Are You Embarrassed To Talk About Money?

July 20, 2017

When I first heard about Financial Finesse’s workplace financial wellness programs, which are offered free to employees of client companies, I assumed that almost all of the employees would want to take advantage of it. After all, how often do you have the opportunity to speak with a CERTIFIED FINANCIAL PLANNER™ professional with at least 10 years of experience who won’t charge you or try to sell you anything? At best, it could change your life, but even if you decide not to do anything, what’s the harm in talking?

But what I’ve learned over my years here is that people find all kinds of reasons not to take advantage. Don’t get me wrong, we are busier than we’ve ever been working with employees to improve their financial lives, but I often wonder what keeps everyone from making the most of this amazing benefit. I find one of the obstacles is people feeling embarrassed to talk about their financial situation. Which I hate, because there really isn’t anything to be embarrassed about — we’ve heard it all and we are a judgement-free zone.

Here are 3 of the most common things I hear people say and why they shouldn’t feel that way:

I feel stupid about money. People tell me this ALL the time. The funny thing is that these people are far from stupid. Many of them are lawyers, doctors, scientists, etc. However, we have an education system that doesn’t really teach personal finance, a financial system packed with unnecessarily (and some would even say purposefully) complicated jargon, and busy lives that leave us without much time to learn this on your own.

Far from being “stupid,” acknowledging what you don’t know is a crucial first step in improving your financial wellness. No one knows it all and even if you did, we all have emotional biases that can prevent us from making the right decisions. It never hurts to get a second opinion (at least when it’s free and unbiased).

I feel guilty about what I spend on X. This is another one I hear constantly. Remember, there is no one right amount to spend in any given area. It all depends on your personal situation, goals, and values.

For example, many New Yorkers complain about how much they spend in rent, but they often forget how much they aren’t spending on car payments, car insurance, gas, and car maintenance. A person who is debt-free and saving enough to hit their goals can afford to spend more than someone trying to pay off credit card debt. You may decide to spend more on travel and less on shopping, while your friend does just the opposite. Neither of you are wrong, as long as that spending doesn’t lead to additional debt.

I know I should be doing X, but I’m not. Welcome to the club. Even financial planners will admit to this. Personal finance reminds me a lot of dieting and exercise. Most of the time we know what we need to do, but the hard part is actually doing it.

Just like working with a personal trainer, a good financial wellness coach can not only help you decide what to do but help motivate you to actually do it. One way is to hold you accountable. In that case, your fear of embarrassment can be your best asset.

You’re not alone.

If you’ve ever said any of the above, know that you’re definitely not alone. These feelings are also nothing to be embarrassed by. (I’m much more concerned about the person who is in denial and doesn’t think they need any help.) The only thing to be embarrassed by is not doing anything about them….especially when the help is free!

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How To Break The Cycle Of Debt

July 18, 2017

One of the biggest road blocks I faced when I was paying off debt was getting out of the “debt cycle.” If you’re struggling to break free of credit card debt for good, you may already be familiar: you pay off a card, only to have an unexpected expense pop up that plunges you right back in to debt again. You work hard to pay it off, then something else comes up… and the cycle repeats.

I’m grateful that I was eventually able to break the cycle, but I had to change my ways a little bit. Here’s how I did it:

I created a spending plan. I always planned for my bills, but I spent the rest of my money without boundaries, leaving me financially exposed to unexpected expenses or overspending that led me back to debt. To fix this, I created a plan for every dollar, sometimes called a “zero based budget,” to account for all my current expenses while also allowing me to start saving for future expenses like vacations, car and home maintenance. Remember this is your plan, so you decide what categories are important to you — I have a category for Starbucks. If you are short on time and technological skills consider using your bank’s online budgeting tools to create and track your budget — many have apps so you can track your spending on your smart phone. Other tools include Mint.com, the Easy Spending Plan or even just Excel.
I started a savings account. A big mistake I made initially was to focus solely on paying off debt without having any money saved. Inevitably some type of emergency would come up and I’d find myself deeper in debt. As part of your spending plan, include a category to put at least $1,000 away in a mini-emergency savings fund ASAP. I labeled the account “Debt Proof Insurance” to remind me what the money was for. Where you keep the money depends on your level of discipline: if you are pretty disciplined, a savings account at your bank to transfer funds in to each time you get paid will suffice; if you are not as disciplined (aka you are in Club Tania), look at opening a savings account at a different bank, then having funds deducted directly from your paycheck to go to that separate account.
I chose a repayment strategy that kept me motivated and consistent. There are a couple popular strategies out there for paying off debt, one of them where you work on paying off the lowest balance account first, another where you focus on paying off the highest interest rate first. Both work — the best plan for you is the one that will keep you motivated enough to get to a zero balance on all your debts. Paying off your highest interest rate first will save you the most money overall, but may not be the most motivating. For others, getting the quick wins from paying off the smallest balance may be what keeps you motivated.
For me, it was paying off a credit card that I used to make a large, stupid purchase. Every time I saw the statement, I was reminded of my bad decision. Although this debt was not my lowest interest rate nor my lowest balance, I paid it off first because I wanted to get rid of the emotional baggage I felt each month when I received the statement. That was all the motivation I needed to keep myself on track until the last debt was paid off. Check out the Debt Blaster calculator for some motivation and a plan as well (it focuses on paying the highest interest rate first).

Probably the most important thing to do is to redefine progress when you are in the thick of paying off debt. Instead of just focusing on the ultimate debt free day, give yourself milestones to celebrate, like when you have paid off each debt, when you have paid off half or even when you denied yourself something so you have the money to payoff debt. These celebrations will keep you motivated until you can do your “debt free dance.”

4 Life Lessons I Wish I’d Learned 30 Years Ago

July 14, 2017

The other day I started thinking, “If I could travel back in time, what advice would 55 year-old me give to 25 year-old me?” The list grew and I started to get depressed, so I decided to limit it to two things financial and two things non financial in hopes that you might find some life wisdom in here as well.

Here are the conversations I imagine I’d have with my younger, cockier, less experienced (but oh my, much thinner…) self:

Non financial life stuff

Keep in touch with people who are important to you. In about 20 years your daughter will ask you and your wife (whom you haven’t met yet), “Were all your friends in college so nice?” The answer is no, you just got rid of the ones that weren’t good for you throughout the years. There will also be some that you regret not keeping in touch with. (There is this thing coming called Facebook which will make this easier.) The bottom line — it’s worth it to keep in touch with the people who are important to you, as they will make life better throughout the years.
Focus on things that you do well and find ways to compensate for things that you don’t do as well. I would tell Young Steve that spelling will always be a challenge for you, but there is this thing coming called spell check that will help, so don’t waste too much time memorizing words. (Although 2017 spell check still cannot figure out what word I am trying to sspaejkll on occasion.) You will be driven to overcome things you are not very good at and pay less attention to what you are good at, but this is a folly — it should be the opposite. I learned this from a book called “Strengths Finder,” which was published in 2007, and showed me I’d wasted a lot of energy over 20 years trying to “fix” myself rather than focusing on what I already did well. Figure out what your strengths are, what you are really good at and focus your time and energy on improving those. Worry less about your short-comings. (And if possible, write that book yourself in ’05 so you can retire early on the revenues from it!)

