All Things Financial Planning Blog

The 6 Biggest Financial Planning Problems with Video Clips You Have to Watch!


I feel that a picture’s worth 1000 words and a video clip is worth 1000 pictures. So I’m putting this blog together to show you the 6 things to really watch out for when it comes to financial planning. So I guess you’re getting the equivalent of 1 million words in my short blog here today!

I seem to learn more by my mistakes than my successes in life so I thought I’d give you a little taste here of what I think are the 6 things you really want to try and avoid when you’re trying to become financially secure. On top of that, I wanted to follow-up with a funny video that sometimes tells the story better than those sometimes harsh words of caution that I give is a financial advisor.

  1. How Much Risk is out there? Do you really understand how much risk you’re taking? Some risk is about catastrophic life risks like death, disability, health, losing your job or a broken relationship. There is also risk when it comes to your investment volatility. There is economic risk, interest rate risk and inflation risk that can really set back a financial plan. In my 30 years of being a financial advisor, I’ve never ran into a single client that knows exactly how much risk they want or even have to take. Needless to say, balance is the key in terms of getting the right mix of things that work for you but it tends to take a long time for people to figure out what they feel comfortable with. Sometimes we do the homework and get it right and sometimes we are just lucky when we escape risky situations. Take a look at this clip and see if it’s your lucky day.
  2. Self Discipline & Control Are Critical! It is really important when you’re trying to stay within a budget and force yourself to save to increase your net worth. Unfortunately we may have our self-control determined by the time we are four years old. In a previous blog, I talked about the marshmallow experiment and spoke about Stanford University professor Walter Mischel doing experiments in the 1960s. Mischel took four-year-olds and put a marshmallow in front of them and asked them if they could wait for 20 minutes. If they were able to, he would give them another one, effectively doubling their reward. It’s very much like me telling people that if you use the rule of 72 and divide your rate of return into that number, it tells you how long it takes to double your money. That means if you get a 7.2% rate of return, then you double your money in roughly 10 years. As a result of the research, most of the children were not able to control their urges. The researchers then followed the progress of each child into adolescence and demonstrated that those with the ability to wait were better adjusted and more dependable (determined via surveys of their parents and teachers), and scored significantly higher on the Scholastic Aptitude Test years later. Try this video on for size and see if you have the same look on your face when you wanting to buy something you feel you shouldn’t.
  3. Afraid of Change and Technology. I’m still looking for people who love change, but they seem few and far between. Growing up I went to 10 high schools and 23 total schools by the time I graduated college. Despite dealing with change, I still didn’t like it. With the advent of our massive productivity increases over the years with Technology driving it, it still seems like many people feel they are behind the curve, including myself. Technology and change in the financial markets continues to move swiftly, especially these days with the wild volatility we experience with the advent of computerized trading. This new, more interconnected, financial world is now even affected by smaller nations like Greece, Ireland, Slovakia and Iceland causing havoc on larger exchanges in the United States, Europe and Asia. Unfortunately the genie of technology is out of the bottle and it’s probably not going back in regardless of what the regulators are trying to.  Just think of the things that you can do now on a cell phone compared to what we were doing on a Rotary phone 30 years ago. In fact I’m still a bit of the technology phobic as I have a five-year-old cell phone that I call my rotary cell phone that I have yet to update. Enjoy this clip of Louis CK talking to Conan O’Brien about technology & the technology brats. Here are a few seniors engaging in it though.
  4. Peer pressure And Mob Psychology Matter! As much as we all feel that we are individuals in the world, we are surrounded by a jury of our peers that remind us that were not quite as individual as we think we are. So when the herds move in and out of the markets, they can draw in many unsophisticated investors into buying or selling at the wrong time. Try and fight the pressure to go with the herd and take a little time to understand what is important and when to act on it. Unfortunately on many occasions we make emotional decisions versus intellectual ones. This candid camera video clip that was taken over 50 years ago tells us a little bit about how many of us play follow the leader, even though we are not sure whether we believe it. Have a discipline or an unbiased financial advisor who has your best interest at heart. Enjoy this elevator ride.
  5. Procrastination & the Wake up call! Unfortunately one of the easiest and worst things we can do in life is nothing. We could learn a little from these videos of our house pets, the cat and dog. As our kitty shows, things can quickly sneak up on you and then turn around on a dime. Mans best friend can also show us that after running in place for a long time, you can sometimes have a rude awakening by running into a wall.
  6. Attitude Matters! I will admit that I am a glass is half full guy myself, so I prefer guarded optimism as opposed to a “ this world is going to heck in a handbasket” mentality. It’s amazing how we can read the exact same words, but they can have opposite meanings like the lost generation Palindrome.

Hopefully you’ll remember to include these 6 things in your financial decision making and hopefully the humor of a video clip can paint 1 million times the impact of a single word. Enjoy the laughs and make your financial life better! Also do me a favor, if you know of some clips that can make people laugh when it comes to their planning, please send me the links and I can share them with others trying to match humor with financial planning!

Dave Caruso, CFP®
Certified Financial Planner™
Coastal Capital Group
Danvers, MA

Author: Dave Caruso, CFP®

Dave attributes his achievements in Financial Planning and Wealth Management to three core themes: experience, effective communication, and attention to the details necessary to manage money in a quickly changing world. Dave is in his third decade in the advisory business, having graduated with his BA in finance at UMASS Amherst in 1980 and subsequently earning his Certificate in Financial Planning. Through the years, Dave has steered hundreds of clients with hundreds of millions of dollars through two major crashes, five bear markets, three recessions, countless financial crises, and dozens of fads and trends in the investment world. Dave’s professional credo is “to educate and motivate people about money so they can achieve their dreams.” Under his guidance, clients are kept on track to accomplish the things that are important in their lives, such as educating children and grandchildren, retiring, and leaving a legacy to loved ones.

2 thoughts on “The 6 Biggest Financial Planning Problems with Video Clips You Have to Watch!

  1. Thanks for listing those 6 problems! I think it is important to be really cautious with money, and try to minimize risk as much as possible. Though you put “Risk” as your first point, I feel like the the five all hearken back to that.Financial planning can either have wondrous or disastrous results. Following your advice will, I think, help it lean more towards the first.

  2. I found this extremely helpful and utterly entertaining – thank you for your incredible creativity & passion.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s