Financial Planning

Mindful retirement

August 28, 2020 By Jacki Liautaud

A non-financial plan can be an asset in building a mindful future.

A mindful future can benefit from a non-financial plan

Thinking about the future is a tricky thing because we don’t actually know, and can’t actually know, what it will be like. And yet it’s coming. When I’ve worked with families and individuals on their financial plans and investment management, I’m often hearing about their deep-seated wishes and dreams for their future. In fact, typically my clients hope that their money and all the hard work they are putting in right now will eventually give them the future they want.

I’ve written quite a bit here about a financial plan and the benefit of having one. But there are other aspects of your future to consider, beyond just the financial side of things. And I believe it might be just as important to talk about your family’s “non-financial plan” as it is to discuss the financials. Being mindful about your dreams and ideas for your future can help you become more aligned and focused as you work towards your goals.

Here’s an example. For many, our work is a defining feature of who we are. When asked to say something about yourself, one of the quickest responses is to talk about what you do for a living. For those with children, often a close second is talking about parenting/being a parent. But in the future, when we are retired and our children are grown, what will consume our time? How can we be mindful about spending our time once the demands of work and child-rearing are over?

Retirement is no longer what it used to be

Along those same lines, when many younger people think of “retirement”, they imagine a retirement community in Florida, where seniors drive around in golf carts playing shuffle board. But is this what we would actually want for ourselves? In real life, retirement may look a lot different than this. I’ve spoken to clients who want to travel, move to a geography with ready access to the outdoors, or engage in volunteer work.

Get mindful about planning your future

Having an idea of what that future might look like, and what your priorities are, can be an important aspect of having a non-financial plan. Start thinking mindfully about what you would like your future to look like, beyond just the financial side of things. And more important, start talking about these ideas with those who will be in that future with you. Then, write it down! This is a key step to defining your ideas.

Here are some benefits of having a written, non-financial plan, according to Robert Laura (link opens in new tab).

Direction and achievement. When you’ve ended your work routine and career, a non-financial plan can give you direction and help you build new achievements. As humans we typically need a purpose, and a non-financial plan can offer that.
Increased commitment. When you have a specific vision of your future, and when you and your spouse are in agreement on this vision, it’s much easier to keep committed to your plan, both now and in retirement. And besides the financial side of things, you may find ways of starting to build that future life now. For example, volunteering at a local charity of interest now, so that when you retire you’re moving into something that you already know about.
Memory lapse. People tend to forget things as time goes on, and it’s helpful to have a written reminder of what you’re striving for.
Process emotions. Retirement is not what it used to be. Thinking about retirement as having the financial independence to start a “second act”, can give you a head start as you think about the future.

How can a non-financial plan help you mindfully build your future?

Let’s get started talking about your goals!

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The importance of a plan

August 21, 2020 By Jacki Liautaud

Having a plan for our financial future is like having a destination for a family vacation.

Imagine you’re going on a vacation.

You’ve got the car packed, your spouse in the front seat, dog and kids in the back seat all buckled in and ready to go. So exciting! You drive onto the street. Then you stop. Wait, where are you going? You forgot to plan the destination!

While this seems like a silly example, there is an analogy here to financial planning. Imagine financial independence or retirement as your destination. You’re preparing (packing the car): you bought a home and are paying the mortgage; you are saving in your company’s retirement savings plan; you’ve set aside something for the kids’ college costs. But every time you think about it, you wonder – am I saving enough in my 401k? Is my money working for me in the form of compound interest and growth over time? I heard college is going to be really expensive when my kids graduate from high school, but how much should I actually expect to spend? Essentially, you’ve packed the car, but you don’t have a destination.

A financial plan can help you define your destination.

What does retirement look like for you and your spouse? Some people prefer to call this stage “financial independence” instead of retirement, because it’s the point at which you are financially independent and no longer need to rely on a 9-5 job to cover the cost of your lifestyle. But have you taken the time to think about what your financial independence might look like? What are your priorities in financial independence – travel, living near family, spending time on specific interests? How does your financial independence compare to paying for your kids’ college? What if the future looks different than you planned and are you prepared if one spouse were to pass away or get ill? These are all issues that are typically considered when you build a financial plan.

If you don’t have a plan for your future, reach out. I’d be happy to help you and your family.

Let’s get started talking about your goals!

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Your thoughts around money

August 14, 2020 By Jacki Liautaud

Our attitudes about money can impact our behaviors.

