Tree Fort Financial

Women

Mindfulness and Covid-19

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Photo by Jen Theodore on Unsplash

Covid-19 can teach us about mindfulness by helping align our lives with our values.

What Covid-19 can teach us about mindfulness

Mid-March, 2020. States across the country announced massive economic shutdowns in order to slow the spread of Covid-19. We ran to the store and bought up toilet paper and canned goods, then we hunkered down at home, yelled at our children to get back to “school” (the kitchen table), and wiped down every package from the grocery store with bleach.

In the months that have passed since then, so much about our world has changed. Everyone wonders when 2020 will ever end. It’s been 7 months that feels like an eternity. Many people have been tragically affected by the loss of life and health. My heart goes out to all who have been affected in these terrible ways.

In the midst of this tragedy, there are wonderfully beautiful things that have arisen, if we just take the time to look carefully and mindfully. Here are a few reasons I have to be grateful over the past several very difficult months:

  • During March/April, American’s savings rates (link opens in new tab) increased significantly due to the lockdown. Some of my clients used that savings to make significant payments to student loans, pay off credit cards, and accumulate rainy day funds.
  • My business owner clients have shown resourcefulness that reinforces my view that an entrepreneurial spirit is one of the backbones strengthening our American culture. They gave themselves paycuts or paid themselves last. They offered work-from-home stipends to help their employees continue working, from home. They pivoted their business model and developed new ways of delivering their services – all over an incredibly short period of time. I asked some of my clients the question, What would it take for the pandemic to be the greatest thing that happened to your business? And they answered by making their businesses stronger and more profitable than ever. They figured out a need consumers had, and developed creative ways of meeting that need.
  • Some of my clients have expressed a strong desire to give back, beyond anything they had previously articulated. They gave loved ones meaningful gifts. They gave their time and financial assistance to specific causes or charities. In recognition of their own blessings, they want to offer up to others that blessing. Personally, I’ve given money to several organizations and causes during this time, including my local restaurant’s Go Fund Me, the Council for Economic Education (link opens in new tab) and Association of African American Financial Advisors (link opens in new tab).
  • Many people are changing their lives to align more with their values. My friend moved to rural Wisconsin for the space and outdoor recreation, after wanting to leave the city for years. Another family is moving to the south to be closer to her parents and sister. Still another family is making a retirement dream of living abroad their reality now while in their 40s. Personally, I spent almost 3 months this summer at our family’s lake home where my son was cared for by my parents and played with cousins every day, building relationships that I hope will last a lifetime.
  • More people than ever seem to be concerned about being good stewards of their financial affairs. They have old employer retirement programs; they have recently inherited money; they have a job that remains stable despite all the year’s disruptions; they are starting a business after losing their job due to Covid-19. The uncertainty caused by Covid-19 has prompted these individuals to reach out to a financial advisor to talk about their personal situation. Now more than ever it seems important to get financial affairs in order. And more people reaching out to me means more families I might be able to help.

It can be easy to get down about so many things happening in the world right now – the world can feel like a scary place, filled with uncertainty and hate. But if we look a little closer and deeper, beyond social media and attention-getting headlines, we can see the good.

My America is made up of neighbors who rake each other’s leaves and hold the door when my arms are full of groceries; daughters who move across the country to be closer to their parents; grandparents who give up their free time to help their grandchildren with remote learning; and good people everywhere. It just takes a bit of mindfulness to see it.

What has Covid-19 shown you about changes you might want to make in your life?

Let’s get started talking about your goals!

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Single Women and Investing

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A study indicates single women aren’t as comfortable with investing as single men are. Reach out if you’re interested in getting more comfortable with investing and your financial affairs.

45% of Single Women Agree They Know A Lot About Investing

A UBS investor watch study (link opens in new tab) from April 9, 2019 found some interesting discrepancies between single women and single men when it comes to their money. According to the study, 61% of single men agree that “I know a lot about investing” while only 45% of single women do. When it comes to making long-term investing decisions, 74% of single men agree that “I’m confident I can make long-term investing decisions”, but 67% of single women agree.

A Bit of Good News

In good news, the majority of single women say they know how much they are saving for retirement. 69% of millennial women, 90% of Generation X women, and 93% of Boomer women.

These research findings align with some of my personal experiences working with women. In my experience, when women feel confident that they know exactly what to do (contribute x% of salary to your 401k; save $x monthly towards your goal of buying a home) – they are likely to do it consistently.

People experience confusion when they don’t know what to do. As a result, I’ve seen that they often take no action, which creates its own set of problems (not enough money saved for retirement; purposeless spending; no real plan of what to do with their money). And for some reason, according to the study, women are less likely than men to feel that they know what to do when it comes to investing.

That’s where I can come into the picture. One of the aspects of my work that I love most is educating my clients about investing: everything from risk tolerance (what does that mean, what risk tolerance works for me) to investment vehicles (what’s an ETF?) to investments to choose in a 401k with often limited options available. No question is too basic or stupid. Actually, the only stupid question is the one that’s not asked!

If you’re interested in learning more about investing and Tree Fort Financial’s approach, reach out!

Let’s get started talking about your goals!

