Since the rise of social media and people spending more time online and engaging in environments that are desirable, spending habits have changed. It used to be people wanting to keep up with the joneses meaning people in their local community but the aspect of local community has changed. Community may mean your Facebook friends, Instagram network and X. The problem with social media is that people can post anything that does not accurately resemble their life but seems convincing. It can be a temptation for people who are emotional and need things to help them fill the void and feel better.
Moreover, online spending which also includes online shopping that may not be on social media need less effort to spend rather than getting dressed, getting out of your home, starting your car, going for a walk and walking into the store. People who are hoarders and compulsive spenders need extra psychological support to manage their habits as it is not that easy. Moreover, people may want extra help to review their lifestyle and change their habits to improve spending habits. However here are some tips that can help manage the spending. - Do a 5 year budget with projections that includes inflation and focus on your retirement plan to determine how much you need. This can help you identify how much you can spend so when you are online you have a framework to work with. - Practice delayed gratification. When you practice delayed gratification you may realise that you actually don't need the item. You can improve delayed gratification with mindfulness. - Review your lifestyle. Ask yourself questions such as do you really need all this stuff? Is it better to browse than buy? What is the meaning of your life and what would you rather do with the spending money you have? Travel, save for investments, spend time with people? Is the stuff really filling the void or making you feel worse? Unhelpful spending habits can create depression, anxiety, and a rift between family and friends. Shift your focus to a healthier lifestyle and learn to have a better relationship with money.
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When an advisor meets a new client and gets to know them, they have systems in place to learn about their relationship with money, financial literacy and situation. Step one of the six steps of the financial advice includes building the relationship between the financial planner and client and step two involves collecting information before any advice is given. If step one and two are not established well, then the client will less likely accept the advice as the trust would not have been established.
Trust is built when there is interest in the other person's story through discovery questions. The planner will have interest in the client's family history, relationship with money, current situation, work habits, and future goals through curiosity . The focus on the client's past, present and future story needs to happen before the focus on numbers. The planner needs to remain curious rather than assume the client's story. Curiosity is the process of not knowing, remaining interested and asking open ended questions. Structured questionnaires can be used together with non structured questions. Non structured questions gives space for the client to tell the story beyond questions in the questionnaire. The planner will facilitate the process by using their skill to guide the client. Trust will increase the planners ability to gather complete and accurate information where appropriate financial advice can be provided. Trust built through curious and genuine interest in the client's story will show the advisor cares. Trust can also be developed through empathic listening, listening to non-verbal cues, active listening, eye contact, micro communication, and giving the client the space to expand on short answers through 'tell me more' questions. These communication strategies can build connection and deepen understanding in the client's story. Trust will increase the client's motivation to implement the strategies in the Statement of Advice. Have a desire to listen, remain curious and ask questions with empathy as people's view about money is personal and connected to an emotional story that won't be disclosed unless trust is built. Through curiosity, empathy and a genuine interest in the client's story, a stronger relationship between client and advisor will develop. The client will feel heard and respected. |
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February 2024
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