Financial life stuff

Figure out a spending plan. I know you hate the word budget – it sounds like diet and they both tell you something you cannot do and you hate that. So here is the trick you play on yourself: it’s not a budget, it’s a “spending plan,” where you plan what you want to spend your money on. And you need one ASAP. Rather than beating yourself up for what you wasted your last paycheck on, it is time to think about what you want to spend your next paycheck on. It doesn’t mean you can’t spend money, it means you will be spending money on what is most important to you. For instance, if you want to take that nice sailing trip with your friends next summer ($1,500), that means taking your lunch to work 3 days a week ($10*3*50 weeks =$1,500). 2017 tools that can help do this include Mint.com, everydollar.com, Easy Spending Plan, your bank’s system or any another system/tool/app available. The particular system doesn’t matter; what matters is that you have a way to make sure you are spending your money on what is important to you and that your system gets you and is easy to use.
Set aside 30 minutes a week to think about your finances to make sure you focus your time and money on what is important to you. Right now, your thought process is what is politely described as “inspirational” (also known as scatter brained), but when you find something you like you really dig into it (also known as OCD). If at 25, not married, no kids you cannot find time to take care of your money, you never will find time to do this. Make the time now. Turns out that you are a morning person, the latest you wake up is 6:30 (you used to think Dad was weird when he did the same thing) and that is when your energy is highest, so do it then. Set an appointment every Sunday morning from 7:00 to 7:30 to go over your finances. Look at what you are spending your money on and make sure it matches your spending plan. Make adjustments as necessary. Review your investments to make sure you are taking an appropriate amount of risk. The bottom line — focus your time and money on what is important to you.

Then I thought, “What do I think 85 year-old Steve will want to tell 55 year-old Steve?” Guess what – at this point, I think it would be the same thing. Only time will tell!

The Best Financial Advice I’ve Ever Heard

July 06, 2017

That’s how the advice was characterized in the title of an article I read recently and it actually lived up to its name. After a five year study, the author found that there are two main ways to wealth for self-made millionaires (not including inheritance, marriage, or winning the lottery):

Pursue a dream.
OR
Live below your means and invest your savings over a long period of time.

Option 1: Pursuing a Dream

I’m often irked when I hear successful entrepreneurs and celebrities advocating the first path. The problem is that it requires both a lot of sacrifice and a lot of risk to achieve a dream. We see the outcomes, but we don’t often see the sacrifice or the risk. Hearing about countless hours of hard work isn’t as exciting, and no one listens to all the people who took the risk of dropping out of college and giving up on a safe career only to fail at acting or whatever else their passion was.

It’s not that this is necessarily a bad choice. Some people who pursue their dream do succeed. Just be aware of the sacrifices and risks you’ll have to take.

But it’s not always an either/or. One option might be to first try to achieve some level of financial security and independence first. For example, Arnold Schwarzenegger first made millions of dollars by selling fitness equipment and investing in real estate before he embarked on his acting career. He didn’t want to be like other aspiring actors he saw that struggled financially and were forced to take sub-par roles to pay the bills.

Option 2: Living Below Your Means

Since most people don’t have the desire to make the sacrifices and take the risks required to pursue a dream, the article’s author found that 83% of the self-made millionaires he studied became rich simply by living a very frugal lifestyle. (boring, I know) This is a path that doesn’t require immense talent, effort, or luck. The main obstacle is “lifestyle creep” or the tendency of people to automatically increase their standard of living as their income rises. As a result, many of them never get much beyond living paycheck to paycheck.

So what’s the secret? The article says the key is to maintain the “same house, same spouse, and same car” as long as possible. After all, houses and cars are two of the biggest expenses Americans have and anyone who has gone through a divorce can tell you it can be quite costly as well.

One advantage I’ve found of minimizing high fixed costs like homes and cars is that it leaves me more money not just for savings, but also for discretionary expenses like dining out, shopping, travel and entertainment. This gives you a certain level of financial freedom in your everyday life that makes you feel less constrained. Research has shown that spending money on experiences can particularly lead to happiness.

In contrast, buying a new home or car can typically only give you a temporary boost in happiness before you get used to it and need to upgrade again to get the same high. In the meantime, having less money to spend day-to-day can make you feel depressed and constrained. It’s kind of like going on a diet vs finding a way to eliminate a bunch of calories everyday so you can eat more of what you want.

So if you want to stop living paycheck to paycheck and become financially independent, you have two choices. You can either make the sacrifices and take the risks necessary to pursue a dream or you can stick to the same house, spouse, and car as long as possible. The second may not sound as exciting but as they say, slow and steady wins the race.

Should You Use Your Emergency Fund For Medical Procedures?

July 05, 2017

After sharing our decision to pursue in vitro fertilization and how we’ll pay for it on the blog last week, I was a bit overwhelmed with the outpouring of support from friends, family, colleagues and even complete strangers. THANK YOU for your words of support and prayers, they mean so much to us!

I’ve also been asked by a few people why we aren’t using our emergency fund or Health Savings Accounts (HSAs), and those are great questions! Here’s my answer:

Using your HSA

Anyone who has discussed the benefits of the HSA with me knows that I actually emphasize the S in HSA for savings — rather than use the funds I’m accumulating in my account for everyday medical expenses like co-pays and minor bills, I’ve been paying for those things with my out of pocket spending money. The thought is that we’ll let our HSA money build up for when we have a big medical expense that we wouldn’t be able to pay out of pocket, while realizing the tax savings along the way.

Well, that day just came sooner than we had planned, so we WILL be draining our HSAs, it’s just a bit of a drop in the bucket compared to the total cost of IVF. Between my HSA and my husband’s, we can’t even cover the cost of the medication required, but we will cover what we can with this tax-free money.

Why not use the emergency fund?

As urgent and important and life-changing as this is for us, we do not feel that undergoing fertility treatment is an emergency in the way that the financial emergency fund is intended. We are stretching ourselves financially to do this, but we still need a back-up in case one of us loses our ability to earn income, which is really what the emergency fund is for —

To keep a roof over your head,
Food on the table,
Transportation to work and
Other basic needs met during times of unexpected income disruptions.

It’s why my colleague Erik wrote about the emergency fund taking priority over paying down debt — it’s your first line of defense against “life happening,” even if it’s not earning a ton of interest and you’re paying interest on other debts in order to keep it in place.

