Have a Philosophy for Your Money — and why you're better off with one
Life should always be about something bigger than money
Life and business intersect and it's near impossible to successfully separate - and keep separate - these two seemingly opposite, and often opposing pursuits.
So where do we begin?
“Let’s start at the very beginning, a very good place to start…”
Julie Andrews sang Rodgers and Hammerstein’s famous line in The Sound of Music. And that’s good advice.
What does 'Money mean to you?'
This can be a conversation stopper at a BBQ with friends and a surefire way to end a conversation at a business networking event. Old-school ideas about money and privacy overlap to the point that asking about money is considered by some Australians, rude.
Ask a parent, would you prefer to talk with their teenager about sex or money and we all know the preferred answer – sex.
This same conversation asked by a financial advisor like myself elicits a range of responses from blank looks to all-knowing-smiles of similarity and shared ideas.
Whatever your answer to the question, it's fair to say that money matters today, need to be taken more seriously.
- Relationships Australia repeatedly reports findings that Money is the #1 Reason for arguments in relationships
- Many older women repeatedly cite being isolated from money conversations while they were growing up and told, 'such matters would be managed by their future husbands'
- No conversation today about money is complete without a conversation about cultural expectations, enforced gender and social roles, family expectations, 'inheritance impatience' (an entitlement blight), and growing elder financial abuse.
For a country that says they don't like talking about its money, it seems there is a growing list of reasons why we should challenge this assumption and evolve our thinking so we can become better versions of ourselves.
Sapience is all about beginning helpful money conversations, normalising the questions, and focusing on the practicalities of 'How'.
You could say we are 'money positive' financial advisers and believe life and business is better with more of it and putting it to use to create more freedom and happiness, rather than following an aimless path to being the richest person in the graveyard.
The good news is our evolutionary drive to protect and provide helps us plan and face our uncertain futures
We see money as a resource to be managed and enjoyed. How different individuals see it is often usually tied to the employment structure of their occupations.
A self-employed business person has reason to see their money differently.
For our self-employed small business owners, the question 'what does money mean to you', is often a more complex answer because intermittent cash flow and managing external challenges go hand in hand with the answer. Small business owners usually cite they're having to constantly keep on top of their cash flow, (there are so many books about this pesky phenomenon) having to constantly chase it, protect it and manage it, and make decisions where it is best put to use – and that's often a very personal value judgment.
Nothing stops a business like stopping its cash flow.
While our 'employed working' cousins see their money stream differently (or perhaps more accurately the predictability of its arrival – even on sick days and holidays) they still have to manage the very real risk of a sickness or injury stopping them from being able to continue to earn their income.
Nothing feels as good as a regular paycheck.
Relationships with Money and Risks
Not having a view about your own money, how you make it, where you keep it, how to protect your ability to continue making it, and decisions about whether to grow it or how to spend it – make you vulnerable.
It's not about the amounts, but the mindset
Giving people either only big-picture advice or practical day-to-day advice seems incomplete without also showing the connection between them.
When talking about managing life and wealth, quick-for-an-argument people will fain offense and want to hijack the conversation blaming all their internal woes on externals of rampant capitalism, work poverty and (insert whatever is the current distraction here).
That's a conversation we'd be happy to participate in – later, but if we're looking at the smaller picture today of what people need to do today to make a more secure tomorrow, perhaps rather than talking about the amounts, we can talk about the processes, the values, and the new habits to learn to put it all to use.
Having a plan for your Money
What gets in the way? Life and lots of other things.
- The major ones we see include – rushed decisions, a history of secrecy about money matters, cultural expectations overtaking good sense, and inherited unquestioned parental money mindsets that morph into problematic 'moneyisms'.
We all have needs to manage
The Missing Maslow
You don't have to go far before you find a reference to Abrahams Maslow's 1942 Hierarchy of Human Needs framework expressed as a triangle ranking (and stacking) the priority of human needs. While this can appear to be an essential part of every uni-student Arts Degree or entry-level business PowerPoint from the marketing department hoping to impress, the Maslow Hierarchy of Needs framework is a useful way to begin to understand how humans prioritise and rank in the level of importance, and their needs.
