean you have to start making TikTok where you dance and give financial advice. 

One of the best platforms for professional service providers is LinkedIn. LinkedIn allows you to connect with your current professional network and use their search tools in order to expand it. It also offers the opportunity to directly message people, comment on people’s professional accomplishments, and more.

Two of the most important tasks to do on LinkedIn for 2022 is to optimize your profile so those searching for a financial advisor can find you and to consider having a LinkedIn services page. A service page is especially good if you’re self employed and in the early stages of your business.

To optimize your LinkedIn profile, make it clear what you do and who you help in the tagline, cover photo, and bio. A common mistake many people make is trying to showcase their accomplishments in a way that makes them look good on LinkedIn. Instead, frame your accomplishments so they show the benefits of working with you to prospective clients. 

2. Create a referral offer for current clients

Despite all the advancements in the world of digital marketing, one of the best marketing tactics has been around long before Instagram, LinkedIn, or even MySpace: the best marketing is a happy client

If you want to get more clients, ask current clients if they know anyone who might need your services. Feel free to even describe who your ideal client is. However, it’s also important to keep in mind that almost everyone is busy today. 

In order to motivate current clients to give referrals, create some sort of incentive. This could be a $5 Starbucks gift card or a discount on one of your services. It doesn’t have to be big; even small incentives can go a long way. 

After you have your incentive and list of clients to reach out to, craft a templated email you can send asking for referrals. 

3. Develop a marketing strategy

Along with referrals and LinkedIn marketing, there are many other marketing tactics you can utilize. Which ones work best for you depend on your ideal demographics, resources and money available to invest, and personal preferences.

For example, if you’re targeting young professionals, digital marketing should play a big role in your marketing strategy with an emphasis on video content and newer platforms like Instagram and TikTok. 

If you want to reach more seasoned professionals who want to improve their retirement plan, you might be better off with print advertisements or going to networking events in your local community. 

There are so many marketing options available today. To figure out what works best for you, define your ideal client and create a plan to reach them where they hang out online or in person. 

4. Pitch the story of your business to local media

While this one is a long game, being featured in the media can add credibility to your business and might bring in potential clients. You also don’t have to try to be featured in the New York Times or Washington Post for this to be effective. 

In fact, being featured in local media may be even more beneficial as it’s only people within your community reading it. 

To get started, write down your business’ story. Try to make it as interesting and insightful to the public as possible. You could also think of ways you could pitch a story which offers financial advice to the readers or watchers of local media. 

After that, make a list of any local news channels, newspapers, or other media outlets which might be interested in your story. Try to find the media contacts who cover financial news or other similar types of stories. After that, craft an email pitching your story and see how they respond!

5. Create a better process for recruiting potential clients

While increasing the reach of your marketing efforts is great, you also want to increase your impact on potential clients who come across your brand. The best way to do this is to have a streamlined pitching and onboarding process. One of the most important parts of the pitching process is selling authentically. It’s also one of the most difficult. 

We’ve all been on the receiving end of a sales pitch that sounds, well, sales-y. And if we’re being honest, those pitches make us want to flee instead of buy whatever the pitch is selling. 

One of the best ways to avoid sounding sales-y is to create a genuine connection with prospective clients and make them feel like you get them. Luckily, there’s a fast, accurate way to get to know them before they even step into your office or onto a Zoom call: Moneymax.

Moneymax is a personality profiling tool that let’s you know where a client or prospective client falls on a scale for 13 different financial psychology characteristics. It gives you a holistic view of how they view money across a variety of facets, from investing to asking for a raise at work. Understanding the full picture of how a prospective client views money allows you to turn a sales pitch into a conversation where you’re working together to discuss the client’s financial future. 

Since we believe so much in the power of Moneymax, we’re offering 10 free profiles to anyone who tries out the tool and posts about it on their social media. Subscribe to our email list for free to learn more details. 

How to Be Emotionally Intelligent About Your Finances

Prudent and successful investing is as much about managing attitudes and feelings about money as it is about managing the money itself.  It’s all in how we use it that brings us the greatest satisfaction and success.

If we are self-aware and self-confident, we feel more of a sense of mastery.  We feel we are making the best use of it because we are using it to reflect our core values and our sense of ourselves.

Daniel Goleman has written extensively about the benefits of having and using “emotional intelligence” in our life’s pursuits.  In his book, “Leadership:  The Power of Emotional Intelligence” he posits that the ability to identify and monitor one’s emotions is imperative to being a competent leader.

He has a short list of competencies leaders must possess including self-awareness and self-management.  If you are self-aware, you have realistic self-confidence—you understand your own strengths and limitations. His point is that effective leaders understand how their personal dynamics, principally emotions, make an impact and learn to manage them so that they are used most effectively.

