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Odds Are You're Going to Need This

Odds Are You're Going to Need This

If there’s one thing that could pose a serious threat to your retirement fund – and hard-earned independence during your Golden Years – it’s the need for long-term care.

7 out of 10 Americans over the age of 65 will need long term care at some point.¹ And the US National Median cost of a private room in a nursing home was $8,821 in 2020.² That’s $92,376 a year!

When you factor in the cost of doctor visits, medical procedures, prescriptions, etc., that number is going to keep climbing.

If your need for long-term care comes after you retire, that financial burden could fall onto your loved ones.

The right life insurance coverage has the potential to keep you living well and independently. Long-term care as a part of a tailored life insurance strategy is a great way to protect your retirement funds – and keep your loved ones’ finances protected, too.

I can help. Contact me today, and together we can explore your options for long-term care – and do what we can to help keep those Golden Years golden.

¹ “Life Insurance: Long-Term Care,” Nationwide, https://www.nationwide.com/personal/insurance/life/long-term-care/

² “Cost of Care Survey,” Genworth, 2020, https://www.genworth.com/aging-and-you/finances/cost-of-care.html


Savings Rates Need Some Serious Saving

Savings Rates Need Some Serious Saving

Ever hear the old story of the 7 years of plenty followed by 7 years of famine?

In the years when there was an abundance of crops, it was wise to store up as much as possible in preparation for the years of famine. However, if instead of saving you ate it all up during the 7 years of abundance, the result would be starvation for you and your family during the 7 lean years. This might be an extreme example in our modern, First World society, but are you “eating it all up” now and not storing enough away for your retirement?

The definition of retirement we’ll be using is: “An indefinite period in which one is no longer actively producing income but rather relies on income generated from pensions and/or personal savings.”

According to this definition, the “years of plenty” would be the years that you are still working and generating income. While you still have regular income, you can set aside a portion of it to save for retirement. This amount is called the “Personal Savings Rate.”

According to the latest statistics, the monthly personal savings rate for Americans is approximately 13.6% of their income.¹ For much of the past decade it’s hovered around 7% to 8%, briefly spiking during the first months of the COVID-19 Pandemic to over 30%.

Suppose you’re looking to retire for at least 10 years (e.g., from 65 years old to 75 years old). Even if you’re planning to live on only half of the income that you were making prior to retirement, you would need to save up 5 years worth of income to last for the 10 years of your retirement. Just raw saving at average rate without the power of interest would take years before it became the wealth most people need to retire.

So unless you’ve found the elixir of everlasting life, we’re going to need to do some serious “saving” of the personal savings rate. Is there a solution to this dilemma? Yes. If you’re looking for possible ways to store up and prepare for your retirement, I’d be happy to have that conversation with you today.

¹ “Personal Saving Rate,” U.S. Bureau of Economic Analysis, Federal Reserve Bank of St. Louis, Nov 25, 2020, http://bit.ly/2qSGrR3.


When Should You Retire?

When Should You Retire?

Have you ever thought about when you want to retire?

You’ve probably daydreamed about what you want to do when you no longer have to withstand the 9-to-5 routine. But do you know when you want retirement to become a reality?

The average retirement age for people in the US is about 63. However, there’s a large group of people who continue to work past 65.¹ Two motivations that could be contributing to this situation are:

  • They choose to work but don’t have to.
  • They have no choice but to keep working.

It’s apparent that the first option might be preferable to the latter – even if you love what you do.

Here’s why: having the choice is better than having no choice at all.
Imagine that as you approach the time when you want to retire that you love your job and experience a lot of satisfaction in what you do. But there’s no option for you to stop even if you wanted to because of bills or obligations to yourself or your family.

As you approach retirement age – whatever that may be – there could be other things in your life that matter to you that come into conflict with the job you love. Some of these “other things” may include (but aren’t limited to) spending time with family, volunteering at an organization you’re passionate about, traveling the world, etc. Except for a lucky few, most can’t both traveling around the world AND work the job they love. That’s when having the resources to choose comes in handy.

It’s important to have a strategy to reach your retirement goals, whether it’s retiring at age 65 or earlier. Having a plan in place doesn’t mean you absolutely have to retire. But at least you’ll have the flexibility to do so!


¹ “Average Retirement Age In The United States,” Dana Anspach, The Balance, Jul 31, 2020, http://bit.ly/2nW9AWJ.


Setting SMART Financial Goals

Setting SMART Financial Goals

So you’ve set some financial goals. Good for you!

But not all goals are created equal. Planning to win the lottery is a foolish objective that won’t help you fulfill your dreams. Spending hours clipping coupons worth a few dollars is probably a waste of time.

Fortunately, establishing proper goals is actually incredibly straightforward. You want to pursue objectives that are SMART—specific, measurable, achievable, realistic, and timely. Formulating these types of goals can radically focus your energy and increase your ability to get things done. Let’s start with the first criteria!

Specific
The more specific your goal, the more clearly you’ll understand exactly what you need to do to achieve it. It’s the difference between a vague daydream and a solid plan.

When writing out your financial goals, be crystal clear on exactly what you want to accomplish and why. Outline the steps and people needed to bring about your vision. Something like “I want to make more money” becomes “I want to earn a raise at work by taking on more responsibility.”

Measurable
How will you know if you’ve accomplished, exceeded, or failed your goal? Including a clear metric gives you insight into how close or far you are from completing your objective.

Decide on a clear numeric goal you can shoot for. Take a vague notion like “I want to save more money” and transform it into “I want to save 15% of my income this year for retirement.” You’ll have a clearer idea of what steps you need to take to meet that benchmark and feel a deep sense of reward once you hit the target.

Achievable
Trying to attain an ill-defined, pie-in-the-sky goal will only lead to crazy behavior, incredible discouragement, or both. If you’re aiming for something huge (which is admirable), break it down into mini goals and focus on one at a time. Achieving a goal like “I want to start a multi-million dollar business” takes careful planning, a lot of research, and loads of help, but there are many, many people in the world who have done just that. How do you eat an elephant? (One bite at a time!)

