This area of focus is:

How to confront money.

Confront has two common definitions:

1. To meet face-to-face in hostility or defiance.
2. To face up to and deal with a problem; to be courageous.

In this article, we are using the second definition. To elaborate further on this:

• To really confront something, you will have no resistance, no hesitation and no emotion. You can courageously face it or simply feel comfortable being around it.
• When we say you can confront money, we mean you can face all aspects of money. For example:
• You can face a credit card bill, a large amount of debt, a tax bill, a financial disagreement like you can face an apple;
• You have no back off from tracking your expenses, sticking to a budget and following good financial disciplines.

Over my years as a financial planner, I have found that clients who are willing to confront money tend to do better financially. For example:

• If a client is financially ruined, confronting money can help them re-establish themselves quickly;
• If a client is having difficulty earning more income, confronting money can help them improve their income capacity;
• If a client is not able to save any money, confronting money can help them to have more savings;
• If a client is already doing very well financially, confronting money will take them to a whole new level;

In other words, there seems to be little downside to increase the ability to confront money.

How to increase our ability to confront money

1. Identify the aspects of money you are not confronting. Some of the aspects can be:
   • How much bad debt do you still have?
   • Are you keeping track of your expenses?
   • Is your tax up to date?
   • Are you avoiding anyone you owe money to?
   • Are you avoiding anyone who owes you money?
   • Are you always involved in a financial dispute with others?
   • Are you spending money on something you know you shouldn’t be?
   • Do you have a long-term financial plan?
   • Are you concerned that you have more money than your friends and family?
   • Are you avoiding having a better income?
2. Confront it.
   • This means you can simply pick one of the non-confront aspects of money, face it and deal with it. For example:
   • If you haven’t done your taxes for a few years, just pick up the phone and book an appointment with your accountant now;
   • If you don’t know where your money is gone on a monthly basis, start collecting receipts today;
   • If you haven’t had a long term financial plan to help you reach a desirable financial goal, just pick up the phone and book an appointment with your financial planner now.

It is not always easy to confront money as we often have reasons and justification of why we can’t confront the issues or we are waiting for other people to do their bits until we do our bits. This is where financial planning can help; a good financial planner can help you work towards your financial goals, just like a personal trainer who can help you work towards your physical goals.

What is financial planning?

Financial planning is not about selling shares and insurance.

Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include simple ones such as buying a home or an investment property, saving for your children’s education, to more complicated ones such as planning for retirement or achieving financial freedom.

A financial planner is someone who uses the financial planning process to help you figure out how to meet your life goals.

• A financial planner can take a `big picture` view of your financial situation and make financial planning recommendations that are right for you.
• A financial planner can look at all of your needs including budgeting and saving, taxes, investments, insurance and retirement planning.

Financial planners are similar to GPs in the medical fields; they work with other specialists financial advisors such as a mortgage, tax and real estate professionals. Without the big picture outlined by a financial planner, property investors often find conflicting and confusing advice from different specialist advisors who are mainly trained within their own areas.

The outcome is no different from a patient trying to book himself in to see a specialist without waiting for a proper recommendation from a GP. We all know specialists get paid for their part of the effort regardless of whether it benefits the whole.

Hence property investors often find themselves in one of the following common situations:

• If they start with a tax specialist, they will find themselves having some of the most complicated and expensive structures;
• If they start with a finance specialist, they will find themselves taking on more and more debt with no reason;
• If they start with an insurance specialist, they will find themselves buying so many different forms of insurance cover they don’t even remember;
• If they start with a property specialist, they will find themselves getting into properties that they don’t fully understand;
• If they start with a stock specialist, they will find themselves being introduced to so many different types of stocks and funds they have never heard of;

The approach a financial planner would take differently is that they will ask you what your overall goal is before sending you off to the specialist advisors. For example, a financial planner may find out the big picture such as what passive net income you want to achieve from your investment within what time frame, define a step by step approach through a financial planning process before recommending you to work with the specialist advisors.

What we do at Investors Direct Financial Planning

After working with thousands of property investors directly for almost a decade, my colleague Bill Zheng, the founder of Investors Direct, had realized that there was a critical component missing from Australian residential property investors which have greatly reduced their chance to succeed financially.

The missing component is financial planning that is 100% dedicated to the needs of property investors, as most property investors do not have a clearly defined financial goal backed by a workable plan.

Bill invited me to start up the financial planning division for Investors Direct a couple of years ago, and I happened to be one of the few financial planners who are very interested in properties and shared the same investment philosophy of Investors Direct.

My mandate as the director of Investors Direct Financial Planning is to help our property investor clients to set up their financial objectives with workable plans and assist them persistently towards their financial freedom.