We work with dozens of people to help them create retirement plans. But in order to get to a successful retirement, there are thousands of small decisions along the way. Like, should you drive through your local coffee place and grab a latte this morning? Go with the office gang for lunch at that little bistro across the street, which usually costs you around $15? Should you order pizza delivered for dinner tonight because you didn’t go to the grocery store yesterday? Grab that new shirt because it’s 50% off?
Sticking to a budget is the beginning of mastering your money. But why do so many of us find it difficult?
A recent article in Forbes magazine may hold some clues as well as ideas about how to take control of your discretionary expenses. The author, Thomas Dichter, advocates writing every expenditure down, to the penny, as well as calculating how well you met your budget on an annual basis. (He usually comes within 1% of his goal, and many times comes in under, which he attributes to his meticulous record-keeping.)
Mr. Dichter explains how he started the process:
I forced myself to write down what I had spent under each category. After a week my inner accountant had emerged and I kept at it. By month six I noticed something magical: the act of tracking expenses had a feedback effect on my spending. My expenses in the categories that all of us tend to ignore (take-out food and coffee, a candy bar at a vending machine, impulse buying a shirt, or a magazine at the check out line, etc.) were going down, not because I wanted to deny myself, but because I could see what was happening.
At the end of that first full year those few minutes a day of what became compulsive recording paid off. It took me about a half hour to add up each category and then total it all (a side benefit became obvious when I had to do my taxes). Then I compared that total to my take-home income for the year and saw I was ahead, for the first time in my life. I decided to do a budget for the next year, using the past year's expenses as a guide. At the end of that year I saw I had come within 1% of my budget estimate. Passing that self-imposed test soon became an annual goal. Each year on December 31st, I see how close I've come to my budget estimate of twelve months earlier. Usually I come within that 1%, sometimes over but more often under.
The author goes on to say that he believes that easy access to credit, along with an economy based on consumption, contributes to the overspending problem in America. And the main excuse for resisting his simple method—“I don’t have time”—is just a cover story for other, deeper reasons. For example, he believes that some people don’t really want to know what they spend, because it might rock their feeling that “everything is okay.” Some operate on the subconscious wavelength that it’s better to risk their financial future rather than turn into some kind of accounting nerd or tightwad.
As financial advisors who work with people every single day, we are here to tell you that managing your finances is possible, and might even be easier than you think. If you'd like to step by step help check out Financial Detox. Every Monday a new task or tip will be posted. These tips will not take long to do but they will have a major impact on your big picture.
“A New Year's Resolution To Manage Your Finances: Why Is Sticking To It So Hard?” by Thomas Dichter, Contributor, Forbes.com. https://www.forbes.com/sites/thomasdichter/2019/01/01/a-new-years-resolution-to-manage-your-finances-why-is-it-so-hard/#38ef8202106f (accessed January 14, 2019).
Last week was the first anniversary of Family Retirement, LLC. Most people can say their first year in business is the hardest. If you know me from before, then you know that my first year was pretty rocky. After an unsuccessful business buyout, I was advised by my attorney to limit my marketing. This limited my ability to reach many former clients I had helped for years. As I was building my business I met with many marketing companies to help build business leads. I got help with marketing and social media strategies (which helped build this blog). But a surprisingly good number of them all told me that I should do what everyone else in the industry did -- Dinner Seminars. If you are not familiar with Dinner Seminars you might be too young but don’t worry once you reach a certain age you will receive a mailer to invite you to dinner at a very nice restaurant. Then all you do is eat nice food and listen to a presentation about annuities--the elephant in the room.
I held 4 dinner seminars and invited many of my clients to see how they felt about it. The comments I got back were disturbing: “What kind of sad dinner parties does she throw? My advisor had one on a boat.” Or: “That’s it? Does she give you any other kind of free stuff?”
I realized that these are not the people I want to serve.
My choice in building this business was based on the fact that people need help in all aspects of their finances -- not just those who have the money set for retirement. When I take a look around and see the people who are in my industry I definitely do not fit in. I want to make real changes in the industry by mentoring my clients. I think this can only be done if I start changing the language I use about my profession: I am a Lifestyle Advisor.
I am not only someone who will get you on track with your investments and help you understand the tax consequences of your retirement income stream. I am here to help you create your financial roadmap and advise on changes that happen through your and your family’s life as you continue to grow.
A Lifestyle Advisor will understand that it's not only about investable assets, but other assets that combine into your net worth. As a Lifestyle Advisor, I have broken down my work into two programs: Roadmap to Retirement and Financial Detox.
Financial Detox is for people who need help budgeting, paying off debt, a basic understanding of personal finances and wealth accumulation.
Roadmap to Retirement is for people who are 10 years away from retirement and need to start forming a plan for income streams, tax efficiency, have or want rental properties and want to be set up for success.
Here (link) you can sign up for monthly emails on financial topics to keep you on top of your financial future. The best thing you can do is schedule a phone appointment with me and see what steps we can take together. There is no charge for this meeting, if you decide to move forward with one of my services it’s 1.25% for me to manage your money, $250 per hour for projects, or NO CHARGE to you for insurance products (the insurance company will pay me to work with you). Just like you would go to a store you’d want to know the price of what you might be paying. If I am not in the budget talk to me and let’s see how we can figure it out.
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