Relevant
Are your goals appropriate? That seems like an obvious question, but it’s a critical one to ask when establishing objectives. For instance, saving up $1,000 so you can buy your new niece a Swarovski crystal, gold-plated baby rattle (yes, that’s a real thing) might be really memorable, but do you have an emergency fund in place? Make sure you’re meeting those practical, basic financial goals before you start aiming for the non-essential ones.

Time-sensitive
Knowing that the clock is ticking is one of the most powerful motivators on the planet. You’ll want to establish a realistic time-frame, but deciding that you want to buy a house in two years or be debt free in six months can increase your intensity, narrow your focus, and inspire you to start working on your goals as soon as possible!

Do your financial goals meet these criteria? If not, don’t sweat it! Spend 15 minutes reviewing your objectives and work in specific details or break down some of your more ambitious targets. Remember, I’m here to help if you hit a financial goal roadblock and need some professional insight and clarity!


Why Financial Goals Matter

Why Financial Goals Matter

Setting goals has the power to change your life. Research has shown that people who write down their goals are 33% more successful in accomplishing them than those who don’t.¹ That data seems to verify what we instinctively know. Is there anything worse than working on a project that has no clear objective or outcome defined?

But here’s the million dollar question: Have you written down your financial goals?

It’s one of those simple things that we tell ourselves we’re going to do or that we’ll get around to later, but we tend to leave undone. And that results in our earning, saving, and spending money aimlessly, without purpose. No wonder the majority of 40-somethings and almost a third of people in their 60s are woefully short of having enough for their retirements!²

In case you still need convincing, here are three reasons why you should write down your financial goals the second you’re done reading this article!

Financial goals bring clarity
Imagine trying to build a house without a blueprint. Where would you start? Would you know what supplies you’d need? What color paint you’d want? Would you end up with a basement? Who knows?

Your finances are the same way. Until you have a clear financial goal for your lifestyle and retirement, you’ll never truly know what to do with your money and how it can help you. Once you’re locked in on a vision of your future, you can start exploring the actions necessary to make your dreams become realities.

Financial goals create intensity
Discovering the steps you need to take to achieve your goals cuts away distractions. You’re no longer as susceptible to distractions and temptations because you’re laser-focused on creating an outcome. You can focus all of your mental and financial energy on bringing your vision to life. Clarity leads to focus. Focus creates intensity. Intensity accomplishes goals.

Financial goals are rewarding
There are few better feelings than the one that comes after a day of hard, productive work. That’s because your brain knows that you accomplished what you set out to do.

Your finances are no different.

Setting goals for your money gives you the opportunity to feel that deep sense of reward and accomplishment. It provides your life with a source of gratification that isn’t shallow and instantaneous.

So what are you waiting for? Grab a piece of paper or pull up your note taking app and write down a few financial goals! Be realistic and hyper specific. Let’s talk about what comes to your mind and what it would take to bring that vision of your life into reality!

¹ “Goal-Setting Is Linked to Higher Achievement,” Marilyn Price-Mitchell Ph.D., Psychology Today, Mar 14, 2018, https://www.psychologytoday.com/us/blog/the-moment-youth/201803/goal-setting-is-linked-higher-achievement

² “Here’s how much Americans have saved for retirement at different ages,” Kathleen Elkins, CNBC Make It, Jan 23, 2020, https://www.cnbc.com/2020/01/23/heres-how-much-americans-have-saved-for-retirement-at-different-ages.html


Questions to Ask About Your Retirement Strategy

Questions to Ask About Your Retirement Strategy

So you’ve decided to create a retirement strategy. Good for you!

Will your plans be durable enough to withstand your working years and sustain you through your retirement? The answers to the following questions can help give you clarity on if your retirement strategy has what it takes!

How’s it constructed?
Not all savings vehicles are created equal. For instance, stashing all your cash in a mattress until retirement is a great way to torpedo the value of your savings. Why? Because inflation will slowly but surely reduce the value of each dollar you earn today. The same goes for low-interest saving options like CDs, bonds, and checking accounts. Even a 401(k) might not be enough!

Realistically, you want to put your money in a place where it can leverage compound interest. That means the cash you save generates interest, and all the interest you earn also generates interest. Interest earning interest on interest eventually unleashes a huge tidal wave of wealth creation that can help carry you through your final years.

What percent of your income will you live on?
Nobody wants to take a pay cut when they retire. But that’s exactly what people relying on Social Security will do; it’s only designed to replace 40% of your annual income!¹ Instead, it’s better to live off of 80% of your salary.²

So what does that number look like now? Assuming you live 30 years after retiring, how much would you need to save before you hit that goal? If you make $60,000, 80% of your income is $48,000. You would need $1,440,000 saved to maintain your lifestyle for three decades.

Once you have that number estimated, determine how much you’ll need to save starting today. You can use a nifty compound interest calculator like this one to get an idea of how much that will be!

Is it tax efficient?
There are few surprises nastier than saving for decades only to have the government bite a huge chunk out of your nest egg at the finish line. We won’t dive into the details of taxes now, but you need to decide when you’ll pay Uncle Sam his share. You can either:

Pay now. CDs and Roth IRAs are options where you pay your taxes, then save the money. You end up only paying the tax rate of today.

Pay later. You don’t pay any taxes now, but you cough up a percentage of whatever you earn in the long haul at a future rate. This is how a 401(k) works.

Pay never. No, you don’t have to hire a Swiss lawyer and hide your money on an island to do this. Ask a licensed and qualified professional about legal ways to achieve tax free growth.

Whatever option you choose, make sure you understand its implications for how much you’ll have when you need it.

It’s always best to review your strategy with a licensed and qualified professional. They’ll have insights and knowledge to help you achieve the retirement of your dreams.

¹ “How Much Can I Receive From My Social Security Retirement Benefit?,” Investopedia, Oct 30, 2020, https://www.investopedia.com/ask/answers/102814/what-maximum-i-can-receive-my-social-security-retirement-benefit.asp#:~:text=The%20maximum%20monthly%20Social%20Security%20benefit%20that%20an%20individual%20can,the%20maximum%20amount%20is%20%242%2C324

² “How Much Money Do You Need to Retire?,” John Waggoner, AARP, Sep 17, 2020, https://www.aarp.org/retirement/planning-for-retirement/info-2020/how-much-money-do-you-need-to-retire/?cmp=RDRCT-3c5a7391-20200917


COVID-19 And The Largest Wealth Transfer In History

COVID-19 And The Largest Wealth Transfer In History

COVID-19 coincided with one of the most important events in modern times.

