Financial Awareness Defined

For my initial post, I thought I would share a short vignette describing a situation in which financial awareness was lacking. I believe this will help clarify my definition of financial awareness and what I hope to accomplish with this blog.

This story occurred a couple years ago as the firm where I first began my career and thought I would end my career was rapidly approaching its demise. I had returned from a conference of young financial planners a couple months earlier where I had learned so much about the meaning of money and what financial planners could do for people if they would move beyond the basic investment advice/product sales paradigm. I was full of excitement about this new way of looking at financial advice and very excited to enter the conversation I am about to describe.

At a gathering around Thanksgiving time, I was asked by a close acquaintance about purchasing a home. The questions posed to me were those generally asked of a financial planner; questions such as how much home could be afforded, what types of mortgage would make sense, etc... During this discussion, however, I never got a feel for why this individual desired to purchase a home. The questions were all very mechanical, focused on how one logistically goes about purchasing a home and keeping a home. These are certainly relevant and important questions to be asked, but with my newfound perspective on financial advice I wanted an idea about what value this individual hoped to receive in a home. Therefore, I began asking a series of questions which were met with surprise, but not nearly as much surprise as the answers that followed.

My first question to this acquaintance was why he wanted to own a home. (I later learned that the wording of my question could come off as challenging...luckily this did not happen.) At first I received no answer, then a vague "Well, I guess it's what we are supposed to do next." I asked what "supposed to do next" meant. This individual responded that he felt it was time for he and his family to own and live in a house. After further discussion and questioning, it became clear that what was meant was that he felt there was an expectation to purchase a home. He had found good employment, been married, began raising a child and purchasing a home was simply the next check mark on his list of progress through life. He had not consciously considered whether he wanted to own and maintain a home and to accept the financial burden and responsibility which accompany homeownership. This step was seen more as an obligation to this individual than a choice.

As we discussed this discovery, I tried to help make it clear that there was an active decision to be made. We discussed that he and his wife had the freedom to choose to purchase a home, rent an apartment, or even live in a tent if they so chose. I wanted him to understand that there was no obligation to commit himself financial to this based on expectations he believed others had of him. My goal was to present him with questions which would allow him to reassert his financial freedom and make a financial decision living fully aware of why he decided the way he did.

Living financially aware is exactly this process. It is defined by having an understanding of what one values and making financial decisions based on well-reasoned logic and a fully aware thought-process. Living financially aware means using your money in ways which support your values, beliefs and desires.

My goal is to bring you more short stories such as this to help understand financial awareness as well as tools to increase your own awareness. I also plan to share articles I find from other sources as shining examples of financial awareness or lack thereof, and plan to share some of my own personal struggles and successes at reaching financial awareness. Please let me know what helps you reach a more financially aware place.


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