Throw away your useless May 2016 monthly budget and just start over. Seriously, 99% of us have not stuck completely to the plan, and that’s expected. But that doesn’t mean you should go and spend as you please, it just means it’s time to start over. Reconstructing your budget around the middle of the month is a helpful way to stay in control of your money. By this time your bills are paid, mortgage/rent has been sent off, and you’re now dealing with necessities (gas, groceries etc.) and disposable income. The key here is disposable income. Have you already spent most of it? Do you have some surplus you should be putting into a savings account? Can you maintain the month’s plan without adding extra onto a credit card? These are all things you should be going back over in the middle of the month that will help you stay in control. Because there’s two ways we can live with money: You can control your money…or your money can control you. savingNo matter how much we need to save, no matter how badly we want to break out of the paycheck to paycheck life, saving money is hard. It’s hard because we get an immediate reward for spending money. I give you $5 you give me a Mocha Latte. Saving on the other hand forces us to delay receiving our reward. I give you $5 and in twenty years or so you give me $20 to enjoy in my old age. Sometimes it helps if you can visualize the future. In 20 years I will spend my days walking in the woods and exploring new cities. I see myself spending my time with my grandchildren, going to the zoo, planting my garden. Visualization helps some but it’s still hard to save. You can also make saving easier by planning things you enjoy that are free or cost very little. Maybe you can go visit a museum or a nearby town. Go for a bike ride or a Sunday afternoon drive. Look for local festivals. Maybe only take a few dollars with you on these short trips so you won’t be tempted to spend. You can make saving automatic by having some amount debited from your paycheck or checking account each month or even each week. If you don’t see it, you won’t miss it. All these things can make saving easier, but it will never be easy. This is a real phone call. Caller: Can you help develop residual income? Make the right investments etc.? Me: Sure, but first you need to develop a plan so we will know what steps to take to reach your long term financial goals. Caller: Well, I wasn’t sure if I have enough money to work with your firm. Me: Well if you look at our web site, you’ll see we offer a Fiscal Checkup™ to get you started in the right direction at a minimal cost. We want to help you grow into a very good client. Caller: I’m not sure. What kinds of investments can I make? Me: Look, investments are neither good nor bad. What matters is that they help you reach your long term goals. You need to know where you’re going before we can talk about investments. How old are you? Caller: I’m 33. Me: I guess you have a job? Caller: Yes, I work at xxxxx Me: Do you have a 401k? Caller: Yes Me: Have you maxed out your contributions to your 401k plan? Caller: No. Me: Well at least you are contributing enough to get all the matching funds, right? Caller: No. Me: Well that’s someplace to start. Caller: Look I know I should be contributing more to my 401k to capture that free money. Me: And yet you are not doing it. Caller: Yeah Me: You have a wife and two kids. Do you have life insurance? Caller: Yeah, I get all that through work. Me: Do you know if it’s enough? Caller: I have $300,000 of protection. Me: Well that will replace about $15,000 of income. Do you make more than $15,000 a year? Caller: Oh yes! I got enough to pay off the mortgage. Me: Wow, two kids, college, that is not enough. How about your 401k plan? How did you choose those investments? Caller: Just a guess. Me: You know college is expensive. How do you plan to pay for that? Caller: I guess I’ll just have to tell the kids they are on their own there. Okay, you should be able to see where this is going. Most of the people I work with do not have a plan when they begin working with me. They call thinking this is about investments. It is not! It is about achieving the important financial goals in your life. It is about identifying your needs, prioritizing those needs, and developing a strategy to meet those needs. Investing comes in at the very end. Many younger people need financial coaching to help them pay off debts, develop a budget, learn to save, understand their employee benefits, and protect their family. They really don’t need “investments”. If you see yourself here, I encourage you to seek help. Sure there are financial firms that don’t care about planning and will be happy to sell you an investment and there are firms that have high minimums to open an account, but there are also firms that believe in growing their own great clients who will be happy to help you get started the right way. Find one that will help you! I’m not one to pay buckets of money for custom tailored clothing. Just like many of you, I go to a store, pick out my general size and buy the nearest fitting clothes available. I would enjoy having my shoulders, waist, neck etc. measured to the quarter inch, then have my clothes fit perfectly, but that just isn’t practical in my mind. However, when it comes to investing, you should always have a plan tailored to your lifestyle and financial standing. While any vehicle could fit you, it may not be appropriate for you. Age, health, income, lifestyle, and risk appetite are some of the many factors that determine how you should invest. There are rarely situations where a single investment is appropriate for a wide range of demographics. Unlike that large sweatshirt that virtually anyone can throw on, investment vehicles are not one size fits all. It takes meticulous understanding and measuring of each individual’s unique situation to find the most fitting investments. So when it comes to your investments, make sure you’re not just following this quarter's fashionable trends and investing in a one-size-fits-all vehicle. Talk to an advisor who will take into account all the various factors of your situation and then tailor a plan that fits you perfectly. If it seems too good to be true, then it probably is. Don’t be fooled by get rich quick schemes. Don’t be fooled by over optimistic return on investment pitches. Don’t make an uneducated commitment to a little known product or fund that promises too much too fast. Don’t be pushed around by salesmen who throw incomprehensible products and jargon at you. Make smart, thoughtful, and rational financial decisions. Talk with an advisor who shoots it straight, understands your unique situation, and tailors a strategy completely around your needs- not a product’s characteristics. Don’t be fooled today, or any other day out of the year when it comes to your money. Now that Spring has officially arrived many households will go through their annual spring cleaning phase. The same should be done with your finances. Whether that’s checking your quarterly statements and discussing strategy with your advisor, or simply finding a higher yielding savings account to take advantage of this year, any little bit helps. You could even kill two birds with one stone- while cleaning out under the couch seat cushions, take that left behind change and add it to your piggy bank. Financial freedom isn’t a matter of sprinting to the finish line at the end of the race. It’s more of a long, methodical strategy consisting of good habits, discipline, and determination. It takes years and years of consistent saving, investing, and oftentimes sacrifice. Just as you can’t expect to go from your couch to completing a marathon the next day. You can’t expect to go from a modest savings account to a fully funded retirement portfolio within a year, 5 years, or even longer. So stick to your training regimen, and if you don’t have one make sure you reach out to a professional who can help you develop one. After all, slow and steady wins the race. Just because you can afford to buy designer clothing doesn't mean you should Just because you can take more risk doesn't mean you should Just because you can take less risk doesn't mean you should Just because you can spend more doesn't mean you should Today, we celebrate St. Patrick's Day in honor of the death of St. Patrick and Irish history and culture. There will be green everywhere, representing good luck, even in the many beers to be consumed today. One thing that we also hope to be green is our stock symbols. However, when it comes to good financial standing, there is very little luck involved. Diversification, strategy, and good habits produce earnings and security in your portfolio. While there may be times when you get financially lucky, say, winning the lottery or a windfall of money from a little known distant uncle, you shouldn't count on this luck- you should bank on a comprehensive and thorough financial plan to get you to the end of the retirement rainbow. The old prayer goes…”God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”
You cannot change the markets; they have a life of their own. But you can change the way you see them and the way you react to them. Enter with caution, have the courage to stay. Know that your fear is usually irrational and have the wisdom to overcome your panic. Patience will bring the serenity. |
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