Millions of Baby Boomers were preparing for retirement and to pass their wealth to a new generation right as the virus and its fallout blindsided the world. Here are two ways that COVID-19 has transformed the largest wealth transfer in history and how this impacts you and your family.

The transfer has accelerated
COVID-19 seems to be more dangerous for people over the age of 65. Of the 231,197 mortalities recorded by the CDC, 183,324 have been 65+.¹ That’s nearly 80%!

Those numbers represent a staggering amount of tragedy on a personal level. But they also mean that the wealth transfer that’s been predicted for years is off to an early start. Money, resources, and assets that were supposed to last the 20 to 30 years of retirement for Baby Boomers are now being passed on to Gen-Xers and Millennials.

The transfer has been complicated
The simple fact of the matter is that 44% of Baby Boomers don’t have estate plans.² That means a potentially vast amount of wealth has wound up in the hands of grieving family members who have to make tough choices about how it’s distributed. There was never any doubt that the Great Wealth Transfer might get complicated. But the large number of transfers occurring earlier than expected and at the same time will mean that more families will need guidance and wisdom as they navigate these challenging times.

The transfer has been reduced
Perhaps the largest impact of COVID-19 will be a serious decrease in the size of the Great Wealth Transfer. Experts have estimated that around $68 trillion dollars would be transferred from retiring Baby Boomers to their children.³ But 2020 has been a year of economic upheaval. Shutdowns have transformed our economy and caused high unemployment among older workers. It’s not just employees: nearly 100,000 businesses have shuttered due to the lockdowns. That represents years of hard work suddenly evaporating.

People impacted by these events and who are also approaching retirement age have two choices. They can either work into their late 60s, 70s, and maybe 80s to generate a livable income, or settle for less from their retirement years. It seems reasonable to believe that: Fewer family businesses will pass down to younger generations The businesses will be worth less than anticipated Children of employees will have to financially support their aging parents Early retirees will have less to leave future generations

The future of the transfer
We still don’t fully understand the extent to which COVID-19 has impacted the Great Wealth Transfer. Only time will tell! But it’s clear that there’s a massive need to guide families through the challenges of estate planning in the midst of current events. There will also be a huge demand for opportunities and business models that allow Baby Boomers approaching retirement to build wealth and leave financial legacies. Let me know if either of those are of interest to you. We can discuss ways for you to start helping your family protect their financial future.

¹ “Weekly Updates by Select Demographic and Geographic Characteristics,” CDC, accessed Nov 25, 2020, https://www.cdc.gov/nchs/nvss/vsrr/covid_weekly/index.htm

² “Baby Boomers Aren’t Creating Estate Plans — What That Means for You,” Robert Kulas, Kulas Law Group, Apr 30, 2020, https://www.kulaslaw.com/baby-boomers-arent-creating-estate-plans-what-that-means-for-you/

³ “Here’s how to prepare your heirs for the $68 trillion ‘great wealth transfer,’” David Robinson, Feb 25, 2019, https://www.cnbc.com/2019/02/22/how-to-prepare-your-heirs-for-the-68-trillion-great-wealth-transfer.html

⁴ “COVID-19 and retirement: Impact and policy responses,” Martin Neil Baily, Benjamin H. Harris, and Siddhi Doshi, Brookings, Jul 28, 2020, https://www.brookings.edu/research/covid-19-and-retirement-impact-and-policy-responses/

⁵ “Yelp: Local Economic Impact Report,” Carl Bialik and Daniel Gole, Yelp, Sep 2020, https://www.yelpeconomicaverage.com/business-closures-update-sep-2020.html


Common Financial Potholes

Common Financial Potholes

The journey to financial independence can feel a bit like driving around with your entire retirement fund stashed in the open-air bed of a pickup truck.

Every dollar bill is at the mercy of the elements. Think of an unforeseen medical emergency as a pop-up windstorm that whips a few thousand dollars out of the truck bed. And that time your refrigerator gave out on you? That’s swerving to avoid a landslide as it tumbles down the mountain. There goes another $1,000.

Emergencies like a case of appendicitis or suddenly needing a place to store your groceries usually arrive unannounced and can’t always be avoided. But there are a few scenarios you can bypass, especially when you know they’re coming.

These scenarios are the potholes on the road to financial independence. When you’re driving along and see a particularly nasty pothole through your windshield, it just makes sense to avoid it.

Here are some common potholes to avoid on your financial journey.

Excessive or Frivolous Spending
A job loss or a sudden, large expense can change your cash flow quickly, making you wish you still had some of the money you spent on… well, what did you spend it on, anyway? That’s exactly the trouble. We often spend on small indulgences without calculating how much those indulgences cost when they’re added up. Unless it’s an emergency, big expenses can be easier to control. It’s the small expenses that can cost the most.

Recurring Payments
Somewhere along the line, businesses started charging monthly subscriptions or membership fees for their products or service. These can be useful. You might not want to shell out $2,000 all at once for home gym equipment, but spending $40/month at your local gym fits in your budget. However, unused subscriptions and memberships create their own credit potholes. If money is tight or you’re prioritizing your spending, take a look at your subscriptions and memberships. Cancel the ones that you’re not using or enjoying.

New Cars
Most people love the smell of a new car, particularly if it’s a car they own. Ownership is strange in regard to cars, however. In most cases, the bank holds the title until the car is paid off. In the interim, the car has depreciated by 20% in the first year and by nearly 60% after 5 years.¹

What often happens is that we trade the car after a few years in exchange for something that has that new car smell – and we’ve never seen the title for the first car. We never owned it outright. In this chain of transactions, each car has taxes and registration fees, interest is paid on a depreciating asset, and car dealers are making money on both sides of the trade when we bring in our old car to exchange for a new one.

Unless you have a business reason to have the latest model, it’s less expensive to stop trading cars. Think of your no-longer-new car as a great deal on a used car – and once it’s paid off, there’s more money to put each month towards your retirement.

