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Personal Finance

Finances Scrooged?

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As Charles Dickens tells us in his celebrated Christmas fable, the self-defeating ways we behave financially are rooted in the past. Digging them out is the only way to fix what's wrong.

A past article discussed the most important step of changing a problematic financial behavior: becoming open to admitting that improving how you act is important, and then seriously contemplating making the change. Ebenezer Scrooge in A Christmas Carol took that step when he heeded a warning from the ghost of Jacob Marley.

The next step in financial transformation is the most difficult and requires the most courage. It is revisiting the events in our lives where our strongly held delusions were formed. Scrooge initially resisted this step. Yet his guide, the Ghost of Christmas Past, gently turned him toward the past.

Looking clearly at entrenched financial delusions isn't easy. Many people want to focus instead on learning more about how to save, invest or spend wisely. Yet dwelling on present-day concerns, before visiting the past, is ineffective.

What's needed most for transformation is emotional intelligence, which you cannot learn academically or all by yourself. You learn the lessons emotionally, experientially, and in community. Just as Scrooge found a guide in the Ghost of Christmas Past, people wanting to gain emotional intelligence require the assistance of a financial coach or therapist. This is a journey you cannot take alone.

Once you take that difficult but transformational journey into the past, you are ready to see reality with new clarity. Once you gain emotional intelligence, you can replace faulty beliefs with accurate cognitive information. This is the time for learning about budgeting, debt reduction, investments and other financial skills.

In the book Changing for Good, psychologist James O. Prochaska calls this the stage of preparation, where you begin to acquire necessary knowledge and take the necessary steps to get ready to act. Scrooge's guide, the Ghost of Christmas Present, helped him negotiate the current day and obtain this knowledge. Our real-world guides may include accountants, attorneys, financial planners, educational books and workshops.

When you gain accurate financial knowledge, you are ready to look toward the future to see where previous delusions potentially were taking you. Like the vision that the Ghost of Christmas Future unveils before Scrooge, the scene is often harsh. However, because of your preparation, you have the capacity and tools to enter what Prochaska calls the action phase.

Now you can begin to create a future that is consciously and deliberately planned. You can take control of your money rather than your money controlling you. Your guides can be financial advisors, financial planners and financial mentors.

Many try to shortcut the transformation process by starting with looking at the future. Sadly, without first taking the critical steps of viewing the past and learning the present, you often lose heart. This is why resolutions for financial change tend to fail, not because the goal is bad or unattainable, but because you are unprepared to go into action.

The end product of Scrooge's difficult journey with the three Spirits was a transformed person, full of joy, generosity and spirit. He experienced this transformation because he had the courage and conviction to start the process.

Giving the gift of a financial transformation is not possible. It is a gift that you can only receive. This Christmas and New Year, perhaps it's time for you to receive yours.

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Rick Kahler, CFP, is president of Kahler Financial Group in Rapid City, S.D.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.