At the end of the day, we are choosing to undergo IVF. It’s true that without it we may not ever have biological children, which would change our life plans and be tremendously sad, but that’s not an emergency. It sucks, don’t get me wrong, but no one will be homeless or go hungry if we DON’T do this. We feel a tremendous sense of gratitude and fortune to even be in a position to make this choice – many people are not, which also makes me sad.

Sometimes it can feel like you don’t have a choice, like if you have an accident and receive a $10,000 hospital bill. While it’s important to make a plan to pay your medical debts to avoid them going to collections, depending on your personal situation, using up your emergency fund may not be the best place to turn — what happens if you’re unable to work and pay your rent? That’s what your emergency fund is for. (caveat: sometimes it DOES make sense, but that’s why it’s called “personal” finance)

Keep that in mind the next time you feel tempted to tap your emergency fund — is it a true emergency that will literally keep you housed, fed, clothed and employable? If not, it’s best to seek another way to pay or to make a different choice.

Deciding Whether To Save Or Pay Down Debt Isn’t Just About Math

June 29, 2017

I recently saw this article titled, “A financial expert says deciding whether to save or pay off debt comes down to a basic math question” that quotes financial writer Jean Chatzky asking, “What am I getting on that money?” For example, if you can save in your 401(k) and get a 100% or 50% match from your employer, that’s probably the highest return you can get. That would be followed by paying off high-interest debt like credit cards that often have double-digit interest rates.

However, you may be better off investing extra money rather than paying off low interest rate debts like many student loans, car loans, and mortgages if you can expect to earn more on your investments than the debts are costing you. In other words, earning a 6% average annualized return on your investments is better than paying down a 4% mortgage (especially if the 6% return is in a tax-sheltered account and the mortgage interest is tax-deductible).

More than basic math

This is generally good advice. There are a couple of problems though. First, it doesn’t take into account emergency savings, which should be kept in a low-risk, low-return account like a bank account or money market fund. With bank interest rates typically below 1%, you would NEVER save for emergencies using that logic because you could always find someplace else to put your money with a higher expected return.

You know how there’s generally an inverse relationship between risk and return? Well, emergency savings and insurance policies have low or negative expected returns. (If returns on insurance policies were expected to be positive, insurance companies would go bankrupt). That’s because they provide the value of reduced or negative risk.

Where does the emergency fund fit in?

So how should you prioritize emergency savings? Like having adequate insurance, I would actually put them first. Yes, your expected return is low but the goal here is to reduce the risk of losing your home and/or car if you lose your job and can’t make the payments.

However, because the return is so low, you don’t want to have TOO much in savings. A good rule of thumb is to have enough to cover at least 3-6 months of necessary expenses and perhaps even 8-12 months, depending on how risky your income is, what other resources you have available, and who else you’re providing for. A tenured teacher with a retirement plan they can borrow against and no dependents needs a lot less than an entrepreneur with little retirement savings and a family to take care of.

Figuring in your personal feelings about debt

Second, don’t forget the emotional component. Some people are more bothered by debt than others. Even if they know they can earn more by investing extra savings, they would derive more happiness (or at least stress relief) from being debt-free than from having those extra investment earnings.

In the end, isn’t happiness the goal? (This isn’t to be confused with making emotional decisions that we’ll later regret. The key is to make decisions that will maximize our long term happiness.)

So remember, when you’re deciding whether to save or pay off debt, it’s not just a basic math question. It’s a personal question too. That’s why we call it “personal” finance.

First Impressions Of Financial Finesse: Intern Insights

June 26, 2017

To wrap up our series of posts highlighting a specific part of our company culture that helps to make Financial Finesse one of America’s best places to work, we are sharing a contribution from one of our interns, who shared her first impressions of Financial Finesse after working with us over her spring break. This is just one part of our celebration of recent recognition by Inc., who listed us as one of the Best Workplaces in 2017 and Entrepreneur, who named us to the Small-Sized Companies: The Best Company Cultures in 2017 list. Here’s what she had to say:

I remember when my dad first interviewed at Financial Finesse – he told me that is was an interesting experience. He told me that the meeting room is mostly outdoors and everyone wasn’t dressed very fancy, that they were in more comfortable attire. When I heard this, I immediately knew that this would be no ordinary job for my dad. And I was correct.

When walking into the El Segundo office, it is not like a normal office building. There are no cubicles and it’s not absolutely silent with only the sound of people typing away. The overall idea of the company is for people to get their work done, no matter how it maybe.

There are many employees that work there, but lots live around the country because their job permits it. Employees who work in the main office are allowed to work from home as their job allows it, but most who live in the LA area come in most days. Dogs are also allowed (as long as they behave) which makes the environment more friendly. Overall, it’s a great place for people who like to collaborate with others, but are also very self-sufficient.

After watching videos that promote the company, I saw the passion behind the work that many of them do. When seeing the Creator (Liz Davidson) speak about why she created this company, I learned that her main goal was really to help people with their finances by decreasing their stress and anxiety as well as make them confident and knowledgeable about their finances.

Financial Finesse also has a Think Tank, where they put out reports and studies from data they have collected on their Financial Wellness Assessment, which the director of it, Greg Ward, oversees. He explained that he likes “seeing [financial wellness] improve the lives of the employees,” showing his passion for helping improve people’s financial situations.

The overall thing that I found common was the love and dedication that the people put into this company.

Madison Starobin is the daughter of Dan Starobin, our Senior Director of Operations. She interned in our marketing department over her spring break. Madison is a junior at Cleveland Charter High School’s Humanities Magnet program in Los Angeles and plans to pursue a career in communications. When she’s not studying, she likes to make friendship bracelets and listen to her dad’s sage advice.

What To Do If Your Spouse Has Bad Credit

June 26, 2017

Have you generally been financially responsible but your spouse or fiancé has made some bad financial decisions? Are you worried that your spouse will drag you down financially, or if you can make the debt and/or bad credit go away quickly? If so, you aren’t alone. Debt and poor credit scores are the norm.

According to a study from CFED, 56 percent of American consumers have sub-prime credit scores, which means they don’t have access to the best interest rates for mortgages, credit cards and car loans. Debt is a way of life for most Americans, says NerdWallet in a 2016 American Household Credit Card Study, with the average amount of credit card debt for those who carry it totaling $16,748. Over 44 million Americans have student loan debt, with 11.2 percent of borrowers delinquent or in default.

Does that sound familiar?

For better or worse

If you have a financially mixed relationship, I’ve got some tough love for you: even if you aren’t legally responsible – although in community property states you will be – it’s still your issue to deal with, too. Marriage is a legal partnership, not just an emotional and spiritual relationship. The only way to deal with debt or credit problems – either your spouse’s or yours — is for both of you to face them head on. If you don’t, it’s only going to get worse.

Excessive debt can drag down your financial life as a couple and lead to a cycle of low financial wellness, where you live paycheck to paycheck without building up emergency savings or saving for retirement. Plus, let’s face it – it can lead to some nasty fights! It’s best to prioritize paying debts as a married couple, even if they aren’t yours, because marriage is also an economic relationship. Each partner affects the whole.

