3 Mind Tricks To Hack Yourself Into Spending Less

April 11, 2019

If you feel like you’re stuck in a rut, living paycheck to paycheck and worried that an unexpected expense could topple your financial situation, you’re not alone. The good news is there are little things you can do today to break the cycle, and no, I’m not talking about making a budget or cutting back on dining out (although those things can help). 

Part of the escape from paycheck-to-paycheck living is a shift in your mindset. A little bit like Jedi mind tricks, one part of the solution is to change the environmental cues around us to encourage, motivate, and support mindsets and behavior that lead to better financial decision making.

Here’s what I mean in 3 different ideas.

Harness the power of pre-commitment

We tend to think of our future selves as a more perfect version of our present self. Yet like the popular phrase reminds us, it seems like tomorrow never comes. Pre-commitment will help you think about your future self by making a binding commitment today to save money from a future payday.

How to apply it

Next time you expect a tax refund, bonus, or pay raise, make a binding contract with yourself to save a portion of that money (remember, pay yourself first). Some ideas to implement that include:

  • Use an app that lets you make savings decisions in advance such as Digit.
  • Set a savings goal in percentage terms in advance of receiving your tax refund, and stick to it. For example, commit to putting 30% of your tax refund in savings.
  • Establish a preset percentage or dollar amount of your bonus that you will set aside, and set it up before you get paid.

If you can pre-commit and set it on automatic, the savings magic can happen.

Use transition moments to your advantage

We tend to get really excited anytime our lives are transitioning, whether it’s a birthday, new year, the start of a new week, or the changing of a season. It’s called The Fresh Start Effect and it’s a real thing. Take advantage of this behavioral phenomenon to take positive financial action accordingly.

How to apply it

Highlight a specific transition moment that is going to happen in your life and set a reminder in your calendar to do something that you’ve wanted to do financially before that day or time. Some ideas include:

  • The day before your birthday, increase your 401(k) contribution or the amount of money you are saving on a monthly basis by $100.
  • Decide that every Monday or perhaps the first Friday of the month you will sit down and review your budget.
  • Schedule 30 minutes at the beginning of every week to work on your side hustle (or any other medium to longer term goal), until you get it going.

You’ll find that you will have a much easier time getting motivated to do these things by leveraging the idea of a “Fresh Start.” The great thing is, if you ever need one, you can conjure one out of thin air!

Change your environment

If you find that it’s the small, frequent purchases that are adding up to slowly kill you, welcome to the club – this is what kills most of our savings efforts. Studies show that the #1 expense we regret after bank fees is eating out.

Take a look at your credit card or bank statement for the last few months. You’ll notice that a coffee here, a burrito there, a health smoothie next all adds up. And if you live in a city, ride sharing apps can be killer. Think about all of those times you took an extra 5 minutes to get ready and as you are running to catch the subway or bus, you give in to grab a ride instead ($$$). (These were all my personal Achilles heel of money). Small and frequent purchases to our budget is like death by 1,000 cuts and my bank account is proof.

How to apply it

Link a pre-loaded card to these purchases, then commit to using ONLY that card for those purchases. Physically force yourself to take your other cards out of your wallet and unlink them from your wallet app (I know I am asking a lot here, but it’s for your own good).

Every additional step (or barrier) that you can add will help you to stop and think before you mindlessly spend another $3 here or $10 there on something you’ve already said you regret spending so much on.

Another idea is to limit yourself to how many rides you will take per week, or how many small favorite food purchases you will make per week. Since we tend to enjoy tracking and counting how many times we do things these days, this mental hack can work to your advantage.

Mind tricks work

Getting out of the paycheck to paycheck rut takes a little mental hacking so that you can change your environment to help your future self, but it works. Follow and apply these 3 behavioral principles and I am confident that your days of living paycheck to paycheck will soon be behind you with your brightest future just ahead.

How To Have The Money Talk With Your Spouse Without Slamming Doors

April 04, 2019

Have you ever had “The Talk” with your partner and it ends in hurt feelings and a slammed door? This is a financial blog so of course I mean the “Money Talk.”

If you haven’t, well then congratulations – can you tell me how it’s done? For the rest of us, you’re not alone. In an almost 30 year career as a financial planner and 26 year “career” as a spouse, I have had the money talk end in a slammed door and talked with people about how to have the money talk quite a few times.

What I’ve learned over the years is that there’s no perfect way to avoid it, but with practice and patience, you can decrease the door slamming and money stress in your relationship. Here are some guidelines that have worked for me:

1. Set reasonable expectations

  • Not a one-time deal. Unless you’re in Hollywood, the Money Talk is probably not going to have a romcom ending – you’re not going to be able to just have a 30 minute talk and then live happily ever after without ever having to bring it up again. Getting and staying on the same page as a couple takes work and repetition.
  • Judgement free zone. Start off with the expectation that there will not be a slammed door. This is where I failed miserably for a long time. In order to accomplish that, the talk must be judgement free – it is not an opportunity to blame each other over who spent too much last month.
  • Don’t be a jerk. This is also an opportunity for you to use your big boy words and not sound like a CFP® with an MBA who does this for a living. Sounding like a lecturing jerk is a major cause of doors getting slammed. (don’t ask me how I know)
  • Give each other grace. If your partner is trying his best not to sound like a jerk, grade him on a curve (he is a guy after all).

2. Remember that this is a planning discussion

  • Break it down into shorter milestones. I get overwhelmed if I try to think of the next 30 years. If this is you or your partner, narrow your timeframe. I suggest you start by discussing the next 4 paychecks (if you’re paid twice a month) or the next 2 paychecks (if you’re paid monthly).
  • Have a common starting point. To frame your discussion, you need to find some way of seeing where your money has gone (How to Find a Spending Plan that is Right for You). This is not the focus of the meeting, it is just where you start.
  • Stick with the next month or 2. Adopt the mindset of “What do I want to spend the next 2 (or 4) paychecks on?” Think of it as planning a vacation – you don’t have the time or money to do everything, so the task is figuring out what matters to you, then focus your time and money on that.
  • Work to limit the ‘must-spend’ items. There are some things like electricity that you must spend money on. Focus on figuring out how to spend the least amount on these items, so you can free up money to save or spend on what is important to you.
  • Follow your debt-payoff plan. Run a DebtBlaster to see how to pay off your debts sooner.
  • Take a look at retirement progress. Run a Retirement Estimator to make sure you are on pace to be OK in retirement.
  • Keep the focus on what you can change. Make sure your Money Talk is a forward-looking talk – if you’re talking about the past, doors will be slammed.

3. Think about the best time to have “The Talk”

  • When are you at your best? I am a morning person, which is another way of saying I am slightly less than perky at night. Some would say I am grumpy at night. The best time for me to have the Money Talk with my spouse would be at 6:30 on Saturday mornings. Unfortunately, my proposed time was met with a surprising lack of enthusiasm. We compromised and decided that 10:30 every other Saturday morning was a better time.
  • When can you talk uninterrupted? Find a time when both of your energy levels are high and you can have a relatively quiet 30 minutes.
  • Schedule it. Put this on your calendars, and if something comes up, you can make a note on your appointment to discuss it then. This is a lot better than having the talk when you are both rushing off to work.

4. Make a plan for all the money you’ll save on doors

One huge benefit to planning a regular Money Talk is that you will save a lot on door repairs. What will you do with that money instead?

Do You Really Need To Tip For That?

March 28, 2019

The other day I popped into one of my favorite burger places to pick up a cheeseburger and fries to carry out and enjoy at home. As I was paying, the check-out guy turned the tablet around for me to sign and I was offered the opportunity to tip. No one was going to be serving me, but I added an extra $1 to my tab just because I was asked.

This got me thinking – why did I do that? If I were picking up the same meal at a fast food joint, they wouldn’t ask for a tip. And if I’d paid with cash, he’d just give me back my change rather than ask me if I wanted him to keep any of it.

Is it because if I’d ordered my food to eat there that someone would deliver it to my table, in which case I might offer them a tip? Was I worried that somehow the burger chef would know and do something gross to my food? Or is it simply that companies have figured out that they can easily get you to part with a few more dollars at the point of sale, so they do?

Before I go any further, I should state that when it comes to more “traditional” tipping practices such as tipping your server at a restaurant, unless the establishment specifically states NOT to tip, I’m a strong advocate for 20% or more of the entire bill. The point of this post is to discuss some of the more nuanced tipping practices that have popped up in recent years, but nothing has changed when it comes to taking care of your bartenders and servers.

When does it really matter?

My colleague Cassie offered up a similar dilemma, asking: “Am I supposed to tip on a $4 latte? Uber/Lyft? Or take out food when I pick it up? What about Postmates (some of my friends give cash to the delivery person but aren’t you supposed to tip in the app?) Or in every beauty treatment available? For instance, my hairdresser is an independent stylist, so she charges whatever she wants – am I supposed to add 20% on top? How do tips affect those who receive them? Do they need tips? Or are they getting paid adequately? I wonder how many dollars I just throw into jars vs. add 15%-20% by the push of a button…..am I a bad person if I don’t tip? I need direction!”

How to decide when and how much to tip

Cassie puts it perfectly – it seems like everywhere we turn these days we are being asked to tip, but whether or not it’s appropriate really depends a lot on how the person you’re tipping is paid along with your own personal preference. The best way to answer this is to go through each circumstance:

Coffee shop:

Should you tip? Up to you.

