Are Your Personal Finances Really Yours?

It's funny how the English language can be so exacting sometimes, and completely mislead you at others. Unfortunately, the term 'Personal Finance' is one of the damaging and completely misleading uses of our language and it's got to stop.

What do I mean?

Personal finance, by definition, should be about you and your beliefs as much as it is about the bottom line, but all too often this isn't the case. Truly personal finance would start with understanding who you are as a person and what you believe, aligning financial options with those ideals.

If you've ever had someone sit down and ask you which stocks or funds you want to invest in, then you know realize that this rarely happens. Usually, the 'Advisor' (aka Salesman) didn't ask what you believe, what you know about, or anything beyond how much risk you want to take.

He then shows you how (amazingly) what he represents is the perfect fit for your situation. Is this a coincidence? Not likely.

It's very similar to walking onto a Ford car lot and asking the salesman what kind of car to buy. He's biased and doesn't make any money if he tells you to shop elsewhere, so he doesn't. Regrettably, most financial advisors operate the same way and lead you toward the product they sell. In most cases this is the stock market, but it could be anything: gold, oil, real estate, etc.

The questions that should come up through this process are: Why is this a good investment choice for you? Why not something else? Do you even know anything about this investment or how it works?

If you invest in something as broad as the stock market, do you know where your money will go or what it will be supporting? What if you found out that your money was supporting the very causes that you stand against as an influencer – as many of the stocks that may not align with your values?

I know those are a lot of difficult questions, but they are important to consider in ANY investment you decide to consider.

You work very hard to earn your money, so understanding how it's being invested and protected is vital.

The good news is that there is a better way. The bad news is that it's not just about investing and just like going from ignorant to learning how to properly take care of your health, it takes a little work and education.

As a first step, start by asking yourself the following questions to see how healthy your financial plan truly is:

Do you have a clear plan to keep your cash flow optimized? In other words, do you have a plan for paying down debt, minimizing interest rates paid on loans and credit cards, and do you regularly review your plan as life and conditions change?

Do you have the proper entity structure and layout for your business to minimize the taxes paid. We've seen that, even with business owners that use a tax professional, more than 90% are still grossly overpaying taxes each year.

Do you understand your insurance coverages and why you have chosen the plans that you pay for every month? Improper insurance coverages leave your business and family exposed to one of the leading causes of bankruptcy.

Have you created a clearly articulated, specific investing strategy that represents how you want your money invested? If you don't know what you plan is, then your ideas may easy be swayed by every professional salesperson that walks through the door.

There are others but these are some of the areas of your financial plan that must be understood to help you stop leaking cash, leaving your assets exposed, and maximize the results of your hard work. If you are uncertain or don't like that answers to these questions it's time to find help so that you can create the certainty that will serve you both now and in the future.

[Ed. Note: Garrett Gunderson is a financial advocate to professionals.
Through the value of Soul Purpose, he empowers people to build sustainable wealth consistent with their passion, purpose and knowledge.  Garrett is a winner of the SBA's Young Entrepreneur of the Year award. He founded Freedom FastTrack, as an expression of his Soul Purpose, which has been the fuel for a growing message that took the company to the Inc 500 in 2007.  Garrett is the author of the revolutionary financial book Killing Sacred Cows, a New York Times bestseller and the New Rules to Get Rich with Nightingale Conant. Garrett lives in Salt Lake City with his wife and two crazy boys! ]