Stop blaming your spouse

Do you plan to stay married? Ok, then stop blaming your spouse for the situation you are in as a couple. Let it go. Blame and shame are not going to move you forward, and may actually make it much, much harder to negotiate changes in in your spouse’s behavior. Consider working with an unbiased CERTIFIED FINANCIAL PLANNER™ who can coach you through the process of figuring out how you are going to tackle the situation together. Find one by asking your workplace financial wellness program or look for a Fee-Only CFP®.

Practice full financial disclosure

When my husband and I first got together, we had the Money Talk. I was honest with him about where I was in my financial life (paying off some debt from a former business, downsizing my lifestyle so I could save more). Although he’d had it together since graduating college, he wasn’t the slightest bit judgmental. In fact, he was able to look at the situation quite logically and before we got married, we figured out a plan to tackle the last of my student loan and business debt.

We developed a strong, unified vision of where we wanted to go in our lives and how we would manage money together. (You can read our story here.) Keep talking about money throughout the evolution of your relationship: have money meetings and make sure you understand each other’s financial values – the number one reason couples fight about money.

Set everyone up to succeed

Set up a system where the less savvy partner can succeed. This means:

Avoiding blame or judgement
Making money management a team effort
Setting up “yours, mine and ours” accounts for cash management so everyone has some control over some of their spending
Monitoring your credit monthly
Celebrating small wins

Consider workarounds to protect your credit

In the meantime, consider workarounds to protect your own credit and repair your spouse’s, such as putting some bills in an individual name and avoiding joint credit cards, car loans or mortgages, etc.

Worst financial enemy or best friend?

Let’s be realistic – if you weeded out everyone in the country who had debt or less than perfect credit, the pool of potential mates would be pretty small. That doesn’t mean it’s not important to address in your relationship, though. How you deal with credit card debt, student loans and/or poor credit scores in your relationship will determine the financial foundation of your marriage.

As our CEO Liz Davidson wrote in What Your Financial Advisor Isn’t Telling You, your life partner can be your worst financial enemy or someone who lifts you higher. Even if you don’t have the same levels of financial wellness levels when you start your life together, with good communication and ingenuity you can be best financial friends.

The Financial Services Industry Is Broken – Here’s How We Should Fix It

June 23, 2017

Along with being a financial planner here, each member of our team wears a bunch of different hats. Obviously, one of my other hats is a blogger. Another is being responsible for hiring new financial planners, where I have the opportunity to talk with incredibly talented CFP®’s from all over the country who want to work at Financial Finesse.

The reality of the situation is that even with a minimum of 10 years of industry experience and the CFP® designation, along with being wonderful human beings, only around 2% of those who apply for this role end up making it all the way through our hiring process. It’s astounding to me that I actually made it through the process and am working here.

Don’t tell anyone, but I regularly talk to planners who are smarter, harder working, more entertaining and much more photogenic than I am, and quite often they don’t get hired. There are lots of reasons for that, but that’s not the direction I want to take this post. Maybe another day…

What most financial planners do

The reason I talk about this is that the overwhelming majority of planners I talk to are in the business of giving world class advice to high net worth families when they apply to work at Financial Finesse, which is what I did prior to coming here. They are typically measured by the amount of assets or fees they collect and are tired of having to sell in order to also do financial planning.

For me, when I was working on a high net worth planning team, there was always a piece of me that thought, “The people we are working with are going to be just fine for the rest of their lives, even if they develop a bad case of ‘the stupids,’ while the people who most need our help can’t afford it and don’t have access to it. There is something fundamentally wrong with this system!” I interviewed three planners today who said something very similar. And that thought is what is driving them to look at us as a potential final career stop.

Working with the other 99%

Most of the employees I talk to in my role as a financial planner will never become a client in a high net worth planning office. Most would be happy just paying off their debt and having enough income in retirement to live a modest lifestyle. My guess (because I’m too lazy to do the math!) is that over half of the people I meet with are there to discuss either how to get out of serious debt or how to stop living paycheck to paycheck and maybe prepare for retirement or put their kids through college. These are the people who wouldn’t normally have access to decent financial planning guidance. And this isn’t isolated to the people I talk to – my colleagues say the same.

A recent Fed “Report on the Economic Well-Being of U.S. Households” reported that just under 1/4 of households can’t pay their monthly bills and almost half of households wouldn’t be unable to cover, with cash, an emergency expense of $400 or more. This information doesn’t surprise me, but it does get my hackles up a little bit about how messed up our financial services industry is.

These are the people that need help from our best and brightest planners. These are the people that our current system is leaving behind. These are the people that I wanted to help when I made the decision to work here.

A new branch of the industry

The good news is that these are the people that I’m helping today. Financial Finesse was founded on the belief that all Americans, regardless of income or net worth, deserve access to excellent financial planning guidance. That’s the vision that guides us. And we are actually excited to see more competitors in our space. Employers are catching on that providing a workplace financial wellness benefit is good for employees and it’s good for the bottom line – if you don’t have a financial wellness benefit at work yet, chances are you will. And that’s a good thing. I firmly believe that our industry will revolutionize the way traditional financial services are offered in the future.

I only wish that every employer in the country would work with us so that I could help everyone. Since I can’t clone myself, I try to at least hire others who have that same burning passion to help those who need it the most. Our internal motto and rallying cry (what I like to say is our true mission), is that we are “changing f’ing lives.” And that’s what we’re doing – one person, one family at a time.

What’s in it for you

What does this have to do with your own personal financial situation? Well, if nothing else, know that we feel your pain – getting unbiased answers to your questions is truly a challenge in today’s world. But if you do have access to a financial wellness benefit at work, USE IT. It’s there to help you and it’s not just for people who are in crisis. In fact, the best time to use it is when you’re not, so we can help make sure you’re ready when the next crisis hits.

Here at Financial Finesse, we believe strongly in the importance of workplace culture and the power of doing well by doing good. This article is the fifth in our week-long series of posts where we highlight a specific part of our company culture that helps to make Financial Finesse one of America’s best places to work. This is just one part of our celebration of recent recognition by Inc., who listed us as one of the Best Workplaces in 2017 and Entrepreneur, who named us to the Small-Sized Companies: The Best Company Cultures in 2017 list.

The Financial Upside of Peer Pressure

June 21, 2017

Have you ever contemplated how the people you hang out with or follow on social media actually affect your financial status? Think about the last time you went on a diet or tried a new fitness regimen — if your friends were on board, chances are that you stuck with it longer than if you tried to go it alone. The same thing applies when it comes to your money, so much so that some banks have been known to check Facebook friend lists before granting people credit for things like a mortgage or car loan.