My logic: In order to earn loyalty points at Starbucks, you have to pay through the app, which doesn’t ask you if you want to tip. Message there: tipping is not expected, although if you’re paying cash, it’s a nice touch to throw your change into the tip jar. Caveat if you go every day – it never hurts to throw a couple bucks in the tip jar every once in awhile, even if you are paying with the app/your card.

Rideshare:

Should you tip? If the driver was courteous and got you to your destination without drama, yes.

My logic: Tipping is a way to reward your driver for making the effort to provide you with a safe comfortable ride, and I know that most of these people are either doing this for a living or to supplement inadequate earnings from their “real” job – I’m more apt to be generous. Most of my rides are in the $10 range, so I’ll add $2 or $3, depending on my experience – $2 for a clean, decent ride, $3 if the driver and I had a great chat. Longer rides, like to the airport, I’ll add 20% unless the driver made me fear for my life.

Takeout food:

Should you tip? If you’re picking up the food, I’d say no, unless it’s sushi, in which case I will leave a tip in the jar for the sushi chef, same as I would when dining in.

My logic: If I’m doing everything but cooking the food, there’s nothing for me to tip for unless the restaurant employee goes above and beyond in some way to ensure a good pick-up experience (although I can’t think of an example, tbh). This same philosophy goes for food trucks – tips are appreciated, but not required.

Food delivery:

Should you tip? Definitely.

My logic: How much depends on a few things: whether the delivery was on time, did the driver come to my door versus call me from the street, and how far they had to drive to get the food to me. Bonus $$ if the weather is nasty. Rather than tip as a percentage of spend, I tip in full dollars based on distance, timeliness and effort required of the driver.

THING TO KNOW: I recently saw a news story on a few food delivery services that make tips part of the total compensation of the driver. In other words, they promise drivers a certain amount per hour, but tips can be a part of that. As a result of this knowledge, I tip in cash when I can for food deliveries that are through an app like Postmates, Uber Eats, GrubHub, Instacart, etc.

Beauty services when they are offered by the owner of the business:

Should you tip? This is a tricky one – I always heard that you didn’t need to tip the salon owner since they get to keep all the money, but when I asked about it at my salon, where I see the owner for my haircuts, the answer was, “Most people still tip him.”

My logic: I decided to tip him as I would any other employee, considering that while he gets to keep all the proceeds, he also has to pay the rent and all the other bills. However, when I go to a colorist who does hair out of her home, I don’t tip her as she doesn’t have employees or other business expenses. My clue that she didn’t expect a tip? She sent me a Venmo request, which doesn’t have an option to add a tip.

Baby-sitter, pet-sitter or dog walker:

Should you tip? It depends on how you booked them and how often you use them.

My logic: I used to baby-sit and pet sit and when the parents contacted me directly, I never expected more than the hourly rate we agreed to. However, when families booked me through a service where the rate was set by the booking company, it was nice to receive a little more than the rate when it was someone I regularly helped out.

When in doubt, ask yourself this question

Would you leave a tip if you paid cash? One reason that a lot of businesses are asking if you want to tip is simply because they can – it’s easy and they figure why not? But if the person you’d be tipping is simply running a cash register or some other transactional work, chances are that tips are just nice-to-haves, but not a key part of their compensation.

On the other hand, if someone is serving you by bringing goods to you or providing a service like doing your nails, there’s a strong chance that they rely on tips as part of their income. When in doubt, feel free to ask!

When to be generous versus keep it for yourself

In the big picture, it’s helpful to understand that there are some instances when you should always tip, such as when you’re waited on at a restaurant or a valet parks your car – how much will depend on the level of service and how much you spent. In some of the grayer areas, such as your daily latte or a restaurant that isn’t quite full-service, I think it’s ok to forgo the tip unless you’re a regular, in which case you might want to add a tip every once in awhile as an expression of gratitude for the workers remembering your order or greeting you with the news of the day.

And when it comes to some of those areas where you could tip but decide not to, consider using that as an opportunity to boost your own savings – if you were about to add $2 on to your sandwich order at the deli, but decided that it was not necessary, click over to your banking app and transfer that $2 to your savings instead. It may not seem like a lot, but it can really add up.

How I Mooched Off My Parents With My Pride (And Their Retirement) Intact

March 27, 2019

Some of the toughest calls I handle as a financial coach are situations where someone is struggling to make their bills because they loaned money to a loved one or have taken on the responsibility of supporting others. Understandably, they wanted to make things easier for someone they care about, but now they’re under stress because they can’t meet their own obligations.

I’ve been there before

My parents and I experienced this dynamic ourselves almost 20 years ago when I was diagnosed with cancer. I was barely in my thirties and, like most people my age, I was healthy, working hard, and enjoying my free time playing softball, volleyball and boating with friends. 

I was also in the second year of building my own practice as a financial advisor, so my savings account was thin (okay, non-existent). However, my income was steadily growing and I was confident I would be on solid financial ground within 1-2 years.

After my diagnosis, I was not able to work for several weeks during treatment. Since my income was built around commissions, it didn’t take long for the revenue stream to dry up, the savings to be depleted, and the medical bills and credit card balances to start growing out of control. 

The thing that made me cry about having cancer wasn’t having cancer

Strangely enough, I never cried over the diagnosis – I was confident in my medical team and it was beyond my control really. However, I did cry the day my parents wrote a check to cover my mortgage payment. That really broke my heart because I should have known better than to let myself get into that vulnerable financial position. 

Seriously, I talked to people daily about emergency reserves and disability protection and here I was taking money from my parents to pay my bills. I was also fully aware of my parents’ financial picture as government employees trying to retire soon. At that time, we didn’t know how long my illness would go on, but I knew they loved me enough to jeopardize their own futures for me – that’s just the kind of people they are.

Making a plan to pay them back

When I eventually came out the other side with my health intact, we agreed on a payment plan so I could reimburse them for all of the bills they helped me with. My parents insisted it wasn’t necessary to pay them back, but I explained that I had to for my own peace of mind.

So we created a monthly payment plan, put it in writing, and agreed on an interest rate that was minimal. The rate was higher than what they could earn at the bank but much lower than I would have paid to a credit card company (win-win). As my situation improved, I ramped up the payment.

What I learned in the process

It took a few years to fully reimburse them, but I learned several valuable lessons by handling my dilemma this way:

  • Making the most of living below my means: I had developed the habit of living without those monthly payments, so when I was finished, I immediately redirected those dollars to my retirement plan. I had a lot of catching up to do. I had also learned to live below my means, and it felt great.
  • Practicing what I preached: I now practice what I preach and try to maintain 3-6 months of reserves on hand for life’s next unexpected curveball. I also always, always enroll in my employer’s short-term and long-term disability programs.
  • Rethinking career choices: I re-evaluated my career choice and found a full-time, non-sales position with a reliable salary and good benefits (just in case the cancer came back).
  • Respecting my siblings: By paying my parents back for everything, I avoided potential tension down the road with my siblings who may not have appreciated the burden I was putting on our parents or felt I was being rewarded for making poor financial choices (or burning through their potential inheritance).
  • Resolving not to repeat history: I came out of that situation determined not to go through anything like it again.
  • Taking care of the most important thing to me: Most importantly, my parents’ financial future was left intact.

We lost Dad about five years ago, but I’m happy he and Mom passed some great lessons along. They always provided a safe place to fall and never allowed me to hit rock bottom, but they also helped me get back on my feet with my pride intact. 

These 2 Accounts Could Fix All Your Budgeting Woes

March 19, 2019

Have you ever heard of the “see food” diet? I like to joke that sometimes that’s my diet: I see food and I eat it! The best way for people like me to stick to a plan to eat better is to just not have junk food around, right?

Well, I’m also on a “see money” budget, and I think a lot of people are: I see money and I spend it. That’s why the only money I keep in my spending account is money that I can afford to spend on discretionary stuff like sushi, wine, athleisure-wear and spa pedicures, while money that I need for things like veterinary expenses, car problems and groceries is separated out.

The same principle applies when it comes to sticking to any type of budget or savings plan – if you want to spend less money so that you have enough set aside to pay for things that come up, for people on the “see money” budget, the best way to do that is to get it out of your sight.

The reason that many budgeting and savings intentions fail is that too often we try to eyeball whether we can afford to splurge on stuff, which often happens right before pay day – we see that we actually have some wiggle room in our checking account and we know it’s about to be replenished, so we go ahead and spend it, only to find that we need that extra money when something else comes up after pay day and all the money is already allocated to other priorities.

One idea I had to combat this issue, which is often what leads to credit card debt that can easily get out of hand, is to fund two specific accounts each paycheck:

Account 1: The ‘Oh, crap!’ account

This account is for things like, “Oh crap! I just dropped my phone and I need a new screen” ($90) or ,“Oh crap! I have a flat tire and I need a tow” ($100) or the latest in my house, “Oh crap! The cat has thyroid issues and needs monthly blood tests” ($120). In order to make sure you have enough money set aside to cover these things, take a look back at the last several months for all the things like this that made you say, “Oh crap!”

Set up an online savings account and have the amount put directly in from your paycheck. For me, that’s $50 per pay or $100 per month, which seems to be the average cost of “oh crap!” This account is for everyday life things that truly make you just say, “oh crap,” that you couldn’t have predicted. (Note that after the initial blood test for the cat, the $120/month became part of my monthly budget, since I can now predict it)

Account 2: The ‘treat yo’self’ account

Most people I talk to would say that dining out is one of the areas that they tend to bleed money and it’s one area they’d like to cut back, but they often go to extremes and just don’t budget anything for it. It’s unrealistic to think that you’re never going to eat out just so that you can build up a savings account or save for retirement, so why not have an amount of money set aside for things like, “Hey, I’m in the mood for a $5 Starbucks drink today,” or, “I really don’t feel like cooking dinner so I’m gonna pick up my favorite meal on the way home from work.”