To sum up, you may already have the best shocks on your financial vehicle (i.e., a well-tailored financial strategy), but slamming into unnecessary potholes could damage what you’ve already built. Don’t damage your potential to go further for longer – avoid those common financial potholes.


¹ “How car depreciation affects your vehicle’s value,” Dana Dratch, Credit Karama, https://www.creditkarma.com/auto/i/how-car-depreciation-affects-value


The True Cost of Debt

The True Cost of Debt

Debt is expensive.

Americans spend about 34% of their income on servicing their mortgages, car loans, and, of course, credit cards.¹

Assuming a household income of $68,703, that translates to roughly $23,359 going down the drain each and every year.²

Obviously, converting that money from debt maintenance to wealth building would be a dream come true for most Americans. But there’s more at stake here than retirement strategies.

The true cost of debt is your peace of mind.

Take the example from above. A third of your income is going towards debt and the rest is split up between everyday living and transportation expenses. You feel you can make ends meet as long as the money keeps coming in.

But what happens if a recession causes massive layoffs? Or if a pandemic shuts down the economy for months?

The sad fact is that the hamster wheel of debt prevents a huge chunk of Americans from saving enough to cover even a brief window of unemployment, let alone a shutdown!

That lack of financial security can have serious repercussions, including bankruptcy. And feeling like you’re always one unexpected emergency away from a financial crisis can result in a myriad of mental health issues. Numerous studies have shown that high levels of debt increase anxiety, depression, anger, and even divorce.³

Conquering debt isn’t about changing numbers on a page. It’s about reclaiming your peace. It’s about securing financial stability for you and your family. Your income is a powerful tool if you can protect it from lenders.

If you’re stressed about debt and seeking some relief, let me know. We can review your situation together and come up with a game plan that will recover the financial security that’s rightfully yours.

¹ “Study: Americans Spend One-Third of Their Income on Debt,” Maurie Backman, The Ascent, Mar 6, 2020, https://www.fool.com/the-ascent/credit-cards/articles/study-americans-spend-one-third-of-their-income-on-debt/#:~:text=And%20recent%20data%20from%20Northwestern,feel%20guilty%20about%20their%20predicament

² “Income and Poverty in the United States: 2019,” Jessica Semega, Melissa Kollar, Emily A. Shrider, and John Creamer, United States Census Bureau, Sept 15, 2020, https://www.census.gov/library/publications/2020/demo/p60-270.html#:~:text=Median%20household%20income%20was%20%2468%2C703,and%20Table%20A%2D1)

³ “The Emotional Effects of Debt,” Kristen Kuchar, The Simple Dollar, Oct 28, 2019, https://www.thesimpledollar.com/credit/manage-debt/the-emotional-effects-of-debt/#:~:text=In%20that%20study%2C%20Gathergood%20found,including%20depression%20and%20severe%20anxiety.&text=The%20study%20also%20reported%20that,stress%20also%20report%20severe%20anxiety.


Are You A Freelancer Or Entrepreneur?

Are You A Freelancer Or Entrepreneur?

Stock images of freelancers and entrepreneurs are essentially identical.

They feature a wide range of people in neat home offices and coffee shops bent over laptops in deep focus. And that reflects how most of us think about them; freelancer and entrepreneur are two different words for people who work outside the traditional employee/employer world.

But there’s more to the picture than stock photos let on. Here’s a look at the difference between freelancers and entrepreneurs.

Freelancers trade time and skill for money
The word freelance comes from the early 19th-century when English authors attempted to describe medieval mercenaries. Most knights in the middle ages pledged their loyalty to a lord. They swore that they would use their skills and resources to support their sovereign in times of war. But there were many knights who worked as mercenaries. They would fight for whoever had the most coin. Sir Walter Scott referred to these soldiers for hire as “free lances” in his novel Ivanhoe, and the name stuck.¹ Soon it was used to describe working without long-term commitments to a single employer.

Freelancers are essentially modern day mercenaries. They have a skillset that’s in demand and they sell it off to the highest bidder, typically for a short period of time or a specific project. They trade their skills and time for money, and then move on. A freelance graphic designer, for instance, might get hired by a small business in need of a new logo. They pay the designer a set fee, the designer delivers the logo, and the two parties part ways. The freelancer doesn’t have any more responsibilities towards the small business beyond completing a specific task, and the small business pays the freelancer a fee.

The main appeal of freelancing is flexibility. You get to decide for whom you work, the hours you work, and from where you work. Yes, you’ll have deadlines, but you get to decide how you’ll get everything done. Freelancing is also a great choice if you’re currently an employee and want to start exploring your options. Striking a balance with your side-gig and your main income stream can help bring in extra money to cover debt, save for retirement, or just have nicer vacations.

But freelancing has drawbacks. You’re still completing tasks for other people, you have to manage projects by yourself, and work can sometimes dry up. If you can’t maintain a healthy time balance with your main job, that work could suffer.

Entrepreneurs trade their team for money
Defining entrepreneurship is tricky. Freelancers and entrepreneurs have many things in common. But they end up working on different levels of risk and solving problems in very different ways. Remember how we said freelancers were like mercenaries, fighting wars for other people in exchange for money? Entrepreneurs are like the lords mercenaries fight for. They make decisions, assume responsibility for outcomes, and build things that last even when they are long gone. A more modern example would be your favorite local restaurant. The owner of the business doesn’t take your order, pour your drinks, and prepare your food. They have a team that does all of that for them. But they had the vision of owning a restaurant, may have reached out to investors, and then took on the financial uncertainty of starting the restaurant. They make the top-level decisions but rely on a team to ensure that the day-to-day operations work smoothly.

Starting a business is risky. Only 25% make it past their 15th birthday.² But the advantage of successfully starting a business is that it will eventually reach a point where it runs on its own. Apple didn’t need Steve Jobs to operate. Amazon doesn’t need Jeff Bezos. Neither does your favorite local restaurant. They’re all built on a system and have teams that empower them to grow and accomplish more than they could independently. A freelancer’s income, however, is tied directly to the time they invest. If they get sick, they can’t earn. Losing just a single client could be a significant loss of business.