A Harris poll conducted on behalf of the AICPA found that 39% of people looked into a purchase or vacation solely because they saw it on someone else’s social media, further proving the power of peer pressure. Guilty as charged – in the past couple months I’ve booked a yoga retreat, shopped a new brand of yoga pants and tried an all-natural, aluminum free deodorant cream solely because of something I saw on Instagram. (are you sensing the hippie theme of my life these days?)

What made me step up

When I first meet people and tell them I’m a financial planner, they typically assume that I’m “perfect” when it comes to money – that I must have a balanced budget, successful investments and a sizable savings account that grows according to my detailed financial plan. The funny thing is, before I joined the Planner team at Financial Finesse, I was far from perfect. I knew what made a perfect financial plan, but I didn’t have one in my life.

All that changed, I think, due to the healthy peer pressure of working with other planners who are making better financial decisions, but also because of my daily work – I get to help clients who are like me, something very rare in the financial planning industry.

Typically, in order for a financial planner to make a living in this industry, you have to work with pretty wealthy people who invest money with you. I’d like to be like that one day, but for now I’m pretty much your average working person who falls victim to Semi-Annual sales and has to put hacks in place in order to avoid over-spending. Having the opportunity to talk with others who have the same struggles has actually helped me to overcome those struggles.

Using peer pressure to get richer

Put the power of peer pressure to work for you in your financial life by trying some of the following:

Talk to your friends about your financial goals and challenge them to join you, kind of like a weight loss challenge – what about a challenge to save a thousand bucks over the summer? When you all achieve the goal, celebrate with a spa day.
Look at who you follow on social media and consider adding positive financial influences, like Feed the Pig, Budgets Are Sexy or Financial Finesse. If you suffer from FOMO, you might want to hide some of the bigger bragsters in your network – trust me, their lives are not as fabulous as you think or they wouldn’t have so much time to be posting on social media!
Become a role model for your friends and family by brushing up on good financial habits, then talking about them at gatherings. Before you know it, people will be calling you for guidance and you’ll feel the positive peer pressure to practice what you preach. It works for me…
Subscribe to blogs that address the questions you have. Shameless plug, but I also like Daily Worth and The Muse for the articles they deliver to my inbox.

The bottom line is, if you don’t like your current financial situation, take a look at what effect your interactions with friends and family may be having. There are some you can’t avoid, like a sister who is constantly coming to you for money when in a pinch, but you can neutralize the negative peer pressure by putting positive money peers more deliberately in your life.

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Here at Financial Finesse, we believe strongly in the importance of workplace culture and the power of doing well by doing good. This article is the third in our week-long series of posts where we highlight a specific part of our company culture that helps to make Financial Finesse one of America’s best places to work. This is just one part of our celebration of recent recognition by Inc., who listed us as one of the Best Workplaces in 2017 and Entrepreneur, who named us to the Small-Sized Companies: The Best Company Cultures in 2017 list.

The Magic Power of Writing Down Your Goals

June 19, 2017

Can writing down your goals help you achieve them? For me, the answer is a definitive “yes.” I’m a prodigious maker of “to do” lists, “to be” lists and “to experience” lists. When I was single, I even made a list of what kind of a person I’d like for a spouse, so I’d recognize him when I met him. (I did!) For me, that process of setting intentions and figuring out how I’ll measure my success has been completely transformative, especially when it comes to a recent discovery in an old notebook.

You can predict your future by writing it down

Last week I was cleaning old files in my office and I discovered a list I’d made in a composition book from late 2000 titled, “Characteristics of My Dream Job.” I wrote it during a particularly difficult time in my career: the stock market tech bubble had burst, and the fee-based income I’d built in my new financial planning practice over the prior three years of a bull market fell by more than 50 percent. I needed a Plan B in case I couldn’t make it through a bear market financially.

The list

When I read the list (pictured below) I was floored. It’s as if seventeen years ago, I conjured up my role as a CERTIFIED FINANCIAL PLANNER™ at Financial Finesse delivering life-changing workplace financial wellness programs.

DREAM JOB LIST: I was floored to read over this list I made 17 years ago, describing exactly what I’m doing today.

My kids tell me all the time they can’t read my handwriting, so I’ll give you the highlights: motivation and encouragement of others, relevant/meaningful/influential in people’s lives, teaching, public speaking, writing instructional materials and articles, flexibility in schedule to meet future childcare needs, deadlines, cheerful/can do environment, fast-paced with lots of formal and informal opportunities to learn. Wow.

Fast forward 14 years

As it turned out, I weathered the bear market and went on to build a successful team practice, eventually leaving after 8 ½ years to move with my family for my husband’s international job. Even though I had forgotten about the Dream Job list until the other day, my intentions were working behind the scenes. That’s why I had an immediate “that’s my tribe” reaction when I came across the Financial Finesse website in 2014. And that’s why it was so easy to choose to work here, instead of accepting offers for a wealth management position.

Writing down our goals is our company’s secret sauce

At Financial Finesse, we also like to write down our goals and intentions. That’s one of the things I absolutely love about working here. It’s also why I believe we’ve been able to have such outsized impact on the country by launching an entirely new industry, workplace financial wellness, which helps millions of American workers become more financially secure.

How we do it

We call them “MBOs” – Management by Objectives, and we all set them individually, by team as well as company-wide for each quarter, in addition to company-wide over the long term. We’re strategic about it – this isn’t just a list of things to do. Rather, the MBO process aligns employees’ actions and team goals with the broader objectives of the company and our social mission.

Employees draft their own MBOs based on company and team goals, propose how success will be measured, then receive direct, personal feedback from our CEO and the management team to let us know if they’re on target. At the close of each quarter, each employee – including our CEO and management team — reviews their MBOs and gets scored based on how well they have achieved them. It works – when I think of what we’ve accomplished as a small-sized company, I’m amazed, but I also know that a huge part of it is that we are mindful of our goals — we keep our eyes on the prize.

Try this goal-setting exercise

Have you been struggling with getting somewhere in your career or financial life? Consider accepting the idea that you become what you believe (or at least borrow it for use). Find some quiet time, grab a notebook and pen and answer these questions:

If everything worked out exactly the way I wanted it to in my life/career/finances, what would that look like?
How will I know when I’ve been successful?

Post them where you can see them, or set regular times to review them. Then maybe you won’t have to wait 17 years to figure out you’ve already achieved them!

If you’re willing to share your goals exercise, tweet a picture of your goals to me @cynthiameyer_FF with the hashtag #PowerOfGoals or email me at [email protected].

Here at Financial Finesse, we believe strongly in the importance of workplace culture and the power of doing well by doing good. This article is the first in our week-long series of posts where we highlight a specific part of our company culture that helps to make Financial Finesse one of America’s best places to work. This is just one part of our celebration of recent recognition by Inc., who listed us as one of the Best Workplaces in 2017 and Entrepreneur, who named us to the Small-Sized Companies: The Best Company Cultures in 2017 list.