Maybe this account can be used for salon pedicures or a personal training session at the gym – whatever it is that you’d like to limit, but not totally give up in order to buckle down on other goals. We all need a treat every once in awhile, no matter how tight our budget. Having a separate account with, say, $25 going in each paycheck, allows you to do that without going overboard.

What these accounts aren‘t for

Note that these accounts are different from your emergency fund, which is there to pay your bills in case your income goes away – that’s a third account that we all need, although it can sometimes do double duty if you’re just starting out. These accounts are also not there to pay for things that you can plan ahead for, such as gifts, vacation travel or ongoing care like hair cuts and childcare. That’s what the strategy I describe in avoiding the number one budget breaker is about.

Finding what works for you

The thing about cash management is that there are lots of different ways to do it, some more involved than others. If you’ve tried other methods and still struggle to plan adequately for your life spending, try this method. For me, figuring out this part about money is just as much about hacking yourself and your habits as it is about willpower and control. Keep tweaking it til you’ve found a way that works, allowing you to more effortlessly work toward other goals.

 

7 Steps To Fit Student Loans Into Your Financial Life Plan

March 18, 2019

What started out as whispers of a potential financial crisis related to recent student loan borrowing has grown to a cacophony of fear, frustration, and concern. The staggering amount of student loan debt in our country has been a shocking wake-up call. As a result, many recent graduates are in need of guidance.

While high student loan balances are having a significant impact on people of all ages, they are particularly stressful for younger employees or those who went back to school during the “Great Recession.” We often hear the anxiety in employees’ voices about having student loans and wanting to pay them off sooner versus later.

But as my colleague Kelley Long notes, there are situations where student loan debt isn’t as bad as it seems. In a Forbes contribution she highlighted the importance of prioritizing other personal financial goals before worrying about making extra payments on student loans. Here are a few financial wellness steps that generally should be taken before making any extra payments on student loans:

Step 1: Make a list of your most important goals.

Student loan debt may seem like a significant burden, but it doesn’t have to be the fun killer that prevents you from reaching meaningful life goals. No matter how tight your budget is, it is important to have a written financial plan to provide guidance when prioritizing where to allocate your time and financial resources.

In fact, the simple act of putting your specific goals in writing and the steps needed to accomplish them actually increases the likelihood you will achieve those goals. Your financial plan doesn’t have to be anything too elaborate. As Carl Richards points out in his book appropriately named The One-Page Financial Plan: A Simple Way to Be Smart About Your Money, you can accomplish big things with a basic plan.

Many people assume that just because they have student loans, they will never be able to buy a home or retire. A simple one-page financial action plan that helps you set SMART goals could be the solution to help you feel like you are making as much progress as possible as you fit student loan payments into other areas of your financial life.

Step 2:  Create (and follow) a personal spending plan.

This one sounds like a no-brainer yet only one out of three Americans actually follows a budget and tracks income and expenses on a regular basis. Depending on which repayment plan you have, student loan payments are typically 10 to 15 percent of discretionary income.

Over 40 percent of student loan borrowers are not currently making any payments. If your loans are currently in deferment status, try to go ahead and incorporate your future payments into the spending plan. Instead of paying your loan servicer, you can start saving some of those payments and get into the habit of making the payment to yourself.

For those who are making payments, the average monthly payment is $351 for borrowers between the ages of 20 and 30. Choosing the right repayment plan is about more than just minimizing your current payments. Knowing how long it will take to become debt-free and how much you will pay in total interest over the life of your loan are major factors to consider. To learn more about choosing the right repayment plan for federal student loans visit Studentaid.ed.gov.

Step 3: Establish a starter emergency fund.

This is the “baby steps” stage that sets the framework for creating a fully funded safety net account. The starter safety net fund typically ranges from $1k-$2k in an account separate from your regular checking account and will come in handy if any unexpected medical, auto, or home expenses occur.

Step 4: Contribute enough to your retirement plan at work to get the full employer match.

If you work for a company that offers some type of matching contribution to your retirement plan, don’t be like the 25 percent of workers who are leaving free money behind. Take advantage of these matching contributions by at least contributing up to the matching amount. A contribution rate escalation program, if provided, can also help you reach that full matching level over time, even if it’s difficult to do now.

Step 5: Eliminate high interest credit card debt and personal loans.

When it comes to paying off loans and other debt obligations, it is important to realize that not all debt is created equal. Low interest student loans or mortgage debt are generally okay since the interest may be tax-deductible and they can help build your credit score. However, try to keep these payments under 25% of your monthly income.

For those other debt obligations with interest greater than 6% such as credits cards, the best approach is to create a plan of attack to eliminate that high interest debt first.

Step 6: Fully fund your emergency savings.

Do you have enough to cover at least 3 to 6 months of basic living expenses? The majority of Americans don’t have enough savings to cover 1 month’s worth of expenses. This is where it helps to be different than the average American and pay yourself first. Set up an automatic transfer from your paycheck into a separate savings account until you’ve built up enough savings.

If you are experiencing student loan anxiety, you may feel the urge to bypass this important step. My best guidance is to avoid this temptation and focus on building up an emergency fund first just in case a life happens moment occurs along the journey. If you participate in a health savings account or contribute to a Roth IRA, you can choose to include these funds in your emergency stash. Just keep in mind that you will typically need at least 3 months of liquid savings before investing those funds.

Step 7: Make sure you are on track to replace at least 80% of your income during retirement (or your own goal).

This is a difficult financial priority to focus on if you are in the early career stages and feel burdened by student loan debt. Paying off student loans may feel like a more urgent priority, but it is generally recommended to save at least 10-15% of income throughout your working years to achieve financial independence. You can use this retirement calculator to see where you stand and try to increase contributions as needed. See if your employer has an auto rate escalator feature which is a painless way to give your retirement savings a raise each year.

It is important to point out that the previous action steps are recommended before paying extra on student debt. If you have student loans that are starting to feel more like a mortgage payment, remember that creating a financial plan that is simple and flexible is the first step you can take to assume control over your situation. As my colleague Kelley Long wrote, she didn’t like making those 10 years of student loan payments, but she was happy to finally be done and have some other life goals completed as well.

How To Break Old Money Cycles When You’re The First In Your Family To ‘Make It’

March 07, 2019

I recently read an interesting study about the psychological impact of what it means to be the first in your family to “make it.” This particular study focused on being the first to go to college, but the concepts also translate into what someone may deal with mentally when they are the first in their family to land a career, buy a home, etc. – accomplishments that many would classify as “making it.”

The study points out that the transition to college for many low-income and first-generation students is also a transition in their social class. If you’re one of the first in your family to “make it,” you probably know that new challenges and questions often arise. Do you ever find yourself thinking things like:

  • “I don’t belong here…”
  • “Am I cut out for this?”
  • “My family thinks I think I’m too good for them now.”
  • “I don’t know how to relate to my campus peers, they live a completely different life than me.”
  • “I’m too nervous to talk with my professor.”
  • Or any other number of thoughts that it can feel like no one else is thinking but you…

The impact on financial choices

These are totally normal thoughts to have, in fact. The thing that always makes me sad is seeing someone who’s done all the work to boost themselves toward a better life, and yet they are unable to boost themselves into the next level of financial security because they’re caught in old money cycles passed down through generations.

The mental impact of being the one that “made it” can affect your financial choices and not in a good way. You might be the first in your family to earn a degree or land a decent paying job, better yet a career. Or maybe you did both? Earned a degree AND landed a career, making more and doing more than those you’ve spent your entire life with.

That can feel weird. AND because that feels weird, you might think “I don’t know what to do with this, considering no one I know can tell me because they’ve never been here before.”

So, maybe you make the extra pay, but don’t save it. You have seen people live paycheck to paycheck and that’s a behavior you’re familiar with, so you do the same. Not because you don’t make enough to do better. You do it out of habit. Out of familiarity.

AND, since you made it, don’t you owe them everything anyway?

It’s easy to think that, especially if you’re hearing that from your loved ones. If you feel like you have to share it in some way, check out the ideas in this article called Ways To Help Others Without Hurting Your Own Finances.

If, on the other hand, you’re worried that keeping a closed hand could lead to losing everything you’ve worked so hard for, that’s fine, just don’t go to extremes. It’s easy to think (or hear from others) that you have a responsibility to give it all away. It’s fine to share, but take care of you too. Learning how to fit tithing into your other financial priorities can help. And there’s some merit to sharing: there are ways that giving your money away may actually improve your budget.

Getting your finances on the right track

To get started and figure out what the right track is, try these 5 steps to determine your financial priorities. If you have a financial coaching benefit at work, this is a great time to reach out to them and get some assistance.

No shame, no blame

“Making it” can be stressful so please don’t waste your precious energy on not having everything figured out. Reach out for help and don’t worry about getting your finances in order first. That would be like waiting until you’re healthy before going to the doctor.

Congrats on making it this far! Getting your finances in order will help push you and your family even further!

 

Common Financial Mistakes Parents Make By The Decade

March 05, 2019

Lately, I’ve had a lot of heartbreaking conversations with folks who are working hard to be the best parents that they can be and are really struggling to balance finances and parenting. What I have noticed is that it seems that there are recurring themes of money mistakes that parents make based on their age and stage of life.

