$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ WEALTH HEALTHY WOMEN [TM] Healthy Attitudes ==> Wealthy Women [TM] Volume 1, Number 4 February, 2001 $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ WELCOME to Wealth Healthy Women [TM], a free e-mail newsletter for women seeking greater financial freedom and well-being. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ IN THIS ISSUE: 1. Note From Your Editor, Lynne 2. Article: New Year's Money Resolutions - Setting SMART Goals 3. Resource Spotlight 4. Your Input, Please 5. WealthHealthy Announcements ************************************************************ Note from Your Editor Did you set resolutions for yourself at the New Year? Did some of these resolutions pertain to money goals - earning, spending, investing? And if so, have you made any progress toward your goals during the month of January? During the past month, I talked with many people in my coaching and psychotherapy practices about their goals and dreams for the coming year. I've decided that optimism-cynicism is a fundamental dimension of human responsiveness, at least in this arena. Optimists easily ticked off their lists, often with enthusiasm. Some liked the term "resolutions" since it connoted determination and focus. Others preferred to use the term "aspirations" as something to move forward towards. On the other end of the continuum, cynicists quickly let me know that setting resolutions for the year was a waste of their time. Their experience was that such resolutions "never worked" to motivate them to make change. These discussions stimulated a lot of thought, which I share with you in the feature article on successfully setting money goals for 2001. After reading the feature article, consider treating yourself to a FREE teleclass on "No Time Like Now - Setting Attainable Money Goals for 2001" See the WealthHealthy Announcements section for dates and times. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Feature Article: New Year's Money Resolutions - Setting SMART Goals In the last issue, we discussed the impact of current financial downshifts on setting your financial goals for the new year. Specifically, we looked at the concept of risk tolerance, and taking your true tolerance level into consideration when making financial plans and taking action on how you are earning, spending or investing. Now, we'll take a look at what factors can interfere with achieving the money goals that you set for the year - assuming that aren't a total cynic and didn't set goals. Or, perhaps you are like my client Julie who told me that she "has a sense of what her goals are, but didn't write them down. As we scratched below the surface of her comment, it became apparent that Julie left her goals "fuzzy" because she was felt daunted by the task. Further discussion revealed that Julie had a whole set of "great expectations" for herself, compounded by a full-time job, family responsibilities and little experience with handling her own finances. In her book "Time Management From the Inside Out," author Julie Morgenstern identifies three levels for evaluating time management problems. Level 1 is "technical errors" which include skills and techniques that you don't have in place. Examples would be miscalculating the amount of time that a task takes, not having certain skills necessary to complete the task, disorganization and not developing a plan. Level 2 is "external realities" which you don't create, or have total control over, yet significantly affect what you can accomplish. Examples include an unrealistic workload, lots of interruptions, health problems, a disorganized partner. Level 3 "psychological obstacles" are internal factors that prevent you from achieving what you desire. Such obstacles can include being a caretaker of others, not defining your own priorities, need for perfection, enjoying the stimulation or being comfortable with chaos, fear of failure or fear of success. Morganstern's three-level analysis easily applies to money management and setting financial goals. Looking at Julie's situation with that three-level lens, we identified factors at each level. On the technical level, Julie had little "money education" growing up. Her parents were hardworking, saved conservatively but well, and put Julie through college. Julie basically earned money from part-time jobs to pay for her books, clothes and fun. After graduating, Julie nailed an editing position with a good salary. While keeping up with her current expenses (rent, food, etc.) Julie knew that she needed to put money away for buying a condo and possibly getting a Masters degree. However, she knew very little about investing and had never done a personal budget for herself. Examining level 2, external realities, Julie had a demanding work schedule, that could expand from a 9-hour to a 12-hour day when there was a backlog of projects. In addition, her mother had been diagnosed with breast cancer about 10 months ago, and Julie spent much of her spare time helping out with her care and supporting her father. Julie felt that she didn't have time to read the paper, much less read up on financial investing. On Level 3, Julie had spent much of her time being a good student. She hadn't really clarified what she wanted out of life, other than a good job. She was responsible, careful, yet had a fear of failure, of seeming incompetent. This fear resulted in rationalizing that "she was young, and had lots of time to plan her future." Understanding Julie's situation, what would be the next step in helping her toward financial well-being? Let me share with you two tools that I use as a money coach. First, develop a picture of what makes life satisfying UNIQUELY for you. There are many ways to do that, but two tools used by many coaches are the Wheel of Life and Pillars of a Balanced Life. Basically, these two tools provide a visual way of looking at essential life areas such as Career, Health, Significant Other\Intimacy, Family & Friends, Physical Environment, Fun, Personal Growth, Wealth. The Wheel uses a circle, with 8 (or so) pie-shaped segments, each representing one life area. The Pillars look like a box composed of eight (or so) columns, like a bar graph. What you do is rate your level of current satisfaction in each of those life areas on a scale of 0 - 10. Then you draw a line in the pie segment or bar to indicate that level. For example, say your current Career satisfaction is 6. Moving up from the center of the pie, you'd draw a curved line in the pie segment "Career" at 6/10s of the slice. With the pillars, you start at the bottom, and draw a straight line at 6/10s up the bar. Then rate your level of current satisfaction for each of the other seven areas, drawing lines in the same manner as you did for Career. When you're done you have a visual representation of your current life satisfaction. The next step is to figure out what influenced your ratings. Specifically what went into rating your Career satsifaction at 6, for example, and what would make it a 10. You do this for each area. As you can guess, you begin to see what is happening in your life right now, and what you want in order to have a balanced, fulfilling life. (If you'd like the chance to be guided through the Wheel of Life or Pillars of a Balanced Life, see WealthHealthy