My Plan to Live in 43 Cities and Make Money Doing It

June 16, 2017

This spring has been an absolute blur for me: my daughter graduated from college, then six days later, my middle guy graduated from high school. Two days after that, my youngest started taking finals in his first year of high school. Granted, all I had to do was show up & root them on, but it’s been super busy and a bit emotional too.

Any day now, my daughter will receive a job offer and become a full-fledged adult member of society, when I swear it was only a few days ago that I held her hand and walked her down the hallway to Ms. Linzey’s kindergarten class… Now I’m facing the fact that in three short years, my youngest will be a high school graduate, moving on to the next phase of his life. It’s time for me to ponder what I want to do once the kids are gone.

The last two decades of my life have been way more about them than it has been about me, and for that, I’m a much better and happier person. But now that it’s time to start thinking about my next chapter, I realize that what I have jokingly referred to as my “Professional Hobo Plan” (PHP) is actually something I might be able to pull off.

Becoming homeless by choice

One of the beautiful parts of working at Financial Finesse is that in order to do my job, all I really need is a telephone, a solid internet connection and a nearby airport. From what I’m told, they have those three things pretty much everywhere now, which means that I can work from almost anywhere. So that’s what I plan to do.

My current game plan for my PHP is to move around to a number of different cities for some yet to be defined period of time, long enough for me to feel more like a local than a tourist. Right now my list of places sits at 43, but it grows once in a while. Some places, like New York City, might require a 3 – 6 month stay (or longer) in order to learn the city like a local, while some, like Portland, Maine, might be more like a 2 – 3 week engagement. In between cities, I’ll come back home to Baltimore to see friends and family – and anyone is welcomed to come visit me during my travels.

Living in 43 cities without going broke

This sounds like a cool plan in theory, but the question I’ve wrestled with was how to pull it off without going broke. I already went through a long and costly divorce and am not where I projected I’d be financially at this age, so I need to make up ground rather than lose ground toward my longer term goals. This is when a few conversations over beverages, random thoughts in the shower, time alone on a plane/train/automobile and some time playing on the internet gave me some ideas about how to fund this and even make it a positive impact financially.

Making it a financial win

While going through my divorce, I actually lived on a boat for 3 – 4 years before moving back on to land and selling the boat. I moved primarily because my kids didn’t love winters on the boat, but once they’re gone, I can easily buy an inexpensive boat, which are in great supply with low demand in this economy, and spend my Bmore time on the boat. This would give me a place to stay while I rent my house for a 2 – 3 year window.

I’ll have my Financial Finesse paycheck along with rental income, while my living expenses will consist of a cheap rickety boat & slip fees that are less than my property taxes. I figure I can save my entire income for a few years if my rental income is steady. And as an added bonus – in some cities there are opportunities to get paid to do house-sitting! Who knew??? I’m picturing a house-sitting income in one city that might pay for a non-house-sitting temporary home in my next city, so my effective cost of on-the-road housing is negligible, while my Bmore housing cost is a net positive cash flow. And, I get to see every cool city in the US and learn them like a local. I may even get a book written along the way…

Making the most of a flexible job

That’s the dream, the plan, the working model currently. I’m not sure if I’ll pull the trigger on this plan in 3 years or not. Life has a way of throwing things at us that make plans change. But if I do, it’s completely because this work-at-home when not traveling out to client sites allows me a lot of flexibility and freedom. And — if I can get the US plan worked out – I could potentially expand the model to include some international cities. That might take more coordination because I do work at our client sites fairly often, but I have a few dozen US cities to hit before I start putting my International Hobo Plan (would I get sued if I call it my IHoP idea?) into action.

How Lower Gas Prices Could Mean an Additional $27,000 in Savings for You

June 14, 2017

A recent article in the New York Times pointed out that according to GasBuddy, gas prices are the lowest they’ve been in over 10 years – have you noticed? But more importantly, what are you doing with that extra money in your budget?

Unless you’re a professional driver, have a ridiculously long commute to work, or live in Southern California where my colleagues laughed when I shared this fact with them (taxes make up the majority of the price of a gallon of gas in that area), chances are that any savings at the pump have been casually absorbed into your everyday spending, offering little effect on your long-term finances.

In fact, lower gas prices may even compel you to spend more money on things like vacations, as the article points out – the people interviewed say that they’re planning to take more road trips due to lower gas prices. That kind of defeats the purpose, don’t you think?

A different way to think of it

You can get really technical in calculating how much you’re actually saving compared to last year – you’ll need to know the size of your tank, how many times you fill up per month and the actual difference in your spending on gas this year versus last year – but that’s not really the point. The point is that many of us have a fixed mindset about our inability to save due to a tight budget, and we miss opportunities that could painlessly help loosen things up.

The little things add up

The article estimates that a driver in the Midwest should be saving about $5 per fill-up. If you fill your tank once per week, that’s $20 per month or $240 per year. It doesn’t sound like much (it’s not), but it adds up. Increasing your 401(k) contributions by just $5 per week could give an estimated $27,000 savings bump to a 35-year old’s 401(k) balance over 30 years.

In other words, every $5 per week you can find in additional savings is a potential extra $27,000 toward retirement. With that in mind, what other ways can you find an additional five bucks per week?

How Would You Answer This Million Dollar Retirement Question?

June 09, 2017

A recent article in the Wall Street Journal asked a question that has led to one of my favorite conversation starters, both with clients and over beverages at my local watering hole: “Would you rather have $1 million or $5,000 per month in retirement?” To me, the way a person answers that question tells me a lot about how their mind works around money. So far, the answers I get are split about 50/50. Here’s what I’ve learned:

I’ll take it all right now, please.

Those people who choose the lump sum tend to have a strong belief in their ability to be fiscally sound. When asked what they’d do with the money, they typically say that they would pay down every penny of debt, make a luxury purchase or two, then live fairly frugally to preserve the remaining money, while investing it to get some growth. Their hope is to be able to grow that initial lump sum well beyond the starting amount and also do some good in the world.

I’d rather keep a steady paycheck.

On the other hand, the people who say they’d rather have the monthly income tend to be wary of becoming one of those tragic stories about people who “had it all” and then blew it. They feel like they can live on the monthly income with ease and save a portion of it for future generations or charitable work. The WSJ goes into the psychology of this choice, which is something called “the illusion of wealth” versus “the illusion of poverty,” but you’re better off just reading the article to understand that one better.

Are you focusing on the right number?

Why do I mention this debate? So many people that I have talked to regarding retirement are completely fixated on getting to some “magic number” in their 401(k) before they’ll feel safe to retire. When I meet people who are locked in on needing X number of dollars in order to retire, they are almost always already in excellent shape for retirement. Why? I find that they’ve been so laser focused on the dollar value of their accounts that they haven’t really thought about the monthly income that the portfolio could generate.

In many cases they’ve saved enough that they can afford to have a higher monthly income than their current income! I can’t count the number of times I’ve told someone that they can walk back to their desk because they are choosing to, not because they need the paycheck.