As a dad myself, I get it. It is so hard to always be “on” and make the right decision. Perhaps by sharing some of the common mistakes we regularly see, I can help you avoid similar situations.

A top mistake parents make in their 20’s

Placing kids before career

Some of the most successful people I know had kids at a very young age. I’ve worked with many single parents who heroically balanced work and early parenthood to scratch their way to success. Often, the resilience and time management they learn in the process helps them later.

One super successful friend of mine started his family when he and his wife were 23 and in grad school. Today he is ranked as one of the 50 most influential people in the US in his profession. That said, they are the exceptions. My friend would tell you that the hardest times in his marriage were those years of school, work, parenting and living at the poverty level.

Without unbelievable willpower and a pretty great support system, most people don’t thrive when they start a family before they start the foundation of their career. That doesn’t mean you have to be in your dream job and have tons in the bank – just that you have put yourself on the right path.

How we avoided this mistake

My wife and I got married just a few weeks before I turned 23. She was a new nurse and as such, always had the night shift. I was still figuring out what I really wanted to do with my degree, so we decided to wait a few years to have kids. I’m so glad we did – 5 years later when we started our family, we were excited about the idea of having kids instead of worrying about how that would change things because we were both more settled in our careers.

I know that it may sound preachy and that isn’t my intent. But as we published in a recent Society of Actuaries essay – our research, and research of leading think tanks, shows that having a committed partner and a career path before a baby goes a long way towards long-term financial wellness.

A top mistake parents make in their 30’s

Not putting limits on kids’ activities

The hardest, but sometimes best, thing we can say to our kids is, “No.” However, in today’s crazy culture of over-scheduled kids, we sometimes don’t even let our kids say “No” because we get worried that they will miss out on something. As activities like sports, music, dance, etc. start at younger ages, sometimes we can forget that our kids haven’t even asked us about playing soccer, but here we are signing them up like their futures depend upon it.

I can’t tell you how many friends I have talked to over the years who have said something to the effect of, “When did our kids activities start running every minute of our lives?” Not only does this impact the time you have to spend with your spouse, your family, friends and even your kids – but it is expensive!

How we placed limits without our daughters hating us

My youngest daughter has been involved in cheerleading over the years and one of the things we had to say at one point was that once she got to high school she could no longer do competitive cheer. It just didn’t make sense to pay huge amounts of money for her to do an activity she was already doing at school, which also required us to drive half way across town two or more times a week (not to mention the cost and time of traveling to those competitions).

My daughter’s initial reaction was not good – she didn’t like it at all. But we stood our ground, then discussed how the money could be directed to other things important to her like vacation and her college fund. She eventually calmed down and I’m happy to report that a month or two into high school, she even said how glad she was to not be doing competitive cheer because she didn’t think she could balance that time commitment with everything else.

The moral of the story

It’s important to encourage your kids to try new things and discover their passions. But it is perfectly OK to set limits on your monetary and time commitment to anything – especially below the middle school level.

A top mistake parents make in their 40’s

Not putting limits on kids’ college choices

No matter where you get your news, you’re probably seeing the same thing we hear every day in talking with people about finances: student loan debt is financially killing people – students AND parents.

Sometimes student loans are unavoidable. My wife entered college right when her dad’s business hit hard times. She got some grants and worked a ton, but she still had to borrow about 1/3 of the cost of her education. That’s what the program was originally designed for – to get students over the final line.

Somehow over the years, costs have risen faster than incomes and more and more people are borrowing to fill the gap. That said, many people are focused on their “dream school” and not their return on investment for education. All education – from technical training to Harvard Law – is a great opportunity as long as you measure the expense against the benefit.

How we’re balancing this in our family

My oldest daughter is majoring in elementary education. She realized early on that our contribution would cover a state school, but she would have a ton of debt at most private or out of state schools. On a teacher’s salary that didn’t make sense, so she’s heading to a state school.

On the other hand, my youngest wants to major in supply chain management. She only has one in-state option in a new program or two nearby states have highly rated programs. Both of those out of state schools will offer her in-state tuition if she gets the ACT score she’s shooting for. Even if she gets a mediocre score, it would probably only mean borrowing about $10,000 – $14,000 for one of those top programs.

That is probably a good investment for a highly rated program. It’s worth noting that her “dream school” for her major would result in about $75,000 of debt or more. On a standard 10-year repayment that would mean an extra $638 per month for essentially the same degree! Needless to say, it’s not even on her list.

So, when talking to your kids about their post-high school education, don’t focus on the name or the cool campus – come at it from a longer-term perspective by setting a maximum amount of debt that jobs in their major can support and don’t go over that amount. A common rule of thumb is that total student loan debt upon graduation should not exceed the first year’s salary in your major’s field in order for the payments to be affordable. If at all possible, stay well below it!

A top mistake parents make in their 50’s

Helping adult kids at the expense of their own retirement

According to a recent study by Merrill Lynch, American parents are setting aside $250 billion annually for retirement while spending $500 billion per year helping their adult children! Think about that for a minute: using twice as much to help your adult kids as you’re using to help yourself.

According to the study, 79% of parents are helping their adult children and most alarming is that 25% of the time people are dipping into their retirement funds to do so. I get it, we all want our kids to succeed because we love them dearly. But I often describe it to people like what you hear from the flight crew before takeoff: if oxygen masks are deployed, put your own mask on first before assisting anyone else. The same concept applies here.

You don’t have to be independently wealthy to help your kids, but you should run a retirement calculation to make sure that you are on track for retirement and that the help you provide won’t jeopardize that. You also want to make sure that you are not making your kids dependent on you, but instead helping them to become self-sufficient. Then you’ll be able to enjoy knowing that not only are you going to be able to enjoy retirement but that you will be able to see your kids enjoy the help.

A top mistake parents make in their 60’s and beyond

Worrying about leaving something to the kids instead of caring for yourself

The last stage of mistakes I’ve seen parents make is worrying about running out of money – not for themselves but that they won’t be able to leave an inheritance to their kids. Of all the mistakes, this is probably the least frequent, but it is still very real and it makes me sad.

It is disheartening when someone works their whole life and then doesn’t do those “bucket list” things because they are worried about their kids again. What’s worse is that usually when I see this, it’s not a vacation that someone goes without but things that really impact their quality of life – I have seen my own family members not want to spend money on things like hearing aids, medical treatments or making accessible improvements to their homes so that they don’t “spend their kids’ inheritance.”

I don’t have a financial solution for this one but just some advice: Remember that your children and grandchildren love you and want you to be healthy and happy. They would rather see you enjoy the fruits of your labor and maintain your quality of life than get a few extra bucks after you are gone. Believe me, they tell me all the time in my line of work.

Creating A Values-Based Spending Plan

February 28, 2019

Note: Today’s post was co-authored by my colleague Laura Finn, who is a Senior Consultant at Financial Finesse.

Here at Financial Finesse, we talk to a lot of people about budgets (we often call them spending plans). We talk about tools to help you create a spending plan, tips to help and guidelines on percentages of take home pay you should allocate to housing, transportation, savings, etc.

But how do you account for the things you love, but don’t really fit into a traditional spending plan? A recent team exercise shed some light for me on something I had never really considered (shout out to Statia Thomas for this great idea) – why don’t we build our spending to reflect the things we value and enjoy the most in life? We decided to explore this concept more in depth.

What the “traditional way” is missing

As a financial planner, I champion the idea that operating within the confines of your spending plan is fundamental to reaching your goals. So then why do so many people struggle with this seemingly simple concept?

Our theory is that it’s not that most people don’t understand the concept; it’s that the spending plan may not be reflective of what truly makes you happy in your everyday life! While most of us have inherent needs for food, shelter, transportation, and saving for retirement, what about the other inherent “needs”? While I may value experiences (like travel or local concerts), others value more tangible items (Laura admits that she goes to Sephora so often, she uses their black-and-white bags to bring her lunch to work).

These examples may or may not resonate with you, but you probably have your own version of travel or Sephora. The key to success is to ensure that these things are captured in your spending plan and have their own line item. Trying to pretend as though they don’t exist will not only continue to thwart your short-term spending plan, it may keep you from hitting those long-term, larger goals.

What if you’re not sure what you truly value? Our solution is start with the person who knows you best: you!

Hack yourself!

The first step in making your values-based spending plan is to work to better understand yourself. What items and activities do you truly love? Do they cost money? Here’s a short list that our group brainstormed for themselves during this exercise:

  • Vinyl record collection
  • Graphic T-shirts
  • Makeup and hair products and services (aka Sephora)
  • Gym membership and spinning app
  • Golf
  • Travel

After making this list, we went around the group and shared if we budgeted for these items. The answers were mixed, but the bottom line is, most of us could refine our spending plans to better include the things that we loved most.

Maybe you like grabbing drinks with your colleagues, and your spending patterns truly reflect this. Let’s go a step further: If you find yourself at your favorite watering hole each week, how much are you typically spending there? And, more importantly, why are you there?

Are you there because you truly enjoy the environment, or is it the company you value? The bottom line is if it’s important enough to you, then it should have its own line item in your budget! But how much should you allocate? If you find that you enjoy the atmosphere, perhaps you can find ways to lower your tab there by eating or drinking less, or, if it’s the company you value, perhaps you can find a less expensive way to get together (such as hosting at someone’s home twice a month).

The bottom line is, there are trade-offs here. And frankly, if you truly love your outings as they are, find another trade-off within your spending plan. For instance, if you care less about what kind of car you drive than spending time with your friends, perhaps keep this in mind when it’s time to make your next purchase.

