Education

10 questions to find out if you suck at wealth management

Many leaders are dissatisfied with their personal life and financial situation. In this blog, leadership coach John M McKee suggests managing each of the 3 key life elements to ensure satisfaction over the long haul.

 Most managers are inept when it comes to managing their own cash and personal finances.

And today - more than ever - one needs to be more conscious about how they look after their financial situation, especially their cash flow. Over the years, I've repeatedly witnessed something about managers and leaders : Many of them make ample money but are, technically, bankrupt. They owe more than they own. In many cases, they're entirely dependent on their paychecks to make even their minimum monthly payments. And, often, their situation doesn't improve as they get promotions and raises during their careers - they simply increase their spending such that they still tread in dangerous waters.

At Business Success Coach.net, we use The Four Windows Process in our client coaching. Simply put, it's predicated on the belief that each of us has three key life aspects that combine to determine who we are. They are:

Career side - This is the slice of you who goes to work each day to earn money while working at something you've chosen for a job or career. Personal part - This is that side of you that focuses on doing things that replenish you, with your friends and loved ones. Finance manager - This is the aspect of your life focused on how to manage the money you have over the short term and long run.

When properly done, using a plan and ensuring balance between them, these three elements will create a life of great satisfaction. However, if one or more of these life elements is not looked after, the result is an individual who, despite some good successes in her/his career or personal life - is very dissatisfied with his life overall. Very frequently, it is the financial management aspect of his life that has him disappointed and frustrated.

Here's a quick quiz to see how you're doing. Give yourself 1 point for each one you answer "yes":

1. Do you know your actual monthly cash burn rate (how much you always spend)?

2. Do you know what your total monthly fixed expenses (the minimum you must spend to live) are?

3. Do you have a savings plan?

4. Are you keeping to the plan you made? (eg: is it growing as planned?)

5. Do you have at least 3 months of cash for an emergency fund?

6. Conservative planners have 6 months. Do you?

7. Do you pay off your credit card balances at least 9 months out of 12?

8. Is your current total debt load (value of all you owe to anyone) lower than it was 12 months ago?

9.. Do you know your net worth (value of all you own less the value of debt including home)?

10. Is your bonus / other financial incentive, "free and clear" without any need to pay bills?

Rating scale:

10 - Please call the new Commerce Secretary and offer to run Citibank. We need you out there!

9 - Awesome! You are one of a very few leaders who are doing it right - you'll reap the rewards

8 - Excellent job - stand up and take a bow before the rest of the world!

7 - Nice work - with a little more focus you'll be in a great place

6 - Good - you're doing better than most people, but more effort is needed

5 - Seems like you understand the mechanics but need to be more dedicated

4 - You may want to consider marrying someone for money.

3 - This is not good. You are in dangerous waters. Get involved. Now.

2 - A little better than 1 but you'd better start buckling down. Before it's too late.

1 - This is serious. You need to start getting more involved before the consequences are too great.

Look after all sides of your life. And the bonus is that, as you become better in balancing yourself, you'll end up a better leader as well. Just works out that way.

john

Leadership Coach

About

John M. McKee is the founder and CEO of BusinessSuccessCoach.net, an international consulting and coaching practice with subscribers in 43 countries. One of the founding senior executives of DIRECTV, his hands-on experience includes leading billion d...

7 comments
boxfiddler
boxfiddler

quiz the other two slices?

brian
brian

It is certainly a worthwhile suggestion to examine the other two parts further. I'd love to see separate postings tied to each of the other two items, to see what everyone else thinks about "career" and "personal part." How to tell if you suck at your personal time (a truly incomplete and rough list): For me, I would measure my personal part mostly by how good my relationships are with the people who matter in my life. One of my friends said the the people who matter in your life are the ones who would mourn at your funeral. (Pets which you share a true personal bond with do count in my book.) 1) Can you even list these people whom you care for? (Far too many of us have trouble even defining who is a true friend.) 2) Have you done something lately to give comfort and joy to other people's lives? (common gifts for common holidays is not what we are looking for here, but if you always take extra time considering the perfect gift for a friend, you get at least 1/2 credit.) 3) Have you done something positive for yourself lately? 4) Have you made sure to take part in something you believe in? Many volunteer organizations have said (in the past) that they need more volunteer hours than money. Right now, both are in high demand. 5) Recharging - It's not just the time between when you go to bed and the alarm clock rings. Have you taken a "mental health day" in the last 6 months? (When was the last time you spent the day just enjoying the day itself?) 6) Can you define in concrete terms where you plan/expect to be in 3 years? If you continue at your current pace, will you reach that goal? 7) Can you define what was the best thing that happened (to you) today? 8) Are you taking time for your physical body's health? Skipping Dr. appts and/or dental visits is a clear indicator that you failed on this one. 9) Can you list the things that make you feel good about yourself? (Sex does not count, and shopping is very questionable.) 10) Can you identify which aspects of your personal life need immediate attention and how you plan to improve upon them?

CareerCoach
CareerCoach

I find that about 15% of people feel they are really satisfied with their life overall, the rest have a hassle in one or two life aspects.

StealthWiFi
StealthWiFi

10. Do you rely on a bonus or other financial incentive to play ?bill catch-up? each year? In order to get rated as 10 you have to answer Yes to the above 10th question. This makes no sense as playing Bill catch-up is not a good thing. Your rating system is flawed. Rating scale: 10 - Please call the new Commerce Secretary and offer to run Citibank. We need you out there!

CareerCoach
CareerCoach

It's been modified to clear this up. Thanks!

mdhealy
mdhealy

On the corrected version of the quiz I score a 10. But for extra credit answer the following question given the current state of the world economy: Are you prepared for ANY combination of deflation or double-digit inflation over the next decade? Right now we are seeing the biggest worldwide evaporation of paper wealth in history, and in response major governments are pumping record amounts of money into their economies. Since this situation has never happened before, the experts are guessing what will happen just as much as we are. Furthermore, not only is the money supply being hit by simultaneous and massive inflationary and deflationary pressures, but ALSO the velocity with which money changes hands is dropping with extreme speed as basically everybody hoards cash. So we may be about to have a wild ride on the monetary roller coaster. This makes planning extremely challenging: if you expect inflation then you want to be a net debtor, if you expect deflation you want the opposite. At the moment my liquid assets just about equal the principal balance on my mortgage so I think I'm in a pretty good place: if there's deflation the real value of my cash and my mortgage should both go up, and if there's inflation I am free to move my cash into higher-yield places but the holder of my mortgage is locked into a low fixed rate.

KSoniat
KSoniat

I agree that a "yes" to 10 should lower your score - thereby no 10 is possible. Sigh - that's life...

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