The number that counts.

When we prepare retirement projections, the most important number – in my opinion – is the monthly income that a person will have from all sources (Social Security, pension, investment accounts, retirement accounts, etc.) during retirement. After all, most people have a lifestyle that requires a rather consistent monthly income. If that income, plus some, can be replaced today – work truly becomes an option, not a requirement.

Find your number.

What can you do? Run retirement projections at least annually. This is probably the most important thing anyone can do to track their progress toward financial security. After a few years, your projections should show a trend. If you’re doing things right, you’ll see that trend improve with each year. When it doesn’t, you can decide what actions to take in order to get the trend line back to being a positive. Regardless of your stance on the question of a big lump sum vs. a steady monthly income, running a projection to see how much income you can expect to have in retirement will help you determine a lot of financial decisions between now & then. To steal a line from Nike: when it comes to running retirement projections, JUST DO IT.

The 4 Money Questions Every Couple Needs To Answer

June 06, 2017

My husband loves to mentor young men, especially married men — he says he hopes to help prevent some of these guys from making the same mistakes we made in our first few years of marriage. Lately he’s been noticing a trend — a lot of them are bringing up arguments about money. As he’s helping them work through these issues, it seems to stem from the fact that couples are thinking through every part of their relationship, but forgetting to discuss and agree on their financial lifestyle.

A financial lifestyle is basically how you, as a couple, choose to handle money. There is no right or wrong answer, just what will work best for both of you. As my husband talks about financial lifestyles, he encourages couples to ask the following questions:

How will you view the money that comes into the household? Discuss how all money coming into your home will be labeled. Will it be “Yours and Mine,” “Yours, Mine and Ours” or simply all “Ours?” Will you have separate accounts only or two separate and one joint or only joint accounts? How will you make spending decisions about big ticket items? Many new couples find that they both just assumed it would be one way and are surprised to find their partner thought differently.

The thing is, it can be an evolution. My husband and I transitioned through each option. When we first married, everything was divided. After a few months, we decided that we wanted to share our joint bills, so we created a joint account for those expenses. A few years later, we were ready to put it all together and agreed to have only joint accounts. But first we established ground rules about how much was ours to spend individually, and we set limits on how much we can spend before we have to discuss the purchase. This saved us from a lot of future “discussions” (my southern way of saying, “fights worthy of WWE“) about spending money.

How will you manage your money? Will you both follow a strict budget or will you have a general idea of the spending and handle things as they come? Sit down with your partner and discuss how you will organize your spending.

As you may have guessed, I was the strict budgeter and my husband operated with no budget. At first, I stuck with my strict budget, which my husband never followed. I had to learn to get my husband involved in the process and give in to how he wanted to spend some of the money. We now have weekly money meetings to discuss the budget and any upcoming expenses.

Whose debt is it? This is a big one. It’s vital to discuss how you will handle any debt you’re bringing into the marriage as well as agree on how you’ll handle debt you incur together. Will it all be considered joint debt or will it be separated by the person who acquired the debt, with that person responsible for paying it out of “their” money?

At first my husband and I kept our debt separated based on whose name was on the bill. But after a few years of getting nowhere with paying off debt, we finally decided to combine it all and used our combined income to tackle it until it was gone. There is no right or wrong answer, just the right answer for you and your partner. The most important thing is to agree on the answer.

How much debt will you have? Ask each other how you each feel about carrying debt and what your relationship with debt will look like throughout your marriage. Some people are fine having low interest debt such as student loans and a mortgage, some others dislike all debt, and yet others are fine with debt as long as the payments are manageable.

My husband and I are both debt averse, but we had very different perspectives as to how to pay off debt. I probably would have lived in a van to get debt free, but my husband actually wanted a life. We learned to meet in the middle. We agreed to budget our lifestyle expenses and to focus the rest of the funds on getting out of debt with ground rules like establishing no new debt. Listen to your partner and compromise to come up with a plan.

These discussion are tough, but the earlier you have them the less potential conflict — learn from us. My husband and I did not have these conversations early enough in our marriage. As a result, we fought about money and struggled until we learned that we can get so much further by working together.

The Thing That Millennials Are Getting Right About Money

June 02, 2017

If you know me, you know that it’s no secret I have a strong dislike for breaking down financial statistics by demographics. Yes, I realize that there are some benefits to looking at trends this way, but there’s a little part of me that bristles whenever we start pointing out the differences in people, especially in today’s less than harmonious political climate.

One of my guiding life principles is that people are people, and we are largely the same regardless of our age, gender, race and other demographics. We all want to see our friends, family and loved ones succeed and we all want to enjoy our lives. And while it may seem naïve and idealistic, I’d like to see those who hold opposing points of view start from a point of commonality in their discussions rather than defending their differences.

So while it’s clear that I am not a fan of discussing differences, I’m about to…

The stereotype

One of the things I often hear is that this current generation of millennials doesn’t seem to view working and saving for retirement the same way that older generations do. A common gripe of gen Xers and baby boomers is that millennials (I really despise that label, as do most of the members of that generation whom I know) are lazy slackers who want to be paid well with fancy titles before they ever accomplish anything.

“Those darn millennials…”

It’s easy to view the next generation as not being as hard working and ambitious as your own generation; I’ve seen that with the way my grandfather talked about my father’s generation and how my generation talks about millennials. Their music is too loud, they don’t work as hard and their standards aren’t as high. It seems like each generation has the same complaints about the succeeding generation as the prior generation had about them. There’s some beautiful irony there.

Surprise! They’re getting this one right

However, I recently came across a very interesting article about the financial behaviors of the millennial generation, which got me to thinking that maybe their bad rap is not justified. The article points out that it may be true that millennials aren’t saving as much for retirement as other generations may be, BUT – and this is a huge point – they do have a higher overall savings rate than other generations. On average, they are saving 19% of their income with over 1/3 of them saving in excess of 20% of their incomes. That’s absolutely incredible! Well done, millennials.

Saving for something else

The thing that irritates older generations though might be that the savings aren’t earmarked for retirement. The savings figures are high, and the money saved is often used for current lifestyle considerations such as travel, fitness & health, and dining out. They are spending money on experiences today rather than building up a gigantic nest egg for the future. Retirement isn’t at the top of their list of reasons to save.

The wisdom of those gone before

While older generations may view that as less than ideal, perhaps it’s just where they are considering their stage of life. And, perhaps it’s wise and it’s something learned from listening to and learning from prior generations. I have heard many older relatives say that they wish they had traveled more extensively when they were younger so that they had more energy and stamina, and their bodies didn’t rebel against long hikes through foreign cities.

A different perspective

Maybe, instead of seeing this generation as snowflake slackers, we should maybe try to see them as incorporating the wisdom of prior generations and putting it into action. Is it possible that millennials are more financially savvy and more mindful of the important things in life than they are being credited for? It’s something to consider.