Interested in freelancing or starting up your own venture? Let’s talk! There are perfect opportunities out there for you to start exploring your potential.

¹ “The Surprising History of ‘Freelance’,” Merriam-Webster, https://www.merriam-webster.com/words-at-play/freelance-origin-meaning

² Michael T. Deane, “Top 6 Reasons New Businesses Fail,” Investopedia, Feb 28, 2020, https://www.investopedia.com/financial-edge/1010/top-6-reasons-new-businesses-fail.aspx#:~:text=Data%20from%20the%20BLS%20shows,to%2015%20years%20or%20more.


The Many Roles Of A Financial Professional

The Many Roles Of A Financial Professional

The world is full of financial professionals.

Accountants, hedge fund managers, and even some attorneys fall under the umbrella of “financial professional”. But you don’t have to be a mega-corporation or global bank to use the services of a money expert. For any family, a financial professional can serve as an educator who assesses your financial health, a planner who can help you prepare for the future, and a trusted advisor who offers high-quality counsel as you navigate life.

Financial professionals as educators
Money management can be difficult. It’s full of confusing terminology, big numbers, and the constant fear that someone’s trying to take advantage of you. Financial professionals specialize in many different fields, but at the end of the day they’re all educators. An investment advisor has to teach you about different strategies and products so that you can make informed decisions about your future. A financial professional can show you how to make a budget and attack debt.

Don’t settle for a professional who just wants to manage your money. Look for someone with the patience and expertise to educate you about how money works.

Financial professionals as planners
There’s a significant debate in the financial service industry about the difference between a financial advisor and a financial planner. But the simple fact of the matter is that you should seek out a financial professional who will help you prepare for the future, regardless of their title. You want a professional who will help you map out a long term investment strategy. Someone who considers insurance, long term care, and estate planning. The best professionals, regardless of their speciality, help you gain some perspective and give you the tools to map out your retirement. Talk with your professional about your wealth and goals so you can draw up a financial blueprint for your retirement and beyond.

Financial professionals as advisors
The financial services industry used the term “advisor” in a specific way, but a high-quality financial professional has wisdom to offer you in any situation. Challenges like credit card debt and student loans can seem overwhelming, especially when unexpected expenses pop up. It’s easy to lose focus and have your debt strategy get derailed. But an advisor can give you the wisdom and insight you need to prepare for a crisis and stay the course of financial independence. They can encourage you to build an emergency fund that will protect your financial strategy from unexpected expenses. When the economy takes a dip, they can give you the perspective you need to not make hasty or emotional moves that could seriously impact your retirement timeline. The financial professional you want by your side is the one with the wisdom and expertise to advise you through all of life’s storms.

When your car breaks down, you turn to a car mechanic. When you’re planning an event, you turn to an event planner. The same should be true of your money. When you set out on the path of financial independence, be sure to look for a financial professional with the know-how to educate you, to help you prepare, and to advise you through the obstacles of life.


Financial Literacy Has Never Been More Important... And More Uncommon

Financial Literacy Has Never Been More Important... And More Uncommon

Here’s a misleading fact: the United States has the largest economy in the world.

It makes up nearly a quarter of the global economy and has a GDP of roughly $21.44 trillion.¹ But that statistic doesn’t tell the whole story. The truth is that only a few Americans have truly mastered how money works and the rest are lagging behind. Despite having the largest economy, the U.S. ranks 13th in GDP per capita.²

And it all begins with the state of financial literacy.

Knowing how money works has never been more important. But it’s becoming an increasingly rare skill among Americans. Here’s a quick look at the significance of financial literacy in the modern world and how ignorance is hampering our ability to build wealth.

The importance of financial literacy is increasing.
Americans are faced with a complex world. We have access to unlimited information on everything under the sun, endless opinions on every issue, and infinite options for entertainment. Money is no exception. The two tried and true safety nets of the past—social security and pension plans—can fall short, so we need to figure out how to provide for our own futures. The options for how to save and grow our money are myriad. Now it’s on us to figure out how to build wealth, save for retirement, and leave money behind for our kids.

Understanding how money works isn’t just helpful for achieving those goals. It’s absolutely mandatory. Saving, budgeting, and the power of compound interest are just a few of the concepts that you’ll need to master before you can start building your financial future.

Financial literacy is decreasing.
Americans are less able to plan and provide for their futures than ever. Financial literacy slid from 42% to 34% between 2009 and 2018.³ And that number is significantly lower for Millennials than for the rest of the population, with only 17% able to answer 4 out of 5 basic questions about finances.⁴ That ignorance shows in our decision making and our inability to build wealth. A stunning 33% of Americans have nothing set aside for retirement.⁵ 44% don’t have enough saved to cover a $1,000 emergency.⁶ We’re surrounded by money and opportunity but don’t have the knowledge to convert them into personal wealth.

There are several reasons why financial literacy could be decreasing. Financial education is not widely taught in public schools, with less than half of states requiring a personal finance course for a highschool diploma.⁷ Perhaps we’ve just been slow to keep up with the rapid changes in the global economy. Or maybe some people benefit from having a large chunk of the population stay in financial ignorance. The lack of financial literacy is most likely a combination of all these reasons! The real question is, do you know how money works? And if not, where will you learn?

¹ Caleb Silver, “The Top 20 Economies in the World,” Investopdia, Updated Mar. 18, 2020,https://www.investopedia.com/insights/worlds-top-economies/

² “GDP per Capita,” Worldometers,https://www.worldometers.info/gdp/gdp-per-capita/

³ Andrew Keshner, “Financial literacy skills have taken a nose dive since the Great Recession,” MarketWatch, June 27, 2019,https://www.marketwatch.com/story/americans-financial-literacy-skills-have-plummeted-since-the-great-recession-2019-06-26

Keshner, “Financial literacy skills have taken a nose dive,” MarketWatch.

Dani Pascarella, “4 Stats That Reveal How Badly America Is Failing At Financial Literacy,” Forbes, Apr. 3, 2018,https://www.forbes.com/sites/danipascarella/2018/04/03/4-stats-that-reveal-how-badly-america-is-failing-at-financial-literacy/#69cecb072bb7

Pascarella, “4 Stats That Reveal How Badly America Is Failing At Financial Literacy,” Forbes.