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Women: Get Involved in Financial Independence Decisions

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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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Your Parents and Financial Planning

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Photo by August de Richelieu from Pexels

In this article, we examine the impact of a parent’s financial planning (or lack thereof) on their grown children.

Baby Boomers and (no) pensions

The Baby Boomer generation is the among first generations where pension income is likely not their main source of retirement income. In 1978, Congress passed the Revenue Act of 1978, which included a new section of the Internal Revenue Code, Section 401(k). Section 401(k) allowed employees to avoid being taxed on deferred compensation.

This meant that corporate employers were able to create plans, commonly called 401ks, that allowed employees to contribute to a retirement account using salary deferrals that were not taxed. As companies phased out pensions due to high costs and a changing workforce, more of the burden for retirement savings was shifted to employees.

However, not all Baby Boomers have saved what they needed to for retirement. And this lack of savings may end up impacting their grown children.

A recent article (link opens in new tab) from Yahoo! Money highlights this potential problem. The article cites an alarming statistic: “The median amount saved by those between 56 and 61 is $21,000, according to the Economic Policy Institute.”

Social Security may not be enough to make up the gap

I’ve talked in this space before about social security and how it may not make up the gap. According to Fast Facts and Figures about Social Security – 2019, as of December 2018 the average monthly retirement benefit for men is $1,627 and for women is $1,297. So the average retired couple, according to these figures, may be receiving about $35,000 per year from Social Security. Unless a couple has another income source, this average couple may have a pretty difficult time making ends meet. Now you can see why the median amount saved of $21,000 is probably not enough.

Grown children may have to help parents financially

And that’s where the grown children of Baby Boomers may be impacted. I personally know families who have had to make difficult choices in taking care of their aging parents. This could include parents moving in with their grown children and their family; grown children paying for some (or all) of Mom and Dad’s monthly bills; grown children quitting a job to care for a sick parent; and more.

Ask some uncomfortable questions

Do you know what your parents’ financial situation is? Even though the conversation might be difficult, in my view it’s always better to know the facts. Even if what you learn could be troublesome, it’s better to know in advance when you can do some planning around the possibilities than to be taken by surprise.

Do you have siblings? Talk things over with them and see how each of you might be able to help. And don’t forget to talk it over with your spouse as well.

Perhaps most important, make good saving choices now for yourself so that you don’t put your children in the same situation.

Need help with these conversations, or planning for your financial future? Contact Tree Fort Financial for help.

Let’s get started talking about your goals!

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A Sailboat and a Plan

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Photo by Peter Gonzalez on Unsplash

In this article, we examine a real life example of financial planning in action.

Several years ago, one of my clients came to me with a question.

Can I afford to retire early?

Jacki, she said, I really want to retire early. Can I afford to? (Some details have been changed to preserve client privacy.)

I did what financial planners do – I investigated. I asked a lot of questions, and did a lot of research. Let’s call my client Megan. I asked her: What do you imagine your life looks like if you’re not going to work each day? Would you stay in your current home, or live in a different style of home or even different state? What might you be willing to cut out of your current expenses, if you had to?

Then I did a lot of research. What social security or pension benefits, if any, would she qualify for? How much would it cost to live the way she wants in retirement? What would she do for healthcare, and how much would that cost? How much did she have accumulated in savings through her employer’s 401k and other resources?

After walking through several detailed scenarios and discussing the merits of each, Megan decided to retire. It might require some scaling back but at the end of the day, Megan felt the trade-offs were worth the extra time freedom she would gain by retiring early. She told me that she had confidence in her decision, and when her co-workers and loved ones questioned her (What are you going to do with all that free time? Are you sure about this?) – she could answer them confidently and with enthusiasm about what her life would soon be.

Can I afford to buy a sailboat?

Fast forward a couple years, and Megan’s enjoying retirement very much, but life is always different than you think it’s going to be. Megan called me with a new request: she really wants to buy a sailboat. She’s researched it, she says, and knows how much it will cost, where she will store it, how often she’ll use it, etc. She’s even been taking sailing lessons to brush up on piloting skills learned in her youth. She wants to know, can she afford it?

Fortunately, she had been following the initial financial plan we created a couple years earlier: living within her means, cutting back on unnecessary expenses, and investing the money she had available for potential compound interest growth.

After some more research, I was happy to be able to say, yes – spend the money on the sailboat! She was so excited to let me know when the boat was purchased, and has since spent many happy hours enjoying the boat with her friends and family.

When I think of what financial planning can do, I think of Megan’s sailboat.

I imagine Megan piloting the boat with confidence on a beautiful breezy summer afternoon, surrounded by good friends. The financial planning work she and I did together gave her the clarity to feel confident about some big decisions she made in her life. She understood the trade offs she might experience due to possible lower income in an early retirement. But she was able to make the decision that was best for her, with all the knowledge that a good financial plan can offer.

In the best case scenario, spending the time to work on a financial plan can deliver clarity around your finances in a way you never had before. And that clarity can lead to making more informed choices about what you do now with your money.

What’s your sailboat – or your dream for your future? What actions are you taking now to help you get there?

Let’s get started talking about your goals!

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