In my work at Financial Psychology Corp., the same principles are applied to money management.   In working with the financial services industry, it became clear early on that understanding feelings and being able to manage them was a key competency in mastering wealth accumulation.  Financial advisors had the greatest influence with their clients if they understood the importance of managing attitudes and feelings as well as finances—both their own and their clients.

Investing by its very nature is an emotional business and being able to understand our feelings and the impact they have on how we are using our money, enables us to make smarter choices and ultimately make the best use of our money.

I have seen too many otherwise highly intelligent investors allow their emotions to cloud their better judgment.  They react impulsively and inappropriately to market swings and use their emotional money minds instead of their more rational money minds.

The skill set is the same whether you want to be a good leader or you want to be a good money manager:  you have to know yourself and how to profit from reinforcing your attitudes and feelings which are assets and shoring up those that may be liabilities.  We can become our greatest financial asset if we learn how to use our personality traits so that we profit from them.  It all starts with knowing ourselves.

The mission of my company, Financial Psychology Corp., is to give people insight into their financial behavior so that they can make the best use of their money.

Just as leaders use their personal attributes to achieve the most powerful influence in their pursuits, investors must be able to use the same skills and competencies to have optimum influence in how their money is being managed:  realistic self-awareness and self-confidence of doing the right thing.

What’s Your Comfort Level with Taking Financial Risk?

If you’re puzzled in how to honestly respond, you’re not alone.  Most people find out their true comfort with risk only after the fact—after they’ve lost money.  Then, and only then, do they really know how much they can financially and emotionally afford to lose.

Your risk tolerance is your ability to make decisions, trading the known for the unknown, and to be comfortable with the decision once it is made.

Before you can begin to understand how to gauge your comfort level in taking risks with your finances and investments, think about how you feel in general about giving up something you know now without being certain of what your return will be in the future.  The possibility exists that what you get will be less than your investment.

There are several reasons that risk is mystifying and elusive:

Tolerance for risk is difficult for most people to accurately gauge because it is a socially desirable trait, at least in the United States.  The USA was founded by brave individuals who risked their lives and ventured into an unknown land for a greater sense of freedom and independence.   Ever since,   entrepreneurial behavior has been revered and rewarded.  So, people like to believe that they’re higher risk takers than they truly are.  They want to believe that they’d step up to the plate if they saw an opportunity for significant financial gain..

The truth is that most people would rather not gamble and take the financial risk because they would regret the potential loss in the process.  They are not certain they will reap a just reward for the risk they’d take.

When you search your minds and hearts for your own sense of what risk means to you and how much risk you can comfortably tolerate, keep in mind that you, too, may be swayed by what you’d like to believe.  Ask yourself how much money you can financially afford to lose.  And then ask an equally important question—how much can you emotionally afford to lose?  How will you weather the financial and emotional loss?

So what’s beneficial?  Should you aspire to be a low, medium or high risk-taker?  There’s no right answer or one-size fits all when risk-taking is involved.

Here are some guidelines that may help you in trying to gauge what’s appropriate for you in achieving your goals and objectives:

–  Impulsive risk-taking usually pays off with buyers or sellers remorse.

–  Calculated risk is always the preferred strategy and surest bet to make.

–  Don’t risk more than you can financially or emotionally afford to lose.

–  Look at what you may lose from risking as well as what you may gain.

–  Experimenting with risk is more costly with age.

You can increase your comfort level with risk slowly and consistently over time—taking small but consistent steps which will eventually lead to bigger gains than a one-time gamble on the risky move paying off.  Your confidence in yourself will also increase in the process if you succeed over time.

Take a look at this brief video with three financial advisers describing how they speak to their clients about risk and how to gauge what it means to them:  http://www.cnbc.com/id/102397145

Stay tuned for Part 2 of “Gauging Risk” by understanding the money personality traits which play a big part in how you relate to risk.

Know What You Can Emotionally and Financially Afford to Lose

So often, investors react impulsively to bad news and a volatile market selling shares of perfectly good stocks or changing their asset allocations in anticipation of a significant downturn in the market. Had they held on, history reinforces staying the course if the allocation makes rational and financial sense and the stocks deemed to be good stocks over the longer term.

But many investors, react with their emotional money minds rather than their rational ones.

Why is it that some investors make rational decisions, stick with their choices and strategies while others act out their emotions and make bad investment decisions?

The field of Behavioral Finance has given insight into the mental miscues investors make that sabotage and crimp their returns. One of those miscues or mental mistakes is the fear of losing money.

This is how it works: Psychologically, people give greater weight to a past loss than they do to a future gain. In fact, some investors find losing money so distasteful that they psych themselves out of investing altogether.

Investors don’t make reasonable tradeoffs. The drive to avoid loss really sabotages any future gains or opportunities. Rather, investors rationalize their feelings and walk away from being an involved and active investor in the market. Some work it out and choose a strategy of a more passive approach investing in index funds and stay the course.