Ann Carrns, “More States Require Students to Learn About Money Matters,” The New York Times, Feb. 8, 2020,https://www.nytimes.com/2020/02/07/your-money/states-financial-education.html


Understanding Generation X

Understanding Generation X

Every generation over the last hundred years has witnessed rapid changes.

But few have been caught in the crossfire of change quite like Generation X. Sandwiched between two larger generations, the folks born between 1965 and 1976 have seen an iron curtain fall, two major wars, a digital revolution, a global financial crisis, and now a world-shattering pandemic. Bridging the gap between so many stages of history has fashioned their perspective and financial health. Here’s a guide to understanding Generation X!

The numbers
Generation X holds surprisingly little wealth. They account for only 16% of the nation’s wealth, while Baby Boomers hold 56%.(1) Debt is also rampant among Gen-Xers, with an average outstanding debt of $136,869.(2) That’s higher than any other generation—and has only increased over the past few years.(3) None of this seems to slow down their non-essential spending, which is also greater than their parents and children.(4) And they’re more reluctant than other generations to seek help from a financial advisor.(5)

Attitudes and anxieties
These pressures have shaped the attitudes and outlooks of Gen-Xers. They’re about as stressed as Millennials when it comes to debt, with a focus on credit cards instead of student loans.(6) But there’s more to it than just stress. Generation X is incredibly hard on itself. 41% would rate their financial health as not very good to not good at all. 43% think their finances are much worse off than their peers’, and half think they earn less.

Gen-X’s outlook on retirement doesn’t line up with previous generations. They’re not particularly prepared; pre-pandemic, they had saved about $35,000 for retirement. Many plan on cutting costs in order to save, but they’re estimated to be the first generation that’s less prepared for retirement than their parents.(7) No wonder most plan on working through their golden years!(8)

The Sandwich Effect
There are several reasons for the dire straits of many Gen-Xers. They endured the financial crisis of 2008, and before that the dot com bubble of 2000, and now they find themselves in the midst of a pandemic-fueled recession. But that’s not all. They’re currently a bridge generation. They have retiring parents to care for (Baby Boomers) and young adult children they’ve had to support (Millennials). Every generation has to contend with this sandwiching effect at some point, but it’s proven particularly difficult for the Gen-Xers.

There’s no doubt that Generation X faces particularly serious challenges. The real question is what’s next for the bridge generation? Where will they find the financial tools to achieve peace of mind for retirement?

Sources:

(1) https://www.investopedia.com/terms/g/generation-x-genx.asp

(2) https://www.lendingtree.com/personal/changes-to-each-generations-debt/

(3) https://www.marketwatch.com/story/all-the-ways-gen-x-is-financially-wrecked-2019-05-15

(4) https://www.marketwatch.com/story/all-the-ways-gen-x-is-financially-wrecked-2019-05-15

(5) https://www.investopedia.com/terms/g/generation-x-genx.asp

(6) https://www.businessinsider.com/personal-finance/millennials-gen-x-money-stresses-retirement-savings-2019-10

(7) https://www.lifehealth.com/gen-x-deep-dive-financial-stress/

(8) https://www.aarp.org/money/credit-loans-debt/info-2015/gen-x-interesting-finance-facts.html#:~:text=The%20typical%20member%20of%20Generation,debt%20of%20%2488%2C313%20per%20adult.


What Does Financial Control Look Like?

What Does Financial Control Look Like?

You work too hard for your money to let it go to waste.

So why does it feel like you have so little control? How many people feel financially helpless? Like there is barely enough to make ends meet and never enough to prepare for the future?

78% of Americans were living paycheck to paycheck before the pandemic hit.(1) That means most of us weren’t in control of our finances. We were just riding the coattails of a fabulous economy.

So what does it take to achieve financial control?

Here are some basic ways to grab the reins of your personal finances!

Knowledge
You should know how much you make. But do you know how much you spend and on what? Discovering that your bank account is empty at the end of each month is one thing. But figuring out where your money is going—that’s something else entirely. This knowledge is what will help equip you to create a strategy and take control of your life.

Start by figuring out how much you spend in total and subtracting that number from how much you make. Then, break down your spending into categories like rent, gas, eating out, entertainment, streaming services, and anything else that takes a chunk out of your normal expenses. It might feel like homework, but hang in there.

Preparing
Goals are the key to creating an effective financial strategy. You have to know what you’re building towards if you want to develop the best steps and strategies. It’s okay to think simple. Maybe you’re just trying to get out of debt. Perhaps you’re trying to save enough to start a business or buy a home. Or you might be a bit more ambitious and have an eye on a dream retirement that you want to start preparing for now.

Figure out what it is you want and how much it will cost. From there you can use your budget to start cutting back in categories where you spend too much. You might discover that you need to increase your income to accomplish your goals. Map out a few steps that will move you closer to making your dream a reality.

Action
Once you’ve built a strategy based on your goals and budget-fueled insights, the only thing left is to follow through and take action. This isn’t a grandiose, one-time maneuver. This is about little decisions day in and day out that will help make your dreams a reality. That means making small moves like meal prepping at home instead of eating out, or avoiding clothing boutiques in favor of thrift shop finds. Those little acts of discipline are the building blocks of success. You might fall off the wagon every now and again, but that’s okay! Pick yourself up and keep pushing forward.

It’s important to have each of these three components operating together at once. Knowing your financial situation and not doing anything about it may not do anything but cause anxiety. Cutting your spending without an overall vision can lead to pointless frugality and meaningless deprivation. And a goal without insight or action? That’s called a fantasy. Let’s talk about how we can implement all three of these elements into a financial strategy today!

Sources:

(1) https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/#3305f4cb4f10


So You’ve Graduated...Now What?

So You’ve Graduated...Now What?

Graduating from college is a big deal.

It represents a transition from student to adult for millions of people. But leaving university and joining the workforce can be intimidating. Looking for a job, paying bills, commuting, and living independently are often uncharted territory for recent grads.