- The missing piece of this puzzle is the practical question of 'The How' (and we'd love to help you out with that answer.)
[ Maslow's hierarchy of needs is an idea in psychology proposed by American psychologist Abraham Maslow in his 1943 paper "A Theory of Human Motivation" in the journal Psychological Review. ]
It's time to build a plan (and a money philosophy) for you and your Loved Ones
We all need a backup plan in case life (and business) don't work out quite the way we hoped they would.
The good news is our desire to Protect & Provide is evolutionary and hard wired into our natures.
When it comes to creating our backup Plan B for ourselves and our families, most people are not as Darwinian in their thinking as we've been led to believe.
We're empathetic and caring creatures who will gladly sacrifice for the well-being of others, often in anonymity. The truth is we are not only interested in our own survival; we're interested in the survival of others. Especially those who have not been given the opportunities we enjoy.
No matter who we meet, their lifestyle, their business, their politics (or their favorite sports team) everyone I meet wants to take care of their families, remain or get healthy, be generous to others, enjoy their hobbies, and excel at their work.
Where to from here?
Having a plan for your money is not a one-time effort. More than a simple destination, it's more a true north star we try to head towards, making corrections as needed as life and business push us off course.
- Like all things of value, expect it to take time but the processes build upon each other and the connections to the bigger financial picture become apparent in the small steps we make to make a plan for our money.
So if you're wanting to create a plan for your money, we believe its starts with understanding how to protect the earning capacity you already have and protect the reason (and motivations) for your money journey, and who you are providing for.
At Sapience, we're all about 'The How'.
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Source:
Maslow's hierarchy of needs is an idea in psychology proposed by American psychologist Abraham Maslow in his 1943 paper "A Theory of Human Motivation" in the journal Psychological Review.
Why who we can work with matters to you
It depends if you just want to look the part or actually win the game - Drew Browne Founder Sapience Financial
The secret life of an Approved Product List (the APL) - and why this matters
There are two important details that most financial advisers are uncomfortable talking about.
- Fact: Not every life insurance company can insure every person, every type of occupation, and every pre-existing health condition.
- Fact: An insurance company is only competitive in a small part of the market; this means the one-size-fits-all approach does not fit at all.
Different insurance companies specialise in covering different parts of the community - that's why there are so many of them. Perhaps a simpler way to see it is; 'There is a reason why you can't buy fried chicken, tachos, and a hot dog, from the McDonald's™ hamburger chain.
Every life insurance company has its specialty and a financial adviser's duty is to be able to match the right one to your unique circumstances.
Why understanding this seemingly small detail, can save you thousands
The Problem: Many financial advisers who provide risk advice proudly state they, 'only work with the biggest insurance providers, and you might see 5 to 7 logos of who they are restricted to working with. (We've even recently, seen the same limitation reframed and disguised behind the words, '....only the most reputable insurers....). Technically speaking this is referred to as a limited approved product list.
This means all their research and focus is only limited to that small limited segment of the market so the question to ask is would they know (or care) if another insurance provider has a better option for you?
- Worse still, if your personal situation did not fit their limited number of suppliers, you could find yourself told you'll have to endure policy exclusions or restrictions, maybe pay higher insurance premiums - or worst - told you are uninsurable - when in fact, you are not.
You can end up living a smaller life, perhaps living with nagging anxiety because someone who was only working from the smallest pool of opportunities simply could not quickly find that one-size-fits-all solution for you.
The Solution: Make sure you ask any potential financial advisers if they work from, a limited approved product list or whether they have an Open Approved Product List.
Insight: Put another way, if you're current financial adviser only has access to 5 out of the 15+ life insurance providers in the Australia Life Insurance market, the chances are you could be paying too much, and you could end up with a policy that did not really fit your needs or you'd miss out entirely on being insured - and risk believing that the problem was with you and not the financial adviser.
This is why Sapience Financial can work with every life insurance provider in the market
Sapience Financial holds access accreditations with every Life Insurance company in the Australian market today.
- We can research, negotiate and deal with the entire market for you, so you get access to a life insurance policy that's tailored to your individual needs and circumstances, and in your best interests.