From where I sit as a psychologist specializing in money management and investing, I tend to experience investors or would-be investors who are frozen by indecision and the fear of losing their money.

Solution: Determine ahead of time exactly how much you can “emotionally” afford to lose as well as “financially”. They are often very different.

If you feel that a financial loss will be a significant emotional and financial loss, then choose the more conservatively balanced approach of investing. If you feel you can handle the emotional and financial upset of a loss, estimate just how much of a loss that should be for you to continue to feel and be secure.

The point is that investing is by nature an emotional as well as financial business. Your heart and wallet go hand in hand.

With spending some time upfront reflecting and gauging your comfort level, you will be better equipped over the long-term for whatever happens in the market.

©2015 Kathleen Gurney, Ph.D.

Managing Anxiety in a Nervous Market

“I no longer watch CNBC with my coffee every morning. I find that I just don’t want to be more confused and feel more anxious. I just don’t feel as optimistic as I used to–my whole mood has changed. I guess I’m feeling a sense of heaviness, uncertainty-maybe even a bit of depression.”

“My statement has sat in my unopened emails for weeks. I don’t want to look at or know the balance. I own a lot of shares of each stock and it’s great when the market is going up because there are big gains. But when it’s going down, I have to face large losses.”

I had these conversations last week with two knowledgeable and confident investors who are generally quite comfortable with volatility. Both of their “Entrepreneur” Moneymax® Profiles suggest that they are both highly motivated by performance with tendencies to take higher but calculated risks.

Often Bull markets are like blinders. Investors begin to believe in the fantasy that their stocks will always take good care of them and never disappoint them.

Since the “Great Recession”, the market has reinforced such fantasies. It has been a bull market for the past five years with one small exception in 2011 with a 10% pull back. Recently we have had the worst three days in three years.

In my years of experience, as a psychologist specializing in the psychodynamics of money management and investing, I’ve come to realize that there are certain important relationships which we must understand before we can achieve a consistent degree of success in the world of investing and in the marketplace.

• The first and foremost of these is that the majority of losses in the marketplace result not from poor trading decisions but rather from emotional and attitudinal causes.

• Investing by its very nature is an emotional business. Few investors have the self-knowledge, emotional stamina or self-control to make rational, intelligent and profitable decisions, particularly in times of stress.

So, often investors react wildly to bad news, often selling shares of perfectly good stocks. Had they held on, they would have realized that. But they, as many investors, react with their emotional money minds rather than their rational ones. They usually are at the “effect” of their feelings and not managing them well.

Why is it that some investors make rational decisions, stick with their choices and strategies while others act out their emotions and make bad investment decisions?

The field of Behavioral Finance has given insight into the mental miscues investors make that sabotage and crimp their returns:

• Fear of losing money

Psychologically, people give greater weight to a past loss than they do to a future gain. In fact, some investors find losing money so distasteful that they psych themselves out of investing altogether.

Investors don’t make reasonable trade-offs. The drive to avoid loss really sabotages any future gains or opportunities.

Solution: Determine ahead of time exactly how much money your clients can “emotionally” afford to lose as well as “financially”. They are often very different.

• Worrying about the wrong risks

Investors are held captive by unpredictable yet frightening events. People are traumatized by dramatic events. They can’t tolerate this anxiety.

Investors become blind and deaf to others’ advice in these times and tune out that advice, including their advisors’. They exaggerate current crises. What’s worse is that they forget the wisdom of lessons from the past. They overlook the fact that people who stayed fully invested during previous volatile times recouped their losses.

Solution: Help your clients base their decisions on what they can control, not on those they can’t control. Give them the rationale for their current strategy and
reiterate why it still makes sense. Repeat it several times and intermittently so they can hear it and use it as a guideline in regulating their knee-jerk and emotional reactions.

In other words, there is a vast world of emotion under the surface structure of investing. To know and understand the motivating forces behind investing, to know and understand why one investor becomes tense about losses, why one becomes greedy about profits, and why one either overreacts or fails to react is, perhaps, more than half the investment battle won. There is a high price to pay for the kind of innocence many investors bring to their investments and the way they interact with their investment advisors. Unfortunately, in many cases, to help your clients continue to maximize their financial returns, you must first help them master their emotions.

Investors Flight from The Market May Indeed Be A Rational Defense

Some experts are calling the recent mass exodus of small investors from the market an irrational reaction to unfound risk; others are hypothesizing that small investors need cash and their home values no longer support equity loans to survive so they are using their 401k investments to pay bills.