Here are a few tips for fresh graduates trying to get on their feet financially.

Figure out what you want
It’s one thing to leave college with an idea of what career you want to pursue. It’s something else entirely to ask yourself what kind of life you want. It’s one of those big issues that can be difficult even to wrap your head around!

However, it’s something that’s important to grapple with. It will help you answer questions like “What kind of lifestyle do I want to live” and “how much will it cost to do the things I want?” You might even find that you don’t really need some of the things that you thought were necessities, and that happiness comes from places you might not have expected.

Come up with a budget
Let’s say you’ve got a ballpark idea of your financial and lifestyle goals. It’s time to come up with a strategy. There are plenty of resources on starting a budget on this blog and the internet on the whole, but the barebones of budgeting are pretty simple. First, figure out how much you make, how much you have to spend, how much you actually spend, then subtract your total spending from how much you make. Get a positive number? Awesome! Use that leftover cash to start saving for retirement (it’s never too early!) or build up an emergency fund. Negative number? Look for places in your unnecessary spending to cut back and maybe consider a side hustle to make more money.

Looking at your spending habits can be difficult. But owning up to mistakes you might be making and coming up with a solid strategy can be far easier than the agony that spending blindly may bring. That’s why starting a budget is a post-graduation must!

Meet with a financial professional
Find a qualified and licensed financial professional and schedule an appointment. Don’t let the idea of meeting with a professional intimidate you. Afterall, you trust your health, car, and legal representation to properly trained experts. Why wouldn’t you do the same with your financial future?

Being scared of starting a new chapter of life is natural. There are a lot of new experiences and unknowns to deal with that come along with leaving the familiarity of college. But the best way to overcome fear is to face it head on. These tips are a great way to start taking control of your future!

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Financial Strategy - The Importance of Having One

Financial Strategy - The Importance of Having One

A financial strategy is many things.

It’s not just a budget. In fact, a solid financial strategy is not entirely based on numbers at all. Rather, it’s a roadmap for your family’s financial future. It’s a journey on which you’ll need to consider daily needs as well as big-picture items. Having a strategy makes it possible to set aside money now for future goals, and help ensure your family is both comfortable in the present and prepared in the future.

Financial Strategy, Big Picture
A good financial strategy covers pretty much everything related to your family’s finances. In addition to a snapshot of your current income, assets, and debt, a strategy should include your savings and goals, a time frame for paying down debt, retirement savings targets, ways to cover taxes and insurance, and in all likelihood some form of end-of-life preparations. How much of your strategy is devoted to each will depend on your age, marital or family status, whether you own your home, and other factors.

Financial Preparation, Financial Independence
How do these items factor into your daily budget? Well, having a financial strategy doesn’t necessarily mean sticking to an oppressive budget. In fact, it may actually provide you with more “freedom” to spend. If you’re allocating the right amount of money each month toward both regular and retirement savings, and staying aware of how much you have to spend in any given time frame, you may find you have less daily stress over your dollars and feel better about buying the things you need (and some of the things you want).

Remember Your Goals
It can also be helpful to keep the purpose of your hard-earned money in mind. For example, a basic financial strategy may include the amount of savings you need each month to retire at a certain age, but with your family’s lifestyle and circumstances in mind. It might be a little easier to skip dinner out and cook at home instead when you know the reward may eventually be a dinner out in Paris!

Always Meet with a Financial Professional
There are many schools of thought as to the best ways to save and invest. Some financial professionals may recommend paying off all debt (except your home mortgage) before saving anything. Others recommend that clients pay off debt while simultaneously saving for retirement, devoting a certain percentage of income to each until the debt is gone and retirement savings can be increased. If you’re just getting started, meet with a qualified and licensed financial professional who can help you figure out which option is for you.


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5 Financial Strategy Tips for Couples

5 Financial Strategy Tips for Couples

Talking to your spouse about money can be tricky.

Different spending habits and conflicting money management values are sometimes sources of tension between partners. Finances are the number one cause of arguments within relationships. In fact, it’s one of the most common reasons for divorce.

With bills to pay, emergency expenses, and a child’s college tuition and retirement on the horizon, many couples find their finances are stretched as they seek solutions to cover the cost of everyday life. The following 5 tips may help you and your spouse gain control of your finances.

1. Set Goals
The goal-setting phase allows a couple to talk openly about their financial history, current obligations, and future objectives. Gauging your spouse’s retirement preferences can often be a challenging obstacle before establishing a financial strategy.

2. Identify Risky Spending
Overspending and making frivolous purchases may damage your financial future. Discussing mistakes respectfully on both sides of the relationship can help prevent poor decisions in the future. If an expense proves to be a blunder, own up to the fact and move on.

Review the household “record of accounts” (that is, your budget) and your current financial landscape before adjusting your strategy. This may help protect your family from further problems that might delay the timeframe you want to retire.

3. Pay off Bills
Be fair. If—or when—your spouse admits to overspending, try not to blow up. We live in a consumerist society designed to push our buttons and trick us into spending. Even worse, it’s a pattern that can be difficult to break because it’s a very socially acceptable addiction.

Instead of exploding, ask them open-ended questions about their spending habits. The key here is working towards a compromise in a way that doesn’t villainize your partner but also protects your financial future together.

4. Periodic Review
Due to the dynamics of financial decision-making between spouses, it’s clear that periodic review has a benefit. Changes in income, lifestyle, and family or business obligations can alter a couple’s financial goals for retirement. Try to meet at least once a month (maybe over a cup of coffee) to review your finances and update your budget.

5. Don’t forget to have some fun!
The goal of getting in control of your finances is not to make life miserable. Sure, you might need to cut back on frivolous spending in the present to have more in the future, but that doesn’t mean you can’t enjoy life. Set aside a little each month for a movie night or dinner with friends. You actually might discover that things like budgeting free up cash!

Building a financially sound relationship takes time. It takes a willingness to listen, to compromise, to take responsibility, and to prepare. Sometimes it might take some experience as well. Contact a qualified and licensed financial professional to help you and your loved one come up with a strategy to build your future together.


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How to Budget for Beginners

How to Budget for Beginners

Everybody needs a budget.

