Saving

Happy Holidays: The Gift of Financial Self-Care

Financial Self Care

We originally published Happy Holidays: The Gift of Financial Self-Care in December 2016 and decided to give it a refresh for 2021. 

The holiday season is a once-a-year mash-up of magic and madness. Indeed, it can be a challenge to find balance between the two. The moments of wonder with family and friends go hand-in-hand with the chaos of shopping, rushing, eating, and drinking–sometimes to excess. ’Tis the season to be jolly, and the season only comes once a year – so enjoy!

And as you make your Gift List, be sure to treat yourself to something special: the gift of financial self-care. The enjoyment and reward will last longer than anything you can buy in a store.

Get a head start on New Year’s resolutions by setting fresh financial goals for the new year now. Then, you can truly embrace the eat-drink-and-be-merry holiday philosophy, knowing you have set yourself on a path towards financial freedom.

Financial Self-Care: Three Easy Steps to Begin

1. Automate your savings program.

Avoid the anxiety of wondering if you are saving enough by automatically setting aside money from your income each month. Either set up a transfer from your checking account to your investment account, or contact your payroll department to have dollars sent directly from your paycheck to your investment account.

  • You can direct your savings to either a taxable brokerage account (unlimited amount), or to an IRA or Roth IRA if you’re eligible.
  • This automated savings program will supplement your monthly contribution to a 401(k) or 403(b) and, if the funds are invested, will have the added benefit of dollar-cost averaging, which tends to boost returns over the long haul.

2. Open your investment account statements – both retirement and taxable – at least quarterly, and review the contents.

Financial self-care involves giving yourself the gift of knowledge. Knowledge is power, and the more you learn, the more in control you will feel. “Clueless” is a 1990s coming-of-age comedy, not a way to feel about investments! Things to look for:

  • Familiarize yourself with your financial statements, and call your custodian or advisor to ask about anything you don’t understand.
  • Is all your money invested, or have you unintentionally left cash in the account that isn’t working for you?
  • What is your Big Picture – otherwise referred to as your asset allocation? How much is invested in stocks, and how much in bonds? Are you comfortable with the allocation knowing that a higher percentage of stocks means greater volatility? Conversely, are you content with the level of bonds, knowing the returns may be lower than what you need to reach your goals?
  • What is your year-to-date rate of return? How does this measure of investment performance compare with your financial objectives?

3. And finally, do something about those old 401(k)’s you’ve almost forgotten about.

Like the reliable jacket that’s been languishing in the back of a closet, those forgotten accounts are an easy refresh to your financial “wardrobe.” Roll over an old 401(k) into your current 401(k) if your plan allows, or into an IRA account. (It’s likely you already have an IRA, so it means receiving one less statement each month/quarter!) If you don’t like to invest, the easiest approach is to roll the old account(s) into your current 401(k) and invest it in your existing choices.

Financial Self-Care = Satisfaction, Empowerment, and Confidence

You know the feelings you get when you finally purge your closet (or even clean just one messy drawer)? Multiply the accomplishment factor by about one hundred, and those are the feelings that result from completing something on your financial self-care check list. Pat yourself on the back – this is a gift that will keep on giving, long into the future.

Now, go out and Eat, Drink, and Be Merry… Happy Holidays!

Do you want to manage your money (and life!) better?

If you want to think differently about the relationship between your spending, your values and your happiness, then get your FREE copy of The Happiness Spreadsheet.

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Single and Thinking About Retirement? Five Tips to Help You Get There

Single Women Retirement Planning
Single Women Retirement Planning

Most of us dream about the day that we can take a break. We envision a full, long-lasting retirement that is free of financial worries and packed with more of the things we enjoy spending our time on. Whether you’re planning to retire at the traditional age of 65 or you’re aiming to get there earlier, being single doesn’t have to slow you down.

Use your unique strengths to your advantage, and plan for a retirement filled with time spent with friends and family, giving back, reading books, traveling, and everything else you enjoy. If you’re thinking ahead to your retirement, but you’re not sure where to start, here are a few tips that will help you get there:

Revisit your spending and saving

The start of your retirement planning is a great time to check in with your spending or looking at it in reverse, at your savings rate. Could you be saving more money? Are you spending on things that aren’t important to you? Are you wasting money anywhere, such as trial subscriptions you forgot to cancel that are now costing you money annually? Paying for a high-priced gym that you rarely use? Highlight anything you think can be cut out or reduced. Savings gives you freedom and it’s something you have control over, more than your investment returns or even your income.  Then, use Vanguard’s handy retirement calculator to compare your current monthly income to what you’ll need in retirement. 