And just so we are transparent and clear - Sapience Financial is not endorsed by nor do we endorse any of the organisations or product providers that may be represented by a logo on this site. The usage of these logos is only for the purposes of comparison.
And for those readers who like to understand the details:
In Australia, you must be authorised under an Australian Financial Services (AFS) license to provide financial product advice.
Australian Financial Advisers (also called Authorised Representatives or AR's) usually work from a list of prior researched and vetted financial products that are added to an approved product list (or APL for short). They regularly work from this list to help speed up their research and work while also providing a level of governance and transparency about what products they work with.
- If a client has a specific need that can't be met by a financial or investment product in their APL, advisers should complete thorough additional research and inquire to find one that is in the best interest of their clients, but with thousands of choices, this can be a time-consuming job.
- If the adviser is not a risk insurance specialist, this additional research and administration may be too much for small advice practices who purposefully work from a Limited Approved Product List (or LAPL for short).
- When it comes to Risk Insurance Advice, Sapience Financial works from an Open Approved Product List (or Open APL for short) accessing every life insurance provider in the Australian market.
This means the team at Sapience Financial has access to every life insurance provider in Australia, so we're able to research and compare every retail life insurance product and its suitability for you - never just limited to the 'top five' companies.
Good Mental Health & Money Matters
There’s no doubt, good mental health and good financial health are much more interconnected than people like to admit.
Mental health and financial security are strongly linked. Experiencing a mental illness can add to financial stress, and financial stress can add to a mental illness — often causing a self-perpetuating cycle that requires practical strategies to overcome. The way people respond to financial stress is linked to their well-being and our relationship to debt is usually informed by how we saw our families and friends interact with their finances when we were kids.
The apple really doesn't fall far from the tree, initially.
You don't have to be a financial expert to realise the vast majority of relational problems have their roots in financial problems.
Financial pressures can create psychological distress, which affects peoples coping mechanisms such as confidence, feeling in control of their life and even their self-esteem. People's financial lives and mindsets are connected to their confidence levels, and in turn to their good mental health.
- Financial stressors are responsible for just under 80% of all relational conflicts. — Black Dog Institute Research
Mental Good Health
Mental illness is now the leading cause of long-term sickness absences among Australian workers costing our Australian economy over $12 billion per year in lost productivity.
- 7 out of 10 couples report money causes tension in their relationships with disagreement over finances a stronger predictor of divorce than other commonly cited causes of marital disagreements. — Relationships Australia
A Harvard study published in the August 2013 edition of Science reports;
- Significant financial stress can even trigger diminished cognitive performance in our decision-making abilities - equal to a loss of 13 points of IQ.
- 'When we think about people who are financially stressed, we think they are short on money, but the truth is they are also short on cognitive capacity' - Sendhil Mullainathan, study co-author.
- Unresolved financial issues can lead to blame, misplaced anger, stress, and intimacy problems in relationships — Relationships Australia
The Connection to Financial Good Health
Our experience has been many people report not feeling confident about their money matters and experience difficulty sharing that with their partner or other family adults.
- Some people have never considered whether many common outdated ideas about money may be linked to past parental attitudes towards money. (We call these Moneyisms).
- Many people report spending at least an hour a night on their mobile devices browsing the web but never reading one article a month on improving their money skills.
- Many newlyweds report wanting to have a deeper money conversation with their partner but feel they lack the structured resources to help do that better.
- Many young families report feeling sandwiched between teaching their kids about money matters but find themselves overspending looking after their own aging parents.
- Many LGBTQI+ members of the community cite their unique needs are simply not understood by traditional financial advice businesses.
- Many Business Owners report, that while being confident in managing business finances and risks at work, are less than happy with how that translates to managing their home finances and the normal risks of family life.
Mental Good Health as a Continuum, rather than a fixed target
When talking about good mental health, it's useful to see good mental health is more of a continuum - with a range of variable stages - rather than just a single fixed place in time.
Beyond Blue explains the Continuum example as 'where mental health is at one end of the spectrum – represented by feeling good and functioning well – while mental health conditions (or mental illness) are at the other – represented by symptoms that affect people’s thoughts, feelings or behavior.'