How do you feel about money?

Awhile back, I met with a young woman who told me, “Having money makes people do bad things. I’ve seen it happen in my own family when my grandpa died. My aunts never really talked after that.”

This woman had an experience in her life that significantly impacted their thinking about money. The person who thought money made people do bad things – do you think she was interested in having money for herself? She felt like if she had money, she would end up doing bad things, or becoming a bad person. I believe it was partly as a result of this attitude that she had more credit card debt than she could pay off, and yet continued to spend.

Attitudes about money can shape your ability to manage your money

A book I read recently is, “You are a badass at making money”, by Jen Sincero. I loved one of the early chapters where she talks about the idea that money makes people bad, or only bad people have money. I’m paraphrasing here, but she says something like, there are good people who have money and bad people who have money. Likewise, there are good people who don’t have money and bad people who don’t have money. Imagine if you were interested in helping abandoned animals. You could volunteer your time, but if you had money, you could also use that money to build a shelter, hire more staff, or buy materials like dog food or beds. Having money does not equal being bad. When you change this attitude, you open the door for yourself to have enough.

I have seen this happen in my own practice. When my clients understand their feelings about money and how those feelings are helping or preventing them from achieving their financial goals, they can be a lot more mindful about the choices they make related to money.

How mindful are you about money? Do you need to change your attitude about money?

If you’re interested in learning more about changing your attitude about money, let’s talk!

Let’s get started talking about your goals!

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Saving for a Rainy Day

August 6, 2020 By Jacki Liautaud

There’s no better time than now to start saving – here are some tips on filling up your rainy day fund.

Rainy Day Fund or Emergency Fund: What is it, and why should I care?

A topic that often comes up in initial conversations with new clients is a rainy day fund. Some people call this an emergency fund. I don’t like the idea of having an “emergency” related to money, so I prefer the term rainy day fund. Rainy days come along, just like sunny days. On a rainy day, you bring an umbrella or wear your waterproof shoes. No big deal, right? Same thing with your money. Having funds readily available for those “rainy days” can really improve your peace of mind.

I know some solo-preneurs who completely lost their income during the initial months of the Covid-19 pandemic. While they waited for unemployment benefits or PPP/EIDL small business loans to come through which took about 3 months for some people, they were able to continue making ends meet with the use of their rainy day fund.

What’s a rainy day fund used for?

This can vary quite a bit based on your personal situation. The rainy day fund can cover things like a nail in your tire; replacing your refrigerator when it stops keeping the cold things cold; the health insurance copay for your son’s broken arm; losing a job.

How much should I keep in my rainy day fund?

Typically, a rainy day fund should contain enough money to cover 3-6 months of expenses.

To figure out how much your monthly expenses are, look at a recent bank statement and tally the expenses you paid. You can also note your monthly income, then note how much (if any) you have “left over” i.e., still in your checking account at the end of the month. Say your checking account balance at the beginning of the month is $1,000. You received monthly income of $5,000. At the end of the month, your checking account balance is $1,200. This suggests you have spent $4,800 ($1,000 + $5,000 = $6,000 – $1,200 = $4,800).

I don’t have enough saved in my rainy day fund. How can I build my savings?

It’s ok to start small. It doesn’t take much to make some big long-term improvements. Of course, next time you receive a “windfall”, whether it’s a check in your birthday card from your aunt or your annual bonus or raise, immediately allocate this found money towards saving.

Here are a few tips to increase your rainy day fund savings.

