December is a great month to look over what has transpired in 2016 and ahead to what you may be able to influence in 2017. One of the things that I like to do is to review books that have had meaning in my life and try to see where I have successfully and unsuccessfully applied their messages. One such book is “The Four Agreements,” by Don Miguel Ruiz. It also connects to financial planning.

“The only way to store information is by agreement,” Ruiz proclaims. When we reject an idea, we are not agreeing to it and are cementing something else in its place. The book discusses four agreements that if adopted, can help us overcome some of our fears. I want to go over each one and how I have seen it applied.

The first, Be Impeccable With Your Word, seems to be obvious, but I have often seen this fall apart in client meetings. When couples are talking about their spending, they may point out behaviors but not what those behaviors trigger.

For example, often couples bring up small spending choices that are a source of conflict. The real problem isn’t the spending, though, it is what they are experiencing and often fearing. Maybe they have concerns about whether they will have enough to retire. They may be nervous that the spending on small items won’t allow room for bigger dreams that they have yet to share. What if someone feels trapped in a job because of financial commitments they have made? Being impeccable with your word is exploring what button is pushed. It is owning it and sharing it with your partner.

The second agreement, Don’t Take Anything Personally, often rears its head when the need to be right becomes more important than being open. It is making the issue about them rather than about you. In financial planning, this often surfaces in how children are treated. When a child doesn’t show appropriate gratitude for “help” being given to them, it is easy to take it personally. But think about that. If you saw a perceived need and had the ability to help, the response would only matter if at some level you were doing this for you rather than for them. A reaction from the receiver may provide good information, but it doesn’t mean that you did something right or wrong. We take things personally when we expect a certain response that removes us from the action we took (over which we had control) and places the power in the hands of the grantee.

The third agreement, Don’t Make Assumptions, is probably the most common thing that I see in working with clients. Clients will often look at the careers of their cohorts and assume that they are doing better or worse than them. They will see how neighbors spend money and assume that the neighbors have more than they do, without considering how the neighbors treat debt or savings. Some clients may assume they are congruent when they are actually not aligned. The most important thing in handling this agreement is by asking questions. Checking things out with each other (especially being impeccable with their word) will avoid many of the seemingly small mistakes that turn into big issues.

The fourth agreement, Always Do Your Best, recognizes that our best may be somewhat fluid. If I had a really draining day at the office, my best at dinner may look different than if I had an uplifting one. When clients do their best, it is not necessarily by doing everything right, but rather by being aware of when they have moved off center.

These concepts seem simple, but they are difficult to maintain. A useful exercise is to make an inventory agreement. Look closely at your actions and determine from where they originate and whether they are serving you. Many times when we are having money problems, it may be because we have unstated agreements regarding where we are supposed to be in our careers or how we should be spending or saving. By understanding the agreements, you can see their effect on you.

Another exercise that is helpful is to write down the various ways you spend your time. Evaluate how focused you are when you are doing the endeavor. Then judge whether you feel energized or depleted when you are done. Try to spend more time on the things for which you are focused and bring you energy. For example, I love sports and regularly watched games on television. This exercise taught me that there was only a certain type of game for which I both felt in the flow and somewhat energized after (Gopher football and basketball, often regardless of outcome). So I have replaced some of my mindless sports watching with reading — something that keeps me focused and energized.

This is also useful to do with money. If we look at our purchases, we will realize some have longer lasting impact on us than others. By evaluating recent purchases you may better direct your spending on items that create a lingering effect.

Using the four agreements will help you understand what you really want and create a path for getting there.


Ross Levin is the founding principal of Accredited Investors Wealth Management in Edina.