announcements. The second step is the meat. From your Wheel or Pillars, think about what it would take to increase your satisfaction level one point, for example from a 6 to a 7. Those become your goals, your new year's resolutions. Now, the critical question, is what allows for successful goal setting? I like an acronym that I learned somewhere (I'm sorry that I can't credit the source, but you can find similar concepts in Susan Wilson's book "Goal Setting.") That acronym is SMART. Effective goals are: * Specific - "I will develop a savings plan" is not specific. "In order to develop a savings plan, I will write down all income sources and calculate my average monthly income; then I will do the same for my expenses" is a specific goal. * Measurable\Manageable - I've seen the "M" in SMART defined both ways. Measureable related to Specific. If your goals is specific, you'll most likely have stated it in measureable terms so that you will know when you've accomplished the goal. For example, when you have your lists of income sources and of expenses totalled and averaged for 12 months, you know that you met your goal. In terms of being manageable, developing a savings plan can see overwhelming. I think most people would agree that developing lists of their income sources and expenses is manageable. * Attainable - Goals may be challenging, but they need to be achievable. * Time-specific - Effective goals have times specified for completion. So, working with the SMART concept, our SMART goal would be "In order to develop a savings plan, in the next 10 days I will write down all income sources and calculate my average monthly income; then I will do the same for my expenses." Finally, a few more tips for effective goals for 2001 1. Get the big picture of your life goals from the first exercise. Decide what you need to give your life better balance. 2. Listen to your heart AND your head. What feels essential to you? AND, what do you know that you may need to priortize first (for example, completing your degree to earn a better salary may be necessary before saving for your vacation home). 3. Decide what would help to increase your satisfaction level one point by the end of the year - be specific. Use your SMART criteria. (Remember, if you achieve your goal in 3 months that's terrific. It's better to take a small step, make it, then take another step than to leap and fail.) 4. Write your SMART goals down. Post them somewhere where you can frequently see them. 5. Share your goals with someone you care about and trust will support your efforts. Many of us are more likely to take action when our commitment is "public." However, if you know that you truly work better "solo," disregard this tip. 6. Set up regular times to check in on your goals, such as at the end of each month. Evaluate and re-adjust as needed. 7. IF you are not achieving your goals, consider the services of a coach who can helGop you analyze your behavior and assist you in achieving the results you want and deserve. References: Goal Setting. Susan B. Wilson. (1994). New York: AMACOM. Time Management From the Inside Out. Julie Morgenstern. (2000). New York: Henry Holt & Company. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Resource Spotlight The WealthHealthy Resource Spotlight features valuable advice and information from financial experts and sources on WealthHealthy-related topics. This month's issue highlights three financial websites that provide interesting financial information and resources: MSN Money Central, Quicken.com, and Smartmoney.com.** * MSN Money Central - This site offers information and assistance on topics including Investing, Saving and Spending, Retirement and Wills, Taxes, Insurance, Family and College, and Mortgage and Loans. Some of the areas that I perused offered step-by-step guides, such as for Spending and Saving, with tools including a spending quiz, debt evaluator and savings calculator. * Quicken.com - As the name suggests, this is Intuit's site, featuring Quicken products. You can use the site to develop a page that will organize and track your finances. Its Savings and Spending page offers a debt reduction planner, and its Retirement page has a retirement planner. Also contains information for starting, running and growing a small business. Other sections include Insurance, Loans and Taxes. * Smartmoney.com - This site had lots of topics listed on its Home Page, including various ways to keep your eye on the market and fund research. It offers a number of tools listed as Helpful Calculators (e.g., car leasing, compound interest, mortgage, retirement) and Tax Calculators (e.g., capital gains, estate taxes, home sales tax, marriage penalty, nanny tax). You can also use the site to track your portfolio. **The information presented aboveis not intended as an endorsement of the sites or products advertised. If you would like to share information regarding another financial site with other WealthHealthy Women [TM] readers, kindly send the information to Lynne@WealthHealthy.com. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ WealthHealthy Announcements FREE WealthHealthy Teleclasses on "Pillars of a Balanced WealthHealthy Life" Interested in being guided through the Pillars of a Balanced Life exercise? Join other like-minded women in a fun, interactive 60-minute class to clarify what is important to you and how your values influence your financial goals. This teleclass will be offered twice: Wednesday, February 21 at 7:30 PM (EST) Wednesday, March 7 at 7:30 PM (EST) Register by contacting Lynne@WealthHealthy.com. Please put "Pillars" in the Subject box of your e-mail. Indicate which class you want to take. $$$$ To hear a 10-minute description of the WealthHealthy approach, as well as a bit about me, you can call 1-212-461-2660. If you are interested in coaching, simply e-mail me at Lynne@WealthHealthy.com. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ Pass this newsletter along to friends, family, and colleagues who also may be interested in moving toward greater financial freedom and well-being. They can get their own free subscription by going to http://wealthhealthy.com and signing up - it's as simple as typing in their e-mail address. Or, send an e-mail to whw-request@WealthHealthy.com with the word "subscribe" in the body of the letter. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ NOTE: Wealth Healthy Women [TM] is intended for informational and educational purposes only. It is not a substitute for financial, legal, accounting, psychotherapeutic, or other professional advice and consultation. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Copyright 2001 Lynne Hornyak, Ph.D. All rights reserved. The above material is copyrighted but you may retransmit or distribute it to whomever you wish as long as not a single word is changed, added or deleted, including the contact information. However, you may not copy it to a website without my permission. Reprint permission will be freely granted upon request. Advance written permission must be obtained for any reprinting of this material in modified or altered form. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ CONTACT INFORMATION Lynne Hornyak, Ph.D. WealthHealthy.com Phone: (202) 387-5923 Fax: (202) 986-8980 e-mail: Lynne@WealthHealthy.com Web: http://wealthhealthy.com