Making it about you instead of what society may be saying

The overriding message here is to make your spending plan a true reflection of who you are and what you love rather than making it follow anyone else’s ideals and guidelines. We all need shelter, but does the big house (with the large rent or mortgage) really make you happy? Maybe cut that back to spend less there in order to spend more on your record collection or makeup.

The goal is to shift your mindset to have your spending reflect what YOU value as opposed to what the world around you tells you is important. What a cool lens to view your spending plan through! If our spending aligns with what we value, might more of us be able to stick with a spending plan long term?

A mindset shift, but don’t forget the basics

We need to be clear here. We are not suggesting that you stop saving for emergencies or retirement in order to spend more on the things you value. Rather, changing our mindset about where we spend money and understanding the “why” in our spending patterns can help us establish a healthier relationship with our money.

Be gentle with yourself and don’t go it alone

This is always true when we are trying to make any change in our lives – it’s bound to be tough. Let’s take trying to be healthier for example. It never happens overnight, and we will always have stumbles along the way. This is natural and even healthy, if we don’t let that discourage us to the point of giving up.

Let your spouse or a confidant know what you are trying to do and ask them to be an accountability partner to help you stay the course. Having support can make all the difference!

This was such a fun exercise for us and I am so excited to share this with all of you. I hope this helps if you have ever struggled to stick to a spending plan.

6 Things That Fortnite Can Teach You About Financial Wellness

February 15, 2019

What does America’s obsession with Fortnite have to do with making the most of your financial wellness benefit? Surprisingly, more than you would think. Fortnite is on track to be the most popular video game in history and is currently beating out television and movies for user engagement. For those who play it regularly, it’s become part of their identity – inspiring dance moves, fashion and online commentary.

I’ve got a son in middle school, so I’ve witnessed this up close. He and his buddies are obsessed with all aspects of the game. What keeps them, and the millions of other players, so engaged, and how can we apply those factors to changing our own financial behaviors?

1. Collect and construct.

Fortnite draws in the new user through its “collect and construct” feature, where the player goes into the battle with a tool they can use to chop down and collect objects and then uses those materials to construct structures to advance in the game. An effective financial wellness program impacts you in a similar way, inviting you to collect the building blocks of financial health and use them to construct good financial habits. For example:

2. Engage and entertain.

How does Epic Games keep players coming back again and again to play? It’s contagiously fun – and doesn’t take itself too seriously. Characters are called “skins,” with a range of colorful, anthropomorphic animation. You can get them to dance by using an “emote” – and learn it yourself if you’re inclined.

An effective financial wellness program helps you to improve your financial habits by encouraging repeat usage. Pay attention to the various ways that you can access your benefit and take advantage:

  • Gamification of tools and resources – making it fun to progress;
  • Multimedia learning tools so you can learn in the style which works best for you;
  • Coaching to empower you to make changes (vs. advice which keeps the power with the advisor); and
  • Facilitated workshops and webcasts which use the power of “show not tell” to create “aha” moments.

3. Play alone or with a friend.

Sometimes you want to be alone and sometimes with companions. Fortnite lets gamers play in teams (“squads”) or play on their own (“playground mode”). Financial wellness programs offer multiple ways to engage, including:

  • Self-directed learning online using articles, blog posts, multimedia planning tools, videos and podcasts;
  • In-person and telephone coaching conversations with a CERTIFIED FINANCIAL PLANNER™ professional or financial counselor; and
  • Group learning using facilitated workshops, webcasts and peer-to-peer coaching groups.

4. Leave you wanting more.

Did you ever try to get your teenager off of Fortnite to come to the dinner table? It’s so difficult. That’s because Fortnite is “sticky.” Gamers are rewarded in some way every single match. While it may be easier to get someone in the middle of running a retirement projection to pause for dinner than to lure your teenager, aim for “stickiness” in your financial wellness journey:

  • Break up action steps into bite-sized, achievable pieces;
  • Start high level and drill down when you need to – look for a big picture summary and ways to dive deeper; and
  • What’s in it for me – take advantage of opportunities to personalize your financial wellness benefit so that you can practically and easily apply what you’re learning to your financial life.

5. Avoid overload.

Has the Fortnite player in your life ever had a Fortnite induced meltdown? Not so fun, right? Too much of that kind of intense neurological stimulation can activate the fight or flight mechanism in the human brain. Financial wellness is a process and a practice, not an event. That means:

  • Define your goals then prioritize them one at a time;
  • Tackle tasks one thing at a time and don’t try to do everything at once; and
  • Be gentle with yourself – work at the pace that works for you, and don’t worry about your colleagues and friends.

6. You don’t have to pay to play – but watch out for a hidden sales pitch

A basic version of Fortnite can be downloaded for free and anyone with a compatible device can play. Truly unbiased financial wellness programs are offered as an employer-paid benefit. It should be offered at no cost to you – without any sales of financial products or services.

Unfortunately, some financial services providers are now using the term “financial wellness” to try and earn insurance or investment sales from employees. Beware! That’s just like downloading Fortnite Battle Royal then getting tempted to buy lots of V-Bucks. Not sure if your program is an unbiased financial wellness program? See this infographic.

Do you have to actually play Fortnite to become better at improving your own financial wellness? Not unless you want to take inspiration from a successful video game. I encourage you, however, to take a few steps today and then keep going. With all the time you’ll save once you’ve gotten your finances in order, you’ll have more time to work on perfecting your floss.

Do You Really Need To Break Your Expenses Down Into Wants Versus Needs?

February 14, 2019

When it comes to budgeting, the conventional wisdom is that we should divide our expenses into “wants” and “needs.” Even our own Expense Tracker worksheet does this. But I think it’s actually a waste of time and let me tell you why.

Want or need?

First, there’s no clear line between “wants” and “needs.” You should see the debates that often happen in our budgeting workshops about what’s a need versus a want. Many would argue that their morning coffee, smart phone, Internet access, and cable TV are all “necessities” while others would call them luxuries. The same debates can happen between couples or even internally.

It’s also not just that we have different ideas of what constitutes a necessity. Each category of spending is a mix of need and want. For example, food is clearly a necessity but most of what we actually spend on food probably isn’t. The same goes for clothing, housing, the car we drive and even electricity.

We don’t really need all of our “needs”

Thinking of certain spending categories as needs can also make us think of them as untouchable. Yet, some of the biggest sources of savings can come from choosing lower cost housing, driving an older car, spending less eating out, looking for discounts on groceries, and reducing cable and phone bills. Focusing on just the “wants” like entertainment and shopping can cause us to miss these opportunities, and blow our budget because we miss those things. It’s also important to be honest with yourself about this when a crisis hits.

Discretionary v. non-discretionary

Besides, unless you’re truly living on a subsistence income, I don’t know anyone who only spends money on wants. So if we’re going to spend on a mix of wants and needs, what’s a better way to characterize spending categories? I prefer to think of spending as discretionary vs non-discretionary.

This doesn’t mean we have no discretion over “non-discretionary” expenses. It just means we’re not exercising that discretion on a regular basis. For example, while it’s certainly not an example of good budgeting practices in any other sense, the federal government essentially breaks down its expenses into entitlement programs like Social Security and Medicare and discretionary expenses like our military and education programs. The difference is that entitlement programs are on auto-pilot while Congress and the President fight about discretionary spending every year.

How to classify

With your own budget, non-discretionary expenses would be things like rent or mortgage payments, insurance premiums, utility bills, and subscriptions. While they may fluctuate over time, they’re generally determined by decisions we make in advance like where to live, which mortgage and insurance coverage to get, and what cable, phone, and gym plans to sign up for. We should take some time and go through each of these to make sure we’re getting the best value for our money. But after that, they’re pretty much on auto-pilot until something changes.

On the other hand, we’re constantly making spending decisions about things like eating out and shopping. How much we spend on these items can also vary considerably from month to month. Rather than try to budget for each of them in advance, which can be pretty difficult, you can give yourself a fixed monthly or weekly “allowance” to cover all of them.

The idea is that you get to spend as much as you like but when the money is gone, it’s gone until the next allowance period. Likewise, whatever you don’t spend can carry over to be splurged in the future. You can then decide what feels more like a want versus a necessity with each purchase.

The reality is that almost every expense can be a “need” or a “want” based on your perspective. What’s important is that you’re prioritizing your spending according to what’s important to you. Arbitrarily splitting your expenses into needs and wants won’t do that. Thinking through each and every expense will.

Should Newlyweds Combine Their Accounts?

February 13, 2019

At Financial Finesse I am often given the opportunity to assist people at the most important events of their lives. We encourage people to make good financial decisions at the outset of a career and on the cusp of retirement. We share in the joy of the birth of a child or the sadness of the death loved one. As such, it is quite common for couples to reach out to us before they marry to get the best tips for handling their finances. There is one questions that is universal:

Should we combine all our accounts or keep them separate?

Marriage represents a joining together of two individual lives and so it is reasonable to question how much needs to be combined. Combining accounts sounds simple, but it can be a shock to your system if you are accustomed to being independent. To help people decide, I like to review three different methods.

Option 1: combine all your cash accounts

Pros

  • Totally transparency
  • Less confusion because there are less accounts
  • Mitigates arguments over who should pay for which expense

Cons

  • Concerns about losing control
  • Requires significant changes upfront to ongoing auto deposits and auto withdrawals

Option 2: keep your accounts separate

There are cases where one person may walk into the marriage with unresolved financial issues from debt or a previous marriage. In those cases it may make sense, even though it may be the long-term plan to put it all together, to hold off on establishing joint accounts and paying bills out of them.

