Last week we talked about Choices and how you can either make the decision to fund a consumer driven lifestyle or to create wealth. Today we deal with Responsibility which goes hand in hand with these choices that we will make. Too many times I hear people blaming the insurance salesman, the stock broker, the fund manager, the bank etc about their finances. Comments such as “I lost money in the stock market because of this broker” or “I lost money in this product or investment because I was mis-advised” or “I didn’t know this loan was going to cost me this much” is common. When you blame anyone else for the state of affairs of your finances (including your employer for not paying you enough) you have shifted responsibility. Once you do this you become very dis-empowered because you believe it is also someone else’s actions or advice that will also fix your state of affairs.
It is great to use professionals. It is good to have a stockbroker who has solid research and operations. However it is not your stockbroker’s job to make you money. You may get help from different people as a result of their specific expertise but it you will always remain the CEO of your Money. When you get advice on what shares to buy, remember they are giving you their recommendation and opinion. It is your job to still know why you are buying into that share, to ask or read relevant research, to educate yourself on the risks etc. This is called Awareness as opposed to Oblivion, which is the way many of us handle our finances. The professionals we use may offer their advise and execute the transactions on our behalf, but always remember it is you who makes the decision on whether to buy that share or not. This same scenario is true for any other financial decision you need to take in other areas – insurance, property, loans, unit trusts etc. If you ever find yourself about to partake in something where you feel, you were not the decision maker take a step back and re-look at it. If you feel you are making a decision without the awareness we are talking about do whatever it talks to get that awareness. Remember the only stupid question is the one not asked and the difference between creating wealth or not is usually information.
So where do you start? Start by understanding where you are. You can’t move from one destination to the other without knowing where you are today. Where have you invested? Do you have all the information? Do you really understand the insurance policy you took out? Do you actually know whether the land you bought exists? Do you know what you are being charged and what is the amount outstanding on your loan? Are you actually the legal owner of your assets? Collect and analyse your documentation, ask the questions and seek to educate yourself some more. Ensure that you can hold yourself accountable or responsible for all your current and future financial decisions as that is the only way we can become truly empowered.
Waceke Nduati
The author teaches Personal Financial Management. Find her at www.centonomy.com or twitter@centonomy.