If you’re a millennial reading this – great job saving so much of your income. It’s a fantastic habit that should translate to a nice bucket of money if/when you actually do retire. If you’re not a millennial and you’re reading this – I’d like to suggest that you maybe try to be more like a millennial and drive your savings rate up above 20%. As they’re learning to listen and implement wisdom from older generations, let’s learn from them as well.

The Top 7 Reasons Saving is the Most Important Part of Adulting

June 01, 2017

I recently celebrated my 38th birthday, which I guess officially puts me in my late 30’s. As I reflect on the past couple decades, I find myself thinking about how the effect of saving money early on really made an impact on my life and helped me to “adult” better. For all those lucky kids just getting started with adulting, here are my top 7 ways that saving money from day one will help make it easier:

Saving money = more life choices

“Finding yourself.” You may still not know what you want to do when you “grow up” and that’s okay. In fact, I didn’t either — my first job interview after college was to sell newspaper advertising. Your early career years are a time to explore different career options. That means you’ll make a lot of mistakes. Having savings gives you the freedom to say “no” to a job or boss you hate in order to pursue something you’ll love.
Security. You may land a great job but find that sometimes things don’t work out on the employer’s end. As the last one hired, young people are often among the first to be let go. Think of your savings as the lifeline keeping you from mom and dad’s basement. Having what our CEO calls “FU money” also means the freedom to walk from a job when you need to.
Travel. One of my closest friends from college took a year off to travel the world shortly after graduation. If you’d like to do something similar, now is the time to do it before you’re tied down with obligations. Having money in the bank will make that a whole lot easier.
Marriage. Unless you plan to elope, weddings are expensive. And even if you do plan to elope or not marry at all, the cost of attending other people’s weddings can really add up too. Having money set aside allows you to make the most of these happy occasions.
Buying a home. An Australian billionaire recently stirred up controversy by blaming millennials’ inability to buy a home on their fondness for expensive avocados and coffee. He has a point. An increasing number of young people are putting off buying a home because they don’t have enough money for the down payment and closing costs. That means continuing to pay rent and helping someone else build equity instead of yourself.
Starting a business. Even the most brilliant business ideas aren’t typically profitable right away. In the meantime, you’ll still have bills to pay. That pressure for a quick buck could lead you to short-term thinking at the expense of the long term growth of your business.
Financial independence. Don’t think of it as “retirement” but as getting to the point where you work (or don’t work) as you want to. The sooner and the more you start saving, the sooner that day will come. Some people have even taken this to the extreme and retired before 40!

Don’t think of saving as deprivation. Think of the money in your bank as representing freedom. The more you have in there, the more options and freedom you have to live your life the way YOU want to.

Happy Memorial Day

May 29, 2017

As we kick off the official start to summer, keep an eye out for a few innovations on the Financial Finesse blog over the coming months. We will be adding video and sharing some our planners’ favorite money hacks along with providing more quizzes, Top 10 lists and other ways to help you make the best money decisions for you. Have something you want to know? Email our blog editor with your questions and suggestions!

And on this particular day of honor, we remember with gratitude and humility the sacrifices that members of our armed forces and their families have made through the years to protect our freedom and democracy. Thank you.

Follow This One Simple Rule for a Secure Retirement

May 26, 2017

While I was taking pictures of my middle guy and a whole bunch of his friends right before their senior prom, I was having a conversation with one of the other kids’ fathers. The inevitable conversation about what kind of work we do came up and he was, at one point in his career, working for a large accounting firm that has a wealth management arm. When he found out I was a financial planner, he shared a story about his colleague who ran that part of the business and had built himself a very nice retirement portfolio. My prom-dad-buddy asked him what the secret was that he used to grow his wealth & that of his clients.

The answer was simple: “Always live on your income from 5 years ago.”

When I heard that, I thought it was an interesting concept. If someone is accustomed to pay increases on an annual basis, this allows for a considerable amount of savings each year. This is a concept/theory that I had not heard before playing amateur photographer at prom time. But, it’s consistent with my very incredibly simple rules for personal financial management:

Spend less than you make
Don’t take on high interest debt
Save 10% or more of your salary
Always live on your income from 5 years ago

How it works

At a 3% pay increase, someone who earns $50,000 this year would earn $57,963 a mere 5 years later. Living on the original $50k would allow that individual to save almost $8,000 (probably closer to $5,000 after taxes & benefits) that year. If that same person contributed 10% of their income ($5,793) to their 401k – that’s one heckuva combined savings rate (>18%) before we even consider an employer matching contribution or account growth. If that pattern is repeated for a couple decades….retirement starts to look awfully secure. (I tried to do the math, but it got complicated. Suffice it to say, we’re talking about doubling your savings or more with this method)

There are a whole lot of very simple methods for becoming financially secure and these are just two of them. Managing your financial life isn’t as complicated as a lot of people make it sound. I’m a financial planner who hates the term “budgeting” because it sounds so restrictive and so much less than fun. I prefer to have a couple of quick & easy spending guidelines instead, like these grumpy old man rules.

How Sitting in Traffic Can Improve Your Finances

May 23, 2017

Over the past few months, it feels like a cloud of transportation demons have settled over my poor city of Atlanta, Georgia. Over the past few months, a bridge on I-85, our major highway collapsed, a section of our second major interstate, I-20, buckled, and we had a sinkhole on Roswell Road, another major street. Atlanta has always been known to have traffic gridlock, so this series of events has taken many people’s already stressful commute to levels I questioned whether our city could survive. My normally happy, mild-tempered friends started using words I never thought they’d say.

It got me to thinking about how many Americans spend hours each day getting to and from work and how much stress that must cause them. Of course then my mind turns to how I can help them escape this seemingly time-wasting activity, when it occurred to me that working on your money may be one of the best solutions: why not use that long commute frustration as motivation to up your financial game and find financial independence sooner? The best relief for traffic gridlock is never needing to sit in traffic again, so here are some ways to pass the time while hopefully moving yourself closer to financial freedom:

Audio books

Consider downloading financial audio books and listening to them while driving. You can check out this list of free places to download audio books. One of my personal favorites is Hoopla, who partners with many local libraries to provide free access to digital movies, music, eBooks and more, as long as you have a library card. If you’re not sure what books to read, use this great checklist from Business Insider. My personal favorite is listed as #1, written by Benjamin Graham, who was a professor at Columbia and counts Warren Buffet among his mentees.

Podcasts

If listening to an audio book is not your thing, then try listening to podcasts. US News & World Report, Entrepreneur and PlayerFM.com all offer great lists of suggestions. You can find a podcast that matches your driving distance or listen to a series while you creep along the interstate.

Putting it to work for you

As you listen, consider taking away one idea you will implement that week once your drive ends. It could be as simple as reviewing your 401k or checking your credit score. Bad memory? Then use the voice recorder feature on your iPhone or Android to record your thoughts and takeaways from your drive to implement later.