The alternative sounds appealing to couples that would like to enjoy a higher level of individual autonomy, but as noted below separate accounts often call for a much higher level of coordination to make sure bills do not fall through the cracks. Also, there needs to be an agreement on what constitutes individual versus household expenses.

Pros

  • Maintain total autonomy
  • Fewer changes to direct deposits and auto withdrawals
  • Could avoid fights about differing spending priorities

Cons

  • Requires significant coordination of payments for expenses incurred together
  • Requires a common understanding of what is considered joint expenses
  • Could lead to resentment if one spouse appears to have more spending power than the other

Option 3: the hybrid method

The system that worked for me and my spouse, and for many of the couples I work with, is to both combine and separate. It starts with having at least 3 accounts – one account for general household expenses and separate accounts for individual expenses. I have found this method helped us come together on what the joint expenses were. It also took away the 50/50 mentality which can become hard to track and is a major point of contention for many couples.

Over the course of our marriage, there have been years when I have earned more than my spouse and in other years she has earned more than me. Having most of the funds come to one place with one purpose took away our need to attempt to equalize. In the individual accounts we have money for personal expenses. Those individual accounts offered us the proper level of autonomy.

This method can be applied in multiple ways. I have a friend that deposits and keeps over 95% of his earnings in the joint or household account. His wife keeps a lower percentage because they agreed her personal expenses were higher than his. In our family, the percentage that goes to the household account has increased as our family has grown. For others, the individual accounts grow because joint household expenses were a smaller percentage of their overall budget.

There is no one right way

Couples are as different as the individuals they consist of and so there is no one-size-fits-all method to handling joint finances. I have seen couples handle finances in all three ways outlined above and I have seen them all handled successfully and unsuccessfully. The biggest key to success was that they got on the same page as a couple. Take some time to be self-reflective about how you came to your current money beliefs and discuss them together.

Regardless of which route you choose, the road is a lot smoother when there is genuine agreement about the destination. Take the time to get on the same page financially and the choice on how to work together will become clearer.

 

Do Your Financial Habits Feel Like Groundhog Day? How To Escape The Cycle

February 01, 2019

One of my favorite movies is the 1993 Bill Murray classic Groundhog Day. For those that haven’t seen it (you should check it out), the theme is a reporter sent to Punxsutawney to cover the annual Groundhog Day events who finds himself reliving the same day over and over again.

When your finances feel like Groundhog Day

Do your finances ever feel like you are reliving the same issues over and over again? We set out with the best intentions to pay down credit card debt or get serious about our spending plan – only to find we slip back into the same habits with the same issues a few months later. It happens to a lot of us. So how do we break the cycle and move from the perpetual financial winter to a new spring?

Make a start

It sounds simple – and it is, but don’t confuse simple with easy. The first step to any change we want to make is to take the first step. Maybe that means tracking your expenses, so you can start to build your spending plan to live below your means. Maybe it means pulling the credit card out of your wallet to help resist impulse purchases. Taking that first step leads to other steps. Before you know it, you have some new habits that will lead you to those financial goals you have set.

Be realistic

Of course, setting goals is important, but if they are not realistic, you will soon become frustrated and more likely to stop trying. No one pays off all their credit card debt overnight nor do they become conscientious spenders with a snap of the fingers. Set realistic time frames with incremental milestones to track your progress and reaffirm that you are on the right track.

Don’t do it alone

We all need some help when making lifestyle changes – be it our finances, health goals, or other changes we want to make. Seek out support from your spouse, family and friends to help hold you accountable and provide encouragement. Utilize your workplace financial wellness benefit if you have one to get tips and ideas on how to make your goals happen.

Be gentle with yourself

We are not perfect, and you will have slip ups along the way. That is okay. Don’t beat yourself up. Learn from the mistakes and keep pressing forward.

Know you can do this!

I mean it. Believe you can change your financial situation. People do it all the time! But you have to it to make it happen. Again, seek encouragement from those close to you to help in those times when you are discouraged.

Making a change is hard. It involves some sacrifices, but it is so worth it to be in control of your money instead of feeling your situation is in control of you. But it doesn’t just happen. Making a plan following these tips will help you end your financial Groundhog Day – the movie, not the little woodland creature that “predicts” the end of winter.

The Ultimate F-word: How I’m Approaching My Goals Differently As Fifty Approaches Me

January 03, 2019

Editor’s note: As we launch 2019, I’ve asked each of our bloggers to reflect on their own personal goals, plans or thoughts on the past or upcoming year. Our hope is that you not only draw inspiration from our sharing over the coming weeks, but also that we are all able to feel more connected through our shared human experience and recognize that no matter where we are on our personal financial wellness journeys, that we all have similar hopes, dreams and struggles. Happy New Year! Here’s what Teresa has to say:

I’ll be reaching the grand age of 50 this June, and I’m determined to reach this milestone with as much grace as possible. On most days, however, it seems my deteriorating body didn’t get the memo.

This year, I had several appointments with my physician, a nutritionist, and other specialists and after being poked, prodded, x-rayed, and scanned, the general diagnosis is simply that “You’re getting older.” What the ****? Can I please have my co-pay refunded?

Since I wasn’t able to find the magic bullet for feeling better, I’ve decided it’s time to get back to the basics for 2019. I’m going to approach my fitness goals using some of the tried and true methods I’ve used when it comes to my finances.

Pay myself first

The phrase “pay yourself first” is popular in personal finance meaning you should save to your investments and retirement accounts first each time you get a paycheck rather than spending it elsewhere and waiting to see what’s left over. By putting your savings on auto-pilot, you’re more likely to reach your goals versus someone who waits until the end of the pay period hoping there are funds left to save.

Using the same philosophy, I’ve learned I have to get to the gym every morning at about 6:00 as a part of my daily routine for any real progress. On the days I’ve planned to get there in the afternoon or evening, some emergency or unexpected fire pops up that needs my attention, and my trip to the gym gets sacrificed. If I get my workout in first thing, I’m energized the rest of day and know that I’ve done something good for myself regardless of how the rest of the day goes.

Moderation works

When it comes to meeting financial goals, we often have to remind ourselves that slow and steady wins the race. For example, I can’t pay off my mortgage early by throwing every extra dollar I have at it until I’ve rebuilt my emergency reserves. If I throw all of my extra dollars at the mortgage, I’ll be in no position to handle life’s next curve ball and will have to resort to a high-interest credit card.

Instead, I make small adjustments with my financial goals like ratcheting up my 401(k) contribution 1-2% every January, making one or two extra principal payments on my mortgage each year, and increasing my “emergency fund” contribution each quarter.

The same approach is true with my daily workouts. I went into my first few workouts this summer with a little too much gusto and spent a week recovering from the damage I did to my lower back. Shivers go up my spine now whenever I see a kettlebell or those battle rope thingy-ma-jigs. I’ve learned that at my age, I have to spend a good deal of time stretching before and after my workouts and I increase my weights slowly each week. I’m getting stronger every week while not doing damage to my muscles and joints.

Stay focused on the goal

When I’m faced with financial decisions – large or small – I’ve learned to ask myself “does this purchase meet one of my goals?” My weakness can be clothes. When I’m tempted to buy a pretty top or something that’s caught my eye, I ask myself, “Does this purchase help me reach any of my goals?” If the answer is NO, then I don’t buy it.

I’m working on asking myself similar questions when I’m just not in the mood to work out…

“Why am I getting up at 5:30 AM?!” So I can get back to rowing and enjoying the outdoors (there are ladies in their 70’s and 80’s doing this!) So I can keep up with my great nephews. So I can remain independent for the rest of my life if God’s willing.

Developing better fitness habits now will help me meet those goals. And studies indicate that I don’t have to kill myself or train like I did as a 20-year-old collegiate rower for results. I can work a variety of programs including strength training, yoga, Pilates, and other fitness routines to stay fit — in moderation.

I just need to find the method that works best for me, make these an automatic part of my daily routine, and stick with it. The results will come — slow and steady — which is just fine at this stage of my life.

How I Plan To ‘Bring It’ In 2019

January 02, 2019

Editor’s note: As we launch 2019, I’ve asked each of our bloggers to reflect on their own personal goals, plans or thoughts on the past or upcoming year. Our hope is that you not only draw inspiration from our sharing over the coming weeks, but also that we are all able to feel more connected through our shared human experience and recognize that no matter where we are on our personal financial wellness journeys, that we all have similar hopes, dreams and struggles. Happy New Year! Here’s what Chris has to say:

As we enter the new year, I really enjoy setting some goals for the various aspects of my life to work on. I’m not so much into resolutions and you won’t find me in the gym the first week of January (I do like to exercise, but do it at home), but a new year lets us all take a fresh look at our goals and work toward a better version of ourselves. So here are some things I will be working on in 2019:

My 2019 life focus areas

My financial wellness

  • Spending less on things and more on experiences. As my kids get older (almost 9 and 12), I find the fleeting time with them as kids compels me to want to expose them to experiences. Not to mention, they have more than enough stuff. I plan to do more skiing with them this winter and continue our travels to see National Parks, beautiful beaches, and cities we haven’t visited yet. Even small things like going for a hike or hitting golf balls are time well spent as a family. This is something we started doing in 2018 and will continue to do.
  • Continuing to work the budget. This one is not my favorite, to be very honest. But it is so important. I like to revisit household expenses once a year or so to make sure we aren’t overpaying for cable, cell phones, etc.
  • Saving for goals. I plan to increase my retirement savings a tad, fund a Health Savings Account (this is a new one for me), and finish paying off my car – hooray! The plan then is to use that money to increase funding for shorter term goals like vacations (see above).