But that doesn’t stop “budget” from being an intimidating word to many people. Some folks may think it means scrimping on everything and never going out for a night on the town. It doesn’t! Budgeting simply means that you know where your money is going and you have a way to track it.

The aim with budgeting is to be aware of your spending, plan for your expenses1, and make sure you have enough saved to pursue your goals.

Without a budget, it can be easy for expenses to climb beyond your ability to pay for them. You break out the plastic and before you know it you’ve spent fifty bucks on drinks and appetizers with the gang after work. These habits might leave you with a lot of accumulated debt. Plus, without a budget, you may not be saving for a rainy day, vacation, or your retirement. A budget allows you to enact a strategy to help pursue your goals. But what if you’ve never had a budget? Where should you start? Here’s a quick step-by-step guide on how to get your budgeting habit off the ground!

Track your expenses every day
Start by tracking your expenses. Write down everything you buy, including memberships, online streaming services, and subscriptions. It’s not complicated to do with popular mobile and web applications. You can also buy a small notebook to keep track of each purchase. Even if it’s a small pack of gum from the gas station or a quick coffee at the corner shop, jot it down. Keep track of the big stuff too, like your rent and bill payments.

Add up expenses every week and develop categories
Once you’ve collected enough data, it’s time to figure out where exactly your paycheck is going. Start with adding up your expenses every week. How much are you spending? What are you spending money on? As you add your spending up, start developing categories. The goal is to organize all your expenses so you can see what you’re spending money on. For example, if you eat out a few times per week, group those expenses under a category called “Eating Out”. Get as general or as specific as you wish. Maybe throwing all your food purchases into one bucket is all you need, or you may want to break it down by location - grocery store, big box store, restaurants, etc.

Create a monthly list of expenses
Once you’ve recorded your expenses for a full month, it’s time to create a monthly list. Now you might also have more clarity on how you want to set up your categories. Next, total each category for the month.

Adjust your spending as necessary
Compare your total expenses with your income. There are two possible outcomes. You may be spending within your income or spending outside your income. If you’re spending within your income, create a category for savings if you don’t have one. It’s a good idea to create a separate savings category for large future purchases too, like a home or a vacation. If you find you’re spending too much, you may need to cut back spending in some categories. The beauty of a budget is that once you see how much you’re spending, and on what, you’ll be able to strategize where you need to cut back.

Keep going
Once you develop the habit of budgeting, it should become part of your routine. You can look forward to working on your savings and developing a retirement strategy, but don’t forget to budget in a little fun too!


¹Jeremy Vohwinkle, “Make a Personal Budget in 6 Steps: A Step-by-Step Guide to Make a Budget,” The Balance (March 6, 2020).

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Now’s the Time for Future Planning

Now’s the Time for Future Planning

What happened to the days of the $10 lawn mowing job or the $7-an-hour babysitting gig every Saturday night?

Not a penny withheld. No taxes to file. No stress about saving a “million dollars” for retirement. As a kid, doing household chores or helping out your friends and neighbors for a little spending money was vastly different from your grown up reality – writing checks for all those bills, paying your taxes, and buying all the things that children seem to need these days, all while trying to save as much as you can for your retirement. When you were a kid, did those concepts feel so far away that they might as well have been camped out on Easter Island?

What happened to the carefree attitude surrounding our finances? It’s simple: we got older. More opportunities. More responsibilities. More choices. As the years go by, finances get more complicated. So knowing where your money is going and whether or not it’s working for you when it gets there is something you need to determine sooner rather than later – even before your source of income switches from mowing lawns and babysitting to your first internship at that marketing firm downtown.

A great way to get a better idea of where your money is going and what it’s doing when it gets there? A financial plan.

A sound strategy for your money is essential, starting as soon as possible is better than waiting, and talking to a financial professional is a solid way to get going. No message in a bottle sent from a more-prepared version of your future self is going to drift your way from Easter Island. But sitting down with me is a great place to start. Contact me any time.


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Big Financial Rocks First

Big Financial Rocks First

A teacher walked into her classroom with a clear jar, a bag of rocks, a bucket of sand, and a glass of water. She placed all the large rocks carefully into the jar.

“Who thinks this jar is full?” she asked. Almost half of her students raised their hands. Next, she began to pour sand from the bucket into the jar full of large rocks emptying the entire bucket into the jar.

“Who thinks this jar is full now?” she asked again. Almost all of her students now had their hands up. To her student’s surprise, she emptied the glass of water into the seemingly full jar of rocks and sand.

“What do you think I’m trying to show you?” She inquired.

One eager student answered: “That things may appear full, but there is always room left to put more stuff in.”

The teacher smiled and shook her head.

“Good try, but the point of this illustration is that if I didn’t put in the large rocks first, I would not be able to fit them in afterwards.”

This concept can be applied to the idea of a constant struggle between priorities that are urgent versus those that are important. When you have limited resources, priorities must be in place since there isn’t enough to go around. Take your money, for example. Unless you have an unlimited amount of funds (we’re still trying to find that source), you can’t have an unlimited amount of important financial goals.

Back to the teacher’s illustration. Let’s say the big rocks are your important goals. Things like buying a home, helping your children pay for college, retirement at 60, etc. They’re all important –but not urgent. These things may happen 10, 20, or 30 years from now.

Urgent things are the sand and water. A monthly payment like your mortgage payment or your monthly utility and internet bills. The urgent things must be paid and paid on time. If you don’t pay your mortgage on time… Well, you might end up retiring homeless.

Even though these monthly obligations might be in mind more often than your retirement or your toddler’s freshman year in college, if all you focus on are urgent things, then the important goals fall by the wayside. And in some cases, they stay there long after they can realistically be rescued. Saving up for a down payment for a home, funding a college education, or having enough to retire on is nearly impossible to come up with overnight (still looking for that source of unlimited funds!). In most cases, it takes time and discipline to save up and plan well to achieve these important goals.

What are the big rocks in your life? If you’ve never considered them, spend some time thinking about it. When you have a few in mind, place them in the priority queue of your life. Otherwise, if those important goals are ignored for too long, they might become one of the urgent goals - and perhaps ultimately unrealized if they weren’t put in your plan early on.


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