Some skills are worth learning before we need to use them
Whether you’re single, parenting or partnered, (or somewhere in between) and regardless of whether your family is biological or logical, there are ways to improve the protective factors around your good mental health.
- Developing a better understanding of how your own financial world works.
- Learning what you're financial options are, and
- Understanding how to better use financial products and services to your advantage.
These are all practical and important protective factors against difficult times and run-away financial stress.
Our life and relationships are interconnected, so in the same way our children's health affects the whole family, men's health affects the entire family as well. It's time to see men's health (all of it) as a family issue.
You’re not alone: life just sucks sometimes
When we’re talking about good mental health, it's important to ‘say it like it is’.
Everyone goes through a rough patch in life and we all experience different stresses and strains during tough times. Everyone has times when we feel down, stressed or frightened.
- But sometimes problems don't go away on their own and we might not be able to solve them by ourselves alone.
- There will always come times when old ways no longer work on new problems.
When this happens it can have a serious impact on a person's work, relationships with family and friends, and even physical and mental health. This is probably the time to learn some new skills from a mental health support service.
Not-so-secret men's business
Although we all go through difficult times in life, often men and women experience the same situations in very different ways.
Many men find it difficult to talk about their emotions and we end up expecting others to ‘just get on with it’ without discovering if the cause of the problem could be removed, reduced or even avoided next time.
- And men often don't know how to ask our mates, ‘what are you doing to get through that?’
- Fifty percent of men claim to rarely talk about deeper personal issues with friends, and a third wish they could open up more to their friends - The Banksia Project
It makes sense to see if there are useful new skills we can all learn before we actually need them. Perhaps we can even head off some of those financial stress triggers before they become so damaging to our relationships.
Get better informed about managing stress and good mental health
No conversation about good financial advice and becoming more life confident would be complete without acknowledging the very real effect difficult times, stress and strain take upon a family unit.
With some learning and planning, everyone can become more life confident
The Canadian Department of National Defence in collaboration with the United States Marine Corps Department of Psychology developed a framework showing how good mental health is more a continuum and a moving target - not a fixed point in time.
US Marines train for mental health - why shouldn't you?
Given that US Marines are trained to the peak of physical fitness and mental health, (while being exposed to the most severe psychological and emotional issues of service), we thought it worthwhile learning about their insights about the importance of good mental health.
- The model (shown below) recognises a range of mental and physical health problems that can affect men during their life.
- The location icon on the image below shows the various states of mental health a person can be at during their lifetime.
So depending on where you are along this Mental Good Health Continuum, there's always a range of different strategies you could use to help get you where you want to go faster.
Immediate resources for Good Mental Health
Tough times come to us all in different ways.
However, there are things you can do to get through tough times better and you certainly don't have to do it alone.
- The most important thing to realise is tough times usually pass and there are new skills we can all learn to help us through.
Sometimes life doesn't get easier - we simply learn new ways to manage it better.
When is the best time to learn a skill? before you need it
If reading this has encouraged you to learn more about the types of professional support available to help people get through tough times, why not add one of their numbers to your phone contact list for later?
It may not be for you, but it's always good to have a way to help a mate out later (perhaps SMS them a helpline number) if they’re going through a particularly tough time and might need some extra support.
Here are some useful Good Mental Health phone and web resources
Why not add one to your phone contacts list in case a friend needs to use it later?
Lifeline
13 14 14
MensLine Australia
1300 789 978
Kids Help Line
1800 55 1800
Relationships Australia
1300 364 277
Beyond Blue
1300 22 4636
QLife
1800 184 527 & Webchat
National Debt Help Line
1800 007 007
Suicide Call Back Service
1300 659 467
Substance use disorders
Substance use disorders include alcohol and drug harmful use or abuse and alcohol or drug dependence.
- The main contributors to mental health related deaths were alcohol dependence (44% and) and drug use disorder (20%)
- Nearly 5% of all deaths are attributed to alcohol and illicit drug use.
Substance use disorders affect more people who are widowed, separated, or divorced (7.5%) unemployed ( 8.5%) - The occurrence of substance use disorders is higher in men above 16 years of age. for women, it affects those aged between 16 and 24 years the most.
- Substance abuse is 3 times greater in men than in women