My physical well-being

  • Continuing to exercise regularly. 2018 was a good year for me in this area. I was able to start a regular workout regimen, which to be honest I have done about a million times before. But this year I was able to stick with it and even do better with my eating habits. The results have been awesome, and I am super motivated to keep it going.

My mental well-being

  • Reading more. I used to read a lot and I’m not sure what happened, but I stopped. I already went to the library to get my library card and my goal is to spend the last minutes of the day reading in bed instead of watching something on the iPad.

My spiritual well-being

  • Spending more quiet time. For me, this takes the form of prayer and reflection. Maybe for you it is meditation. But taking time to quiet the mind and reflect and center is something I need more of.
  • Giving back. I can do better in giving of my time to make my community a better place. I want that experience for my kids as well. We’ll be seeking out ways to serve together throughout the year.

As you consider your goals for 2019, make sure you focus on all areas of your life. Check in with your goals at least once a quarter to see how you are doing. And be realistic (see this about setting SMART goals) in your goal setting. I wish you all a prosperous and healthy 2019!

Why I’m OK With The Fact That I Didn’t Achieve All My Goals This Year

December 31, 2018

Editor’s note: As 2018 draws to a close and we launch 2019, I’ve asked each of our bloggers to reflect on their own personal goals, plans or thoughts on the past or upcoming year. Our hope is that you not only draw inspiration from our sharing over the coming weeks, but also that we are all able to feel more connected through our shared human experience and recognize that no matter where we are on our personal financial wellness journeys, that we all have similar hopes, dreams and struggles. Happy New Year! Here’s what I have to say:

Last year I called my personal goals the 3 T’s: travel, tennis and tail (getting a dog). As I reflect on how that went, I realize that I didn’t really accomplish any of those goals as they were set, and yet I feel like 2018 was a great year full of accomplishments and success. The moral of the year for me is that goal-setting is less about the actual end-point and more about giving purpose and intention to your efforts, with a requirement to remain flexible and self-aware of what’s working and not working so you can adjust on the fly. Here’s a quick review of what happened:

Travel: my travel goal for 2018 was to make the most of our Southwest Airlines companion pass by visiting at least 3 new states. I technically hit this goal because I deliberately visited two new states (shout out to Utah and Oregon!) but the third was actually checked by a diverted flight to St. Louis, which required us to drive back to Chicago from Missouri. Sorry MO, but that counts as a visit in my books! Did I accomplish my travel goal? To me, yes – I visited new places and also revisited some pretty cool other places like New Orleans and NYC. Check!

Tennis: this is a semi-success to me. We did take tennis lessons last year and I loved that, but after the lessons ended I played exactly twice and hated it. Was it the heat? My lack of skills? Not sure, but I’m going to try again this year with some more lessons and see if I am just a lesson-taker or if I can become one of those people who plays on the weekends with friends. Semi–check!

Tail: this was a bit of a stretch goal, which was basically an intention to find a better place to live where we could have a dog. The bottom line is, we have not moved, but more importantly, we realized that maybe having a dog isn’t for us right now. Luckily we were able to do a little trial by caring for our friends’ adorable golden retriever for a week, so we had a taste of the work involved. It’s not for our current lifestyle. 

Instead we’ve decided to open our home to foster cats, which can be contained if/when needed and can be left alone for an entire evening without needing a walk. Goal not accomplished, but changed, so I consider this a successful effort. Check–minus?

The life lesson for all of us 

Many times we set goals for ourselves and then in the process of working toward those goals, we learn new things about ourselves or the world in general. The key is to recognize when it’s time to re-think the intention behind the goal rather than pushing toward it just to say you did it. 

If your goal is to run a marathon in order to get in shape, but you find that you hate runs longer than an hour, it’s ok to shift to running 10ks – you’re still in better shape than when you weren’t running at all! Or if you have a goal to max out your HSA so you can let it grow for retirement expenses, awesome, but don’t let an unexpected health event drive you into credit card debt because you want to preserve your HSA – that’s what it’s there for!

Goal setting is an important first step in any effort, but sometimes it’s ok to not accomplish the goal if the intention behind the goal still exists. Are there any areas in your life where you need to re-think the goal in order to be happier and healthier?

Happy New Year!

 

How I Stopped The Grinch From Stealing My Christmas

December 21, 2018

A few months ago, I got to travel to one of my favorite cities, San Diego, on business. Having lived in Kansas most of my life, I appreciate any opportunity to see the ocean and enjoy the warm weather, especially when things are getting cooler back home and a cold winter is just around the corner.

Navigating Southern California traffic

Although I’ve visited San Diego before, I’ve never driven in the city and I’m not familiar with the highways and roads. I took a few wrong turns in my rental car, was startled by the motorcycles whizzing between the lines of cars on the highway, and caught a couple of rude hand gestures being directed my way (or maybe there’s a secret “welcome to San Diego” sign I’m unaware of).

Anyway, I trusted my phone’s GPS when she warned for two miles that my exit was coming up on the left. Being the planner I am, I gradually maneuvered my way over to the left side of the highway but avoiding the lane marked for “carpools.” When Ms. GPS finally said “take the exit on the left” … well, I did just that.

The Grinch wearing a badge

At the end of the exit ramp, a member of the California highway patrol leaned down, pointed at me, and promptly waved me over. He explained I had been driving in the carpool lane. I tried to respectfully argue that I had not. He further explained that I had illegally taken an exit for “HO’s only,” which further confused me. Apparently “HO” stands for “high occupancy” and since I didn’t qualify as a “HO,” I was not allowed to use that exit.

Where I come from, HO is what Santa says

I didn’t score any sympathy when I asked why they had to make it so complicated. I explained that I understand “carpool,” but I’ve never heard of “HO,” and I’m from out-of-state in a strange city, and I’m in a rental, etc. Long story short, he was feeling Grinch-y and I received my first ever traffic citation for a whopping $490. To really rub it in, the deadline for payment was just a few days before Christmas.

I fought the law and the law won

My first instinct was to fight it. I used my complementary consultation with an attorney that we have through our Employee Assistance Program (EAP). I also tried to beg for mercy with the court, which was time-consuming from another state. Eventually, I realized the holidays were nearing and I just needed to put on my big girl pants and pay it.

How I kept the Grinch from ruining Christmas

While $490 is enough to be a potential set-back in my financial world, the good news is that I had set two goals back in January, 2018 that would help me through this and ensure my holidays were still festive:

  • First, I had made automatic deposits into my emergency reserves with every check, so I was more than able to pay the ticket without impacting my ability to pay my December bills.
  • Second, and most important for me, I had set up a separate savings account for gifts only and deposited a small, set amount from every paycheck to have enough for Christmas gifts (like my colleague explained in this blog). So, despite the unexpected wallop to my personal finances, I had saved enough to still get gifts for my family and loved ones.

Paying a traffic ticket, especially a ridiculously expensive one that I don’t even feel like I deserved, really rubbed me the wrong way. But I’m not about to let it ruin this time of year for me. I think I’ll just pretend the fat payment I made to the beautiful city of San Diego was a well-deserved gift for the holidays.

7 Financial Steps To Take Before The Year Is Over

December 14, 2018

It’s safe to say that you will start to hear a lot of talk about New Year’s resolutions over the course of the next few weeks. Since money and wealth are integrated into many aspects of the life journey, it isn’t too surprising that financial resolutions are generally near the top of those well-intentioned “to do” lists for the new year. But if you’re like me, you’ve broken most of them before Groundhog Day.

That’s why this year I’ve decided to make and keep some New Year’s resolutions before the new year even starts. That’s my financial holiday gift to myself. Here are some actions you can take before the year is over as an opportunity to make sure you are doing everything to improve your own financial wellness during 2019 (and beyond):

1. Create a plan to aggressively fund your savings account

Over the past year, I’ve met with many individuals and families who are dealing with some major life changes and challenges that have made the emergency safety net a necessity. This may seem like a basic step, but most households report being woefully off track with this fundamental financial goal. According to a Federal Reserve report on financial well-being, less than half of U.S. households have enough savings to cover a $400 emergency without using credit or relying on friends and family.

A general guideline is to keep around 3-6 months of basic living expenses in an emergency savings fund. Some people are better suited maintaining an emergency savings fund of 6-12 months of living expenses (especially those in an uncertain job situation or with concerns about the economy). If paying off debt is a current priority, you should at least maintain a starter emergency fund of around $1k-2k even if you are in debt reduction mode.

In addition, consider contributing to a Roth IRA or HSA since these accounts provide tax advantages and may also be considered a supplemental part of your emergency fund. Just be sure to keep your core emergency savings in relatively stable, liquid assets that are not subject to market volatility.

2. Review your income tax withholding

Are you looking for a quick and easy way to increase your take-home pay so you can free up extra dollars to save in 2019? Or maybe you’re worried that you haven’t had enough withheld due to the tax change this year? You may need to adjust your income tax withholding, especially if you’ve had any changes in your income or expenses so far this year or if you’ve received a large tax refund in the past and you’re tired of loaning your money to Uncle Sam at zero interest.

It may seem easy to continue with this forced savings program right now, but with a little discipline and a few simple changes to your Form W-4, you can put that money from your upcoming paychecks to work for you right now rather than waiting to file your tax return. For a calculator you can use to figure out your recommended tax withholding, visit the IRS withholding calculator or this alternative version from TurboTax.

