The Newspoll found that two thirds of Australians are stressed about money, second only to being stressed about work. Does that include you?

The Lifeline poll reminded me of research published last year by Relationships Australia, which found that financial stress was the second largest contributor to relationship breakdown, affecting 35 percent of relationships.

This may be a stretch, but if we can work together to reduce our financial stress we may be able to lower the divorce rate and bring more joy into everyone’s lives.

Causes of financial stress

I started writing a list of what has caused financial stress among people I’ve met. Most of the causes fell into two broad categories:

1. Not enough money (to do, buy or retain)
2. Doing it for the money

In this article I’ll share some tips for reducing your stress caused by “not enough money”. Later, I’ll write about “doing it for the money”, but if you’re keen to learn how to earn money doing what you love then please call me now.

Stress about not enough money

Our stress seems to rise when we don’t have enough money for something that is really important to us. For example:

• To join our close friends on a big interstate or overseas holiday (maybe to celebrate a milestone birthday)
• To buy a bigger house when our family has well and truly outgrown the current shoebox
• To keep our car and house when we lose our job and fall behind in the mortgage repayments

Our stress doesn’t appear to rise when we decide we can’t afford the $2 chocolate bar or $15 movie ticket. I believe that is because those things aren’t really that important to most of us.

Financially related decisions can also stress us, and I believe they fall into this broad category. Our stress level is affected by the materiality of the loss or by the consequence of a wrong decision. If we get the decision wrong it may mean we won’t be able to upgrade our shoebox house when we want to, so then we stress about the decision.

Save for the Significant. Minimise the Insignificant

To reduce your financial stress plan to have enough money for those things that are most important to you. This is a personal thing and is based on your values.

Once you have plans to be able to afford the most important things in your life you can spend the rest of your money on whatever you want, guilt free.

You need to move your thinking from “next pay” to “next year” and then onto “next decade”.

I believe it is through spending too much on daily insignificant things that we end up not having enough for the significant things. This is often because the significant experiences and achievements are lumpy and irregular, so they can sneak up on us.

Bring far away important things into focus

Here’s an exercise that you can do.

Get a blank piece of paper and place it in landscape orientation. Across the middle from left to right draw a thick line. The left represents now; the right represents your passing, say at age 100.

Divide this line representing the remainder of your life into bite size chunks. The length of each chunk is not fixed, just make it meaningful to you. You may like symmetry and therefore make each chunk an even five years. Or each chunk could be of different length representing different life stages you have in mind.

Next fill the rest of the page with all of those achievements and experiences that are really important for you in each of those meaningful chunks of life. For example:

• Career transitions you’d like to make
• Places you’d like to see in the world
• Experiences you’d like to have with your family
• Time out of the workforce to study, reflect or travel
• Contributions you’d like to make to your community and world

For inspiration on what is really important reflect on your personal values.

Now implement plans

Implement a clear plan to manage your money so that you achieve and experience what is really important to you. Then you can happily spend the remainder on whatever insignificant pleasures you want, guilt free.

This is how you can achieve what I call financial fulfilment. And this exercise is part of the process that I call Fulfilment Financial Planning. To learn more call me on 1300 669 101. I take clients from all around Australia and would love to hear from you.

You may also enjoy these related articles:

1. The source of financial stress
2. The Three Fatal Financial Behaviours
3. The dilemma of realistic financial goals

Standard & Poor’s and the Australian Securities Exchange (ASX) recently changed the name of the S&P/ASX 200 Property Trusts Index to the S&P/ASX 200 A-REIT Index. The name change follows the ASX and Property Council of Australia’s renaming of Australian listed property trusts as Australian Real Estate Investment Trusts (A-REITs) to align with global practice.

REIT is the most commonly used and understood term used for listed property trusts in international markets. Australian REITs currently comprise around 12 per cent of the world’s listed real estate assets and are one of the largest sectors on the ASX.

Source: Vanguard Investments Australia, Smart Investing newsletter.

I recommend that all investors benchmark their portfolio returns once per year. The above name change is important to know because I recommend you use the market indices as one of your benchmarks.

You may also enjoy these related articles:

1. Find the right property mentor
2. Risky SMSF borrowing advice from real estate agents
3. Property prices do go down

Most likely it is only people with an existing appetite for risk and confidence in their decisions that would be comfortable buying at volatile times like now.

So for everyone else it is a great opportunity to learn and to begin the journey of increasing your tolerance of risk. Emotions are one of the key drivers of risk tolerance. So right now and during volatile times do the following:

1. Stop, take time and observe your thoughts and feelings about the current state of the market
2. Write them down in your journal or diary, if you have one, or even in you investment file. (Date the entry.)
3. Probe deeper by asking the wonderful question that children master: “Why?” For example, “what makes me feel or think that way?”, “What do I think may happen?” Keep drilling and obtain mastery of your thoughts.
4. Seek resources that help you learn about the thoughts or fears you identified

The Financial Planning Association of Australia have just released this excellent resource to help you learn about risk: “The trade off – understanding investment risk.”

The graph on page 14 is particularly pertinent to anyone thinking they should be selling now. My question to those people is “if you do choose to sell now, what are the triggers that will make you buy again?” If you are serious about long term wealth creation you need to answer that question. The graph on page 14 shows the significant impact of missing the best month because you hesitated in being in the market.

