Many Americans, including high income earners, are not “on track” to maintain their standard of living without having to work longer into old age than they want to. Even relatively financially secure households rarely do all they can to take the best possible care of their total financial situation. They often pay more than necessary for loans, insurance, investment advice, and/or taxes, and more generally fail to maximize the capacity of their assets to live a good life.

Some blame the financial services industry for these breakdowns; but over the last 20 years, plenty of superb products and services have come into the market to address these concerns. They are a little harder to find than mass-marketed brokerage products and services — but using Google, they are just a few keystrokes away.

Fundamentally, these breakdowns arise from people’s failure to blend three different types of skills needed to craft a strong financial future for themselves. Few people are naturally gifted at all three, but almost everyone can learn or acquire what it takes to fill the gaps and get the job done.

Motivation: People are “motivated” when they feel impelled to act to avoid a threat or realize an opportunity. Many people who are motivated to earn a lot of money are surprisingly unmotivated to take great care of what they have already earned.

Sometimes this is because people don’t enjoy being a prudent steward of already-earned money as going out and making more money doing what they love. In other instances, especially for those raised in financially-secure households, lack of motivation to take care of financial concerns is grounded in naivete – such people have not generally felt the motivating sting of what it means to not have enough money to take care of their basic needs.

Whatever the cause, the bottom line is that many people lack the basic psychological drive to make sure their money is working as hard as it can for them. And sadly, they often don’t get it until they realize how much less they will have to spend in retirement than they are accustomed to — and by then it may be too late.

People who need help with motivation to take good care of their total financial situation are helped by someone who will speak clearly about the threats that will unfold absent more attention to financial matters. Sometimes this requires a dramatic “in-your-face” intervention, but it almost always involves some kind of perturbation or stressful situation that shocks someone out of complacency.

Mobilization: While internal personal motivation is a constructive driver of attention to financial matters, it is insufficient. Physical action must occur as well. Mobilization involves designing and implementing a plan of action that is coherent with the external realities of a world that is indifferent to our success. Mobilization, often associated with armies preparing for battle, recognizes the practicalities of limited time, energy, and money. It is as concerned with logistics (like carving out enough time to understand how much it costs to live the life you have grown accustomed to and to calculate how “on track” you are) as it is strategic effectiveness (having the career skills to earn and save enough to not have to work into old age).

People with weak mobilization skills will benefit from people and processes that help them organize information and activities in a coherent strategy that is consistently focused on their ultimate objectives.

Modification: No matter how motivated and mobilized a person is, life has a way of not working out as planned. This may be due to personal developments (e.g. disability or divorce) or external factors (e.g. layoffs or stock market crash). Whatever the reason, the odds of financial success go way up when you have the resilience and creativity to adopt new practices to adapt to unanticipated situations. This is especially true in a marketplace in which changing technologies and politics can disrupt careers and businesses that have been relatively stable in the past.

People who have trouble adapting when their financial situation changes will benefit from conversations with people who have weathered such crises in the past, or reliably helped others do the same.

In Summary:

• Motivation without mobilization is relying on good luck – a “read, fire, aim” approach may hit the target on occasions, but for which the odds of success are not high.
• Mobilization without motivation is dithering – “paralysis analysis” in which the commitment to act is lost amidst academic research and high concept planning.
• Motivation and mobilization without modification will enjoy early success, but is likely to lose ground facing the longer term challenges of evolving marketplace and personal situation.

Most of us are naturally inclined to be better at one of these fundamental money management skills than the others, but you cannot buy motivation, mobilization and modification in the financial services marketplace. But like any combination of skills, they can be developed through a combination of commitment, conversation, and coordination with the family members, colleagues, and advisors helping you make it down the path of financial success.

The first step is to announce that commitment to yourself. The more reliable way to produce results is to work on it with others. Most of us will be more accountable to our families, colleagues, friends, and coaches than we will be to ourselves. So conversations with others increase the odds you develop the combination of motivation, mobilization, and modification needed to take the best possible care of your financial future.

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