Personally, I feel small investors are feeling a tremendous level of anxiety and are having difficulty managing it. Their high level of anxiety and their inability to tolerate it precludes them from keeping their money in the market for the long-term and continuing to believe that they will be okay. The true definition of a suitable investment strategy is whether investors can maintain it over time – even anxious and volatile times.

Apparently, these investors are incapable of managing the stress of being in what they deem to be a risky strategy. But even sophisticated investors and professional money managers are anxious and unable to predict current and future risk in the market. So why should the small investor be any different. The difference may lie in unrealistic expectations and inappropriate risk taking that led the small investor into the market in the first place that is the real problem. If they weren’t diversified; if they didn’t understand the downside and determine whether they could withstand it, then they are feeling much greater stress and lack of tolerance in coping with their current feelings of anxiety and distrust.

There are a myriad of reasons why investors have reduced their exposure to securities and gravitated to what they perceive to be less risky investments like bonds, cash, and other fixed income vehicles. Perception is a subjective reality that is difficult to alter with objective facts. The problem is compounded by the volatility of today’s market and objectivity being illusive. You just have to listen to CNBC for a while and you’ll hear experts hypothesizing, and disagreeing whether we’re out of a recession or just heading into another. So how is the small investor to feel confidence or a sense of trust that the market will be kind to them if they stay? At least by doing something, they feel they have taken some action in their best interest rather than remaining frozen from fear.

I have empathy for these small investors who fell into the trap of feeling that they would be saved by the boom in house prices, stock market rallies and the optimistic view that kept all of us believing that the good times were here forever. For those who did not save some of the rewards from those flush exuberant times, or diversify to manage the potential downside of such a upside for the market it is a particularly stressful time. It is a time of reflection to learn valuable lessons for the future as well as a time to take an inventory of what can be done to manage personal financial insecurity and stress.

What my work has taught me is that the ability to tolerate anxiety and fear, manage stress and take small and consistent steps to control what can be controlled is often a defining difference between achieving a successful solution and optimistic financial future or sinking further into financial stress and insecurity.

Needed for Our Time: A New American Dream

Do you find yourself thinking about your expectations for financial well-being and how they’ve changed? We hear about this subject daily and we are all left with that puzzling question of what our future will hold? Americans are known as the eternal optimists always finding hope and feeling like we can fulfill our dreams to have the “good life”. However, in talking to many of our regular community members on www.kathleengurney.com, I’m finding a very different sentiment. Instead of optimism; I hear fear, anxiety, uncertainty, and even pessimism.

How soon might we find a crystal ball? Wouldn’t that be great? We all want reassurance that we’ll be okay. Of course, as adults we know that we can always do something in our own behalf to empower ourselves, but I find that there’s a desperate desire for the road map of how to get there from here.

So, in this state of distress. we can all follow the prudent advice of the rehabilitation programs that advocate day-by-day planning and focusing on what we can control. For me, I know that I can manage my anxiety about the future by having a concrete plan for my priorities. I try to make my goals reasonable, realistic and rewarding. My clients tell me they use those three descriptions and use them to manage their financial behavior and feelings. Clients find that my advice to take small steps consistently and purposefully help them achieve big gains over time.

So, maybe our new dreams will evolve and become clearer as we all start to focus on what’s most reasonable and rewarding for each of our individual situations.

Boomers Willing to Wait to Get What They Want and Say They Need

The quest for “the good life” continues to drive Baby Boomers to sacrifice today, so that they can enjoy the finer things tomorrow according to a MainStay Investments’ Boomer Retirement Lifestyle Study. A majority (76 percent) of Boomers surveyed say they are willing to spend less now to invest for a more comfortable lifestyle in the future.

When it comes to lifestyle, Baby Boomers are redefining what constitutes a basic need and what they consider a luxury. They have clearly expanded beyond the three traditionally thought-of necessities – clothes, food and shelter.

An interesting pattern that emerged in the research was that as Boomers age, things that were once considered luxuries are more likely to be considered basic needs–thereby reaffirming that Boomers essentially want it all.
The lesson for us, in my opinion, is to be clear about what gives us a sense of peace and safety and pleases us most. We need to understand our priorities and their price. It’s also important to clarify and understand the difference between want and need.

Money for needs can be classified as survival money and safety money while money for wants can be classified as freedom money, gift money and dream money perhaps. Our hierarchy of financial needs and wants can then be ordered so we may plan suitably for our survival and safety first. Only then should we incorporate our wants for a sense of freedom and self-actualization.

Because time can never be regained, it’s vitally important to understand the cost – financial and psychological – of putting off until tomorrow what might satisfy us today in moderation. It’s a difficult call to make whether we’ll be successful in affording our wants and wishes in the future. If we have a moderate and realistic plan understanding our needs and wants with timelines for accomplishment, we will always know where we stand. Then we can be certain that we know what we can afford and when. It’s impossible to get back precious time once it’s gone.