If you are a long term investor turn off the news when the finance report starts. It’s just distracting noise.

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Discover your financial fitness by completing our brand new Financial Fitness quiz now. (It’s free and takes about 70 seconds).

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Doug Turek of Wealth Benchmarks has been researching wealthy investors since January this year. In the latest edition (5th December 2007) of The Eureka Report, Doug presents some of the findings of his research, which he plans to publish in a book in June 2008. The article is available for subscribers only but you can get a free 14 day trial so you may be able to read it if you act quickly.

Following are a few quotes from the conclusions in the article:

“Successful people create a “virtuous” wealth-building circle of earning, saving and investing and reinvesting.”

“The key message, which is a timeless anecdote about finance, is that we build wealth patiently and purposefully. There is a rich reward for those who get it right.”

“Other factors apart from age and income drive financial freedom or impact it. I observe, for example, a
marital separation knocks off on average 20% of lifetime wealth.” (Matt’s note: there is much value in investing in relationship development as well as wealth education.)

“Knowing the right asset allocation for you and managing your portfolio to this target is a critically important investment discipline. This work reinforces my suspicion that too many Australian investors neglect this fundamental and focus instead on tactically or ad hoc accumulating shares and other investments.”

Check out Doug’s site Wealth Benchmarks to conduct a free benchmark of your net worth against the average Australian.

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By necessity the tool has been simplified so that it can be usable on the Internet by a broad range of people. The simplification is that it assumes that your only retirement saving is done through superannuation. For wise wealth creators, like the people who read this blog, you are likely to be creating wealth both inside and outside of superannuation. But the tool is still very useful in giving you a point in the general direction of the level of savings required.

I encourage you to read the “Assumptions & Methodology” section on the opening page of the retirement simulator as it provides some very interesting information from which you could learn a lot.

It is pleasing to see that some of the profits from investment administration and management are being reinvested in providing high quality educational tools – for free. Thanks AMP.

Check out the AMP Retirement Simulator now.

You may also enjoy these related articles:

1. Retirement lifestyle costs quick estimator
2. Dec 2010 qtr retirement cost statistics
3. The annual cost of retirement

Well, if you suspect that your finances are out of shape you are not alone. The average score from my online financial health check-up is just 39 percent.

That low average is to be expected given that we don’t receive much if any financial education when we are growing up, and then none afterwards unless we seek it. So we leave school not knowing what we don’t know.

But wouldn’t it be great to be enlightened as to things we could easily do that would make quick gains and we didn’t even know about? That’s why I created the online financial health check-up to produce a very comprehensive, personalised report.

And the great news is that until Monday December 3rd you can complete the check-up and get three extra educational tools for half-price. It’s all part of my mega Christmas bundle – check it out now.

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I was complimenting Kylie on her wonderful ability to have lots of fun and control her spending within what she had defined as their budget. She then revealed one of her “secrets” – a website called Simple Savings.

Budgeting doesn’t have to equate to sacrifice, even though that is what your money mindset may lead you to believe. Often there are ways to keep your current lifestyle but shave dollars off the cost by just being in the know.

Simple Savings has a terrific free newsletter that highlights at least one tip per week.

If you want to search the archive of tips Simple Savings also has a members vault jam packed with great insights from other members about how they have become smarter consumers. I have been impressed by the ideas and I’m sure you will be too. (There is a $47 joining fee for the members vault.)

Do you know of any other resources?

Do you use other resources to help you become a master of your money? Maybe other sites with tips for smart spending? If so, please let me know by leaving a comment below as I’d love to share them.

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Brock apparently left three Wills – the latter one changed a major beneficiary from his former partner (Bev Brock) to his partner at the time of his death (Julie Bamford). But the latter Will was unsigned.

Unfortunately it is too late for Brock to advise us of his true intentions, leaving his estate wide open to a challenge based on many people second guessing his intentions.

Have you made your intentions clear with regard to the distribution of your assets?

Are there possible beneficiaries who may be unhappy and seek to challenge your estate, irrespective of the presence of a valid Will?

For example:

• Do you have a former partner(s), or children from other relationships?
• Does your current partner have children from other relationships and with whom you have a relationship?
• Do your children have a close relationship with each other and their surviving parent, or are they likely to bicker after you are gone?

Examples like that of Peter Brock remind us to get our affairs in order and to make our intentions clear. Not just to others, but also in a legal sense.

If you do not have a valid Will that is up to date then it is time to sort it out.

LawCentral provide a wonderful online resource to guide you in the creation of a legal Will, and it is very cost effective. Visit LawCentral now.

You may also enjoy these related articles:

1. Who can challenge a Will?
2. Famous Will Catastrophes
3. Update your Will when your cheating husband is given marching orders

What are your expectations of the returns you will achieve from your specific investments? What evidence have you used to shape your expectations?

To help you manage your expectations it is useful to consider what has been achieved in the past. Vanguard Investments Australia has created a flexible tool for looking at historical market returns since 1970. You can even select individual years and see what the best, worst or average return was for each investment market. Check out the Vanguard tool here.

(If you know of any other great tools out there on the internet please let me know by leaving a comment below.)

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