Welcome (back) to our Six Stones series. Our financial adviser, Jordan, is sharing as many tips, ideas and advice for people going through a divorce as a humble blog will allow. He’s staying away from specific financial advice – it’s all general advice over here, be sure to get personal financial advice before doing anything – but we hope you find some useful information in here as you navigate through/out of your divorce.
There’s that term again.
It’s a bland, nothing term and I’m open to suggestions on better names for what’s actually a fairly important part of Cash Confidence.
Because taking the time to:
1) Identify the risks in your life;
2) Categorise them using our Risk Matrix;
3) Deciding on how you’ll deal with them
will underpin the rest of your approach to money.
It’s a lot easier to make better investment decisions when you know the risks you’re accepting, avoiding and mitigating.
You’ll feel more confident when you have a plan in place to transfer the financial cost of not being able to work for six months.
You’ll be more secure knowing that your family will be provided for if you die suddenly.
Essentially – it’s easier to make better decisions more consistently when you have a risk management plan in place.
Still, it’s a shocking term.
Here to Help
I’ve put together a template you can use to get started on building out your own risk management plan (the title is totally editable too).
It’s a spreadsheet, predictably, that has room for you to:
– List the risks you’re facing (I’ve included some common ones too);
– Easily categorise them using our framework;
– Make a few notes about how you intend to deal with them;
– And, finally, a section for you to include the specific details of any particular action item.
Clicking here will take you to our website, where you can download a copy for free using the code RMP2020.
I’ve also recorded a short video explaining how to use the sheet too, so please check it out if you have any questions!
But first, a quick note on this:
I’m a financial adviser and a huge part of my job is doing exactly this – identifying, categorising and dealing with risks.
So I’m used to seeing the world like this! After nearly 15 years, it’s a completely natural way for me to look at things.
This is likely not the case for you. It is, after all, a pretty unusual way to take in the world!
Which means it’ll probably be confronting for you to go through this process and you might be inclined not to bother.
“What a weird dude he is, I don’t want to see all the risks in my life!” you might say.
“If I think about it, it’s more likely to happen.” Is another common one.
And fair enough too.
There’s no need for you to take this step. Most people don’t and they’re pretty much all fine. (Except for the ones that aren’t, of course. They’re really not fine at all).
But there are a few reasons I’d encourage you to take these uncomfortable steps:
1) The Monster in the Wardrobe
It’s easy to be scared of things we don’t understand or appreciate. I mean, an entire global marketing machinery exists purely to exploit our fears.
But just like the monster in the wardrobe, the most effective way of defeating these fears is to simply open the door and turn the lights on.
To avoid even thinking about these risks is to leave yourself vulnerable to fear – of the unknown, the unexpected and the undesirable.
And that fear is corrosive; it grinds away at your self-esteem and rusts your perspective.
This results in two situations – either total paralysis, which achieves nothing, or a flight to a promised ‘safe haven’, which brings its own risks and dangers.
Working through this process – uncomfortable as it might be – is the equivalent of ripping the closet door open, turning the lights on and kicking that monster square in its middle nose.
2) Control and Confidence
My goal in this entire exercise is to help people feel confident about their money again after their divorce or separation.
And I truly believe that real Cash Confidence – the deep-seated confidence you feel in your bones with total certainty – comes from being able to exercise control over your life.
Without that control, you’re entirely at life’s mercy – which can leave you feeling disoriented, nervous and vulnerable.
Now, by taking back this control you won’t be able to exercise it over every part of your life. To quote the Quindon Tarver song:
The real troubles in your life are apt to be things that
never crossed your worried mind
the kind that blindside you at 4pm on some idle Tuesday
But what you WILL be able to control is how prepared you are for these things happening AND how you will be able to react when they blindside you.
We’re not aiming for perfection here, but we are aiming for control over parts of your life that you’re probably already nervous and uncertain about.
That uncertainty is slowing your journey towards arse-kicking confidence, and needs to go!
There are moments leading up to, and immediately after, a crisis.
Be it the seconds before a car crash, the minute a colleague collapses or the hours after you’re retrenched.
What you do in these moments – how you react – are often critically important.
Flinching when your car skids through an oil slick could make it worse, being shocked to a standstill can stop you helping your colleague and reacting emotionally can burn the bridges you have left at your (now former) job.
But by taking a few moments to think about these things now – hypothetically and at a distance – you can start getting a grasp on what you might want to happen in those situations.
And while it may not mean the risk doesn’t happen, it can prevent you from making things worse.
So that defensive driving course, CPR instruction or emergency savings fund can give you the clarity of mind in that critical moment to hurdle what’s being thrown at you, land on your feet and get stuck in.
Now, if that doesn’t sound like confidence, I don’t know what does.
Now that we’ve explored our framework for thinking about risk, my next few posts will take that and squeeze it into the realities of our financial world.