3. Establish a separate savings or checking account for irregular expenses

It may be too late to save for travel expenses over the holidays if you do not already have a plan in place. However, it’s not too late to start planning for upcoming vacations or to start setting aside money for the 2019 holiday season or annual expenses such as taxes and insurance.

This is where a planned spending account comes into play. You probably have heard of this concept a time or two before, but not everyone has a formal plan in place to prepare for irregular expenses. In fact, these non-systematic expenses are usually the ones that can blow up a budget and create financial stress.

This effective money management technique simply requires us to create a separate account for those expenses that don’t occur on a regular basis but still belong in your personal spending plan. Rather than turning the calendar to December and wondering how to pay for those holiday gifts, taxes, insurance, HOA dues, etc., you can go ahead and work them into your spending plan right now.

4. Schedule a “money talk” with a spouse, significant other, or friend

It is important to have regular conversations about your financial goals if you are married or in a committed relationship. Regardless of your money personality or who normally handles different financial roles (paying bills, spending money, investing, planning, etc.), regular money dates can help couples overcome prior roadblocks to working together as a team.

If you do not have a financial planning partner or your significant other is creating significant roadblocks on your path to financial freedom, you can reach out to a trusted friend or family member to serve as your accountability partner or voice of reason. Then again, some of our friends aren’t the best models of financial responsibility so you can always reach out to a CERTIFIED FINANCIAL PLANNER™ professional or financial wellness coach for additional guidance.

5. Review your membership accounts and subscription fees

With all of the different account subscriptions and memberships that we maintain in today’s connected world, it is easy to lose track of the actual costs of these conveniences. That is why it’s advisable to complete an annual inventory of these type of accounts. As a result, Amazon Prime, Netflix, Hulu, Spotify, etc. each have to answer the same question at least once every six months from me – are you still worth keeping?

6. Verify your debt reduction plan is on track

Not surprisingly, debt consistently remains at the top of the list of obstacles holding people back from reaching their important goals like retirement or simply building up savings. Our latest research suggests that many households are still in need of a plan to reduce or eliminate high interest debt.

If debt reduction is near the top of your financial to-do list for next year, check out our Debt Blaster Calculator to see if you are on track to get those credit card balances and other creditors out of your life. If you don’t have a plan, your new year financial checkup should provide you with an excellent place to start.

7. Re-balance your investment portfolio

One investment best practice behavior that most financial professionals recommend is to re-balance your portfolio on at least an annual basis. If you haven’t reset your target asset allocation for current and future investments, the end of the year is an ideal time to do so. Take advantage of automatic re-balancing if it’s available through a retirement plan at work to simplify this process with a click of the button. While you are examining your retirement portfolio, you can also review your answers to important questions about the status of your own retirement plans.

Taking all seven steps between now and the end of the year is an unlikely goal for most of us. But a little dose of financial awareness during the busy holiday season can provide you with lasting gifts of financial wellness. Try choosing 1-2 of these action steps and commit to checking them off your “to do” list. Don’t wait until next week or next year to start turning those good intentions of yours into a meaningful financial life plan!

How Would You Answer This One Question About Your Life?

December 13, 2018

Each year on my birthday, I like to spend some time reflecting on the past year and setting intentions for the year to come. Since it’s so close to the New Year anyway, it feels especially appropriate. In years past I’ve tried setting Big Hairy Audacious Goals (aka “Be-HAGs”), including plotting out exactly what I need to do each month to get there, but after several years of reading over the past year’s goals and laughing at how I never really even started the plan, I’m switching my tradition.

The question I’ll start asking myself

I came across an article recently where the author suggested that everyone take time to answer the same question every year, and write the answer in the same journal. The question is:

What is the meaning of my life?

What that question actually means to me

It would be easy to over-think this because hey, do we ever really know the meaning of our life until it’s often too late to do anything about it? The point of the exercise however, isn’t necessarily to figure out the meaning of your life, it’s to state very simply what you think the meaning of your life is RIGHT NOW. As I think back how I would have answered that question in past years, it’s easy to see how insightful and encouraging this simple moment of reflection and projection can be.

How I would have answered it in the past

Two years ago on my 39th birthday, I would’ve answered that the meaning of my life was to become a mother. As I embarked upon a frustrating and ultimately unsuccessful (not to mention expensive) quest to get pregnant that year, I found myself searching for meaning as my 40th approached last year.

Because the fertility treatments I endured (two rounds of egg retrieval, which yielded exactly zero healthy embryos for implantation) were so hard on my body, I almost literally rolled into 40 about thirty pounds overweight, feeling fat, sick, weak and a little lost.

Therefore last year on my 40th, I definitely would have said that the meaning of my life was to get healthy. That involved more than just adjusting my diet and exercise, it also involved giving myself the grace to grieve the life I’d always thought I’d end up living and to begin envisioning an alternate, and just as meaningful, future.

How I’m answering it this year

As I celebrate my 41st birthday, I’m proud to say that I’ve lost over 15 pounds and am back to feeling strong and healthy – there’s more I’d like to achieve in my nutrition and fitness goals, but I feel more in control and once again healthy. While my intention to be healthy won’t go away, it no longer needs to be the primary focus it was last year. I also feel ready to embrace the amazing opportunities in my life that are available because I WON’T have kids (more on that in my 2019 goals post).

For the coming year, I think the meaning of my life is to, quite simply, share love. I will make a conscious effort to spread all the love I have to share with family, friends, my amazing colleagues (who are, quite honestly, some of my very best friends as well), animals, the people I work with through my job and the world at large. This means that I will abide by the 2nd agreement from The Four Agreements: Don’t take anything personally, including remembering that nothing others do is because of you — I will work to give others grace and caring, rather than getting upset when someone behaves in a way that conflicts with me.

On one hand, this sounds like a Be-HAG to me – living life 100% from a place of love isn’t always easy in today’s world. On the other hand, I’ve learned that when I approach others with love, especially in the face of stress, anger or frustration, the outcome is almost always better, both for me and for everyone else.

I know this post doesn’t really have much to do with financial wellness, but in a bigger picture way, it kind of does. When we examine our lives and set intentions and meaning to it, we allow abundance to flow and contentment to prevail. When those things happen, we naturally experience less stress in all areas of our life, including financially.

What would you say the meaning of your life is right now? If you don’t like the answer, it’s the perfect time to decide what needs to change so that you do.

 

 

How To Make Sure Your Charitable Donations Are Most Effective

December 12, 2018

It is said that it is better to give than receive. There’s even research that shows that giving is psychologically and financially beneficial. For many Americans, giving to charity has made a material difference in terms of reducing their tax liability (approximately 25% of Americans report charitable donations as itemized deductions to their income each year.) Charitable giving is a key component of tax planning for many taxpayers and it is important to make those gifts in time to count for 2018.

Last year’s Tax Cuts and Jobs Act left most charitable deduction rules the same but there have been some additional changes that may make it more difficult to reap the same tax benefits. If you are in the habit of making a lot of donations toward year-end in order to get the tax deduction, keep reading – you may not see as much benefit as in years past.

Is it deductible?

First, a quick review of the rules of charitable giving. You can count a gift as a charitable tax deduction ONLY if you make that gift to a qualified organization as defined by IRS section 170(c) – most of these are 501(c)(3) organizations.

Outside of that, you may make donations to people or organizations, such as helping a local family in need, but those donations are considered gifts and are not deductible from your taxes. That means those charitable individuals paying off Walmart layaways aren’t likely to see a tax benefit (although I still think it’s really cool!). One of the more common misconceptions is that crowd-sourced giving, like GoFundMe campaigns, are tax deductions, but they are not.

Will charitable giving actually reduce your tax?

Due to the recent tax changes, people who make charitable gifts strictly to lower their income tax burden may need to re-think their strategy. One major change to the tax code is the increase in the standard deduction, which basically doubled for each filing status. This doubling means that many Americans who previously itemized deductions will likely use their standard deduction this year because their itemized deductions will not measure up. To determine if you have enough itemized deductions, total them up and compare them to your standard deduction ($12,000 for single, $24,000 for married). You’ll claim whichever one is higher.

One way to make it count for tax purposes

If you are falling just short, one idea is to accelerate some charitable contributions for next year into this year to get you over the standard limit. If you are falling well short of reaching your deduction level this year, you could hold off on some end of the year giving to boost your itemized deduction for the following year.

If you have a large amount of funds to donate this year but want to spread out the disbursement of those funds over several years, consider a donor advised fund. You can make a gift to the donor advised fund upfront and claim it for the current year and then disperse the gifts over time.

Making sure your gift is going to a worthy cause

Your charitable gift can help an organization achieve its cause, but you want to make sure the organization you are giving to is managing your gift correctly. There are many organizations that offer rosy promises but how can you be sure they are doing what they say? Take some time to investigate the organization’s mission and find out what percentage of donations actually go toward the mission. You may want to tour the operations or even volunteer with the organization to see how your gift is making a difference.

If you are looking for a third party assessment of an organization’s stewardship, online resources like Charity Navigator rate hundreds of organizations on their accountability measures and transparency. If you are considering giving to a smaller or local organization that may not show up on these national search engines, check in with resources like a local community foundation to determine if they have vetted that organization’s efficacy.

The bottom line

I have witnessed the ability of a well-run charity to change individual lives and whole communities for the better. Whether you will receive a tax deduction for a gift does not have to be the determining factor in whether to make a gift, but consider these strategies when you do give to maximize the potential tax benefits. Doing so can give you additional assurance that your hard-earned dollars are being effective in helping others, while also leaving you with more money to be generous in the future.