Pay yourself first. Set up an automatic transfer from your checking account to your rainy day account, each day you are paid. Say you’re paid on the 15th and 30th of each month. On those days, set up an automatic transfer of a set amount into your rainy day fund.
Get some information about where you’re spending your money right now. Create a budget using the method here.
Look at options for cutting back monthly fixed expenses. Can you refinance your mortgage, or negotiate with your landlord for a decrease in rent? Can you cut back on monthly subscriptions to news services, or entertainment like streaming music or video services? Are you still paying for the international plan on your cell phone bill?
Intentionally change your spending habits. In the past few months, Americans’ spending habits have changed significantly as we’ve been housebound and working from home. The morning commute Starbucks visit; lunchtime stop at a local clothing store, and dinners out with friends have been cut way back for many. Starbucks coffee drinks can easily cost $5. That could be $25 / week, or $100 / month. Have you found that your spending habits have changed amidst the pandemic? Take advantage of this to build up your rainy day savings, and consider how you can turn these unplanned changes into permanent habits.
Food spending. I consider food to be discretionary, only because you can choose what you eat. Eating out or ordering take out is usually way more expensive than doing your own cooking. Spend a little time collecting some recipes in a folder that you know your family enjoys that are also simple to prepare (I’ve been loving this lime chicken and Mexican cole slaw on soft tacos – links open in new tab). Before you head to the grocery store, choose a few recipes you’ll make, and make a shopping list. Then only get the items on your shopping list (online ordering can help avoid impulse grocery store purchases). You’ll have the opportunity to eat healthier and also save some money.
Make your credit cards less accessible. Put them in the back of your wallet, or keep them at home in a drawer. Put a sticky note on your credit card that says “rainy day” as a reminder to not mindlessly make purchases when you know you’re saving for your rainy day.

And don’t forget to celebrate your wins. Give yourself a small reward for reaching set goals along the way. The reward could be a pint of that gourmet ice cream, a kitchen gadget you’ve been eyeing, or a car wash and detail – whatever feels like a special treat for you.

Once you’ve started this saving process, keep going! When you’ve built up your rainy day fund, consider where else you can keep saving. Are you contributing to your company’s 401k or retirement savings program fully? Are you planning a vacation?Start saving now so it’s fully funded by the time the trip begins. And congratulations! You’re on your way to building healthy money habits.

If you’re interested in learning more about building up your rainy day fund, reach out!

Let’s get started talking about your goals!

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Women: Get Involved in Financial Independence Decisions

July 14, 2020 By Jacki Liautaud

Photo by Sharon McCutcheon on Unsplash — Photo by Nikita Kachanovsky on Unsplash

According to a recent UBS study, in the wake of the pandemic, “80% of women want to protect their family more than ever before”. Will they take action?

Let’s change the “Women budget, men invest” cultural norm.

UBS recently completed their “Own your worth 2020” (link opens in new tab) study, which examines women’s views and actions related to financial independence. In 2018, they completed a similar study and found that at some point in their life, 8 in 10 women would find themselves alone and solely responsible for their financial situation, as a result of divorce, becoming widowed, or never marrying. It’s clear to see that women need to be engaged in their personal financial situation, and empowered to make financial decisions.

The study finds that the old trope “women budget, men invest” still applies to many women. Even among single women and millennial women, they feel less confident in their ability to make financial decisions than similar men do, according to the study.

The study says that “nearly half of women with an advanced degree (46%) defer to spouses” when it comes to financial decisions – even though the majority of both men and women believe “equal financial participation is necessary for true gender equality”.

Among the women who defer to their husbands on financial decisions, there are multiple reasons, including “lack of confidence, complacency, entrenched roles and a desire to keep the peace in their relationships. Overall, most women who defer tend to believe their spouse knows more about investing and other long-term decisions,” according to the study.

We need to do a better job making financial advice and education more accessible to women.

I try to create a “judgement free” zone as I’m discussing financial matters with clients. There can be a lot of shame and fear that people associate with financial matters; shame that I don’t know enough, fear that I’m not where I should be. These feelings can sometimes get in the way of taking action on financial matters. But how are we supposed to learn about these topics? We’re not required to take a class on personal finance in school – although that might be a good start! We also need to offer up more women role models, so moms, this can mean figuring out how you can become a better role model in this area for your daughters and sons.

The pandemic has led many women to want to take action more than before.

According to the UBS study, 8 in 10 women want to protect their families more than ever before. So here’s a few tips if you’re considering taking action on your financial situation.

Talk to your spouse about your concerns or questions. Try to leave behind the unhelpful past behaviors and pre-judgements in the conversation, and simply talk about what you would like to learn.
Agree on some financial goals. These could be budget-oriented, such as keeping track of your monthly expenses to identify where your money goes; or more long-term, such as saving up for children’s college education or buying a new home. The financial goal could also be task-oriented, such as getting all your financial papers in order.
Ask for help from a professional. Sometimes a professional financial advisor can be helpful in creating a financial plan for your family. Maybe you need help managing your investments. Reaching out to a fiduciary financial advisor, who will keep your interests top priority, can be a wise choice for some families.

Want to learn more about your financial situation? Reach out to Tree Fort Financial today.

Let’s get started talking about your goals!

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