Make small changes

Now that you’ve revisited your spending vs savings rate and identified areas that could use improvement, start making small, incremental changes. Save takeout or restaurant meals for weekends; make coffee at home instead of suffering through long drive-thru lines; cancel unused services or subscriptions. Discretionary items like these add up quickly to cost us thousands each year. Aim for improvement, not deprivation and watch your savings grow. Cutting out all discretionary spending isn’t sustainable long-term. Choose the changes and budget cuts that make the most sense to you and your goals.

Max out your savings

Reallocate the funds from your discretionary budget cuts to your retirement accounts or investment accounts. While opting for easy alternatives may have been eating up all of your extra cash, maxing out your savings opportunities will make you extra cash. When it comes to saving for retirement, compound interest is your best friend. Start spending time with her as soon as you can.

Diversify

Any personal finance expert will tell you that it’s not enough to match your employer’s contributions (or fully fund your Solo 401(k) if you’re self-employed). Investing outside of your retirement account in mutual funds, ETFs, or individual stocks can help you create additional streams of income when you’re settling comfortably into your retirement.

Work a little longer than you think you can stand

While you are working your salary funds your expenses. When you stop working you are going to rely on other income sources: social security, maybe a pension, and withdrawals from your retirement and investment accounts. If your retirement projections are at all iffy – meaning, it seems your money may not last through your retirement years, it pays to stay employed. Most people want to maintain their standard of living in retirement not have to reduce it. Staying employed and savings as much as you can in those last years of working is one way to get you closer to your goal.

No one-size-fits-all plan for retirement

There’s no one-size-fits-all plan for retirement. But if your end goal is a retirement free of financial worries, there are plenty of actionable steps you can take now to set your future self up for success. A lack of financial stress helps us better connect with the people we love, sleep better, stay healthy, and enjoy both the destination and the journey. Employ financial strategies that will help you move consistently toward your goals.  

If you need a retirement plan and want to work with a trusted financial partner, we encourage you to explore our services and schedule an introductory phone call.

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Living Within Your Means – 10 Tips on Saving Money

Are you cash-flow challenged?When did dining-out, facials, manicures, pedicures, personal trainers, pricey haircuts, books, magazines, CD’s, I-Phones and expensive annual vacations become necessities? How did we get here?

This fee-only financial planner contemplates this question as client after client comes in with cash flow issues – agonizing over credit card statements, wondering how they can keep up with an avalanche of bills.

As a first step in my financial planning process, I ask clients to complete a detailed cash flow worksheet. This is followed by a meeting to review this document line by line.

Are you cash-flow challenged?

This exercise is as exhilarating as it is agonizing – clients are relieved to finally be doing something around financial planning, but terrified that the end result will be deprivation.  Everyone has his or her own “can’t give this up” list.

I’ve learned to remain neutral as a client explains to me why they can’t possibly cut out their $400 a month Amazon habit or can’t postpone the $4,000 vacation for a couple of years. (Really? Are you sure?)

Lately, there are more and more cash flow challenged clients at my door, and of course, it’s the economy.  No longer is cash-out refinancing an option as house values plummet and equity lines of credit disappear or decrease. And, to make matters more difficult, credit card companies are lowering limits and raising interest rates. Brokerage balances are also down.

Some state employees are seeing pay cuts as high as 8 %. The self-employed and freelancers lament incomes that have been slashed in half over the last year.

A spouse loses a job, two incomes are now one because of divorce, or unemployment — benefits have run out and there’s no job in sight. Not exactly a pretty picture.

All of a sudden, people have to live within their means, and for many, this is the first time they’ve had to watch what they spend and they’re not finding it easy to cut back.

As a financial planner, I can assure you – our incomes are finite, there’s just no way around that fact. I remind clients that recessions and hard economic times don’t last forever. The good times will roll again, but in the meantime, this is a good opportunity to really tap into what makes us most happy and to learn to live within our means and make it stick.

Living within your means doesn’t mean that you have to cut out all pleasure. Think of living within your means as good practice for your retirement years when you live off the money you save now. Think of it as living a sustainable lifestyle.

10 Ways to Save Money and Not Feel Deprived

Here’s a few spending tips for the person who doesn’t want to feel deprived:

  1. Suspend spending on those items you can do yourself:  manicures, pedicures,  highlights, gym workouts. Or, cut back on frequency.
  2. Don’t buy things you can borrow or trade  (books, magazines, cd’s).
  3. Avoid temptation – stay away from your favorite shops and toss out the catalogs unopened.
  4. Stop subscriptions to things you aren’t reading: newspapers, magazines, online and offline.
  5. Eat really well at home.
  6. Bring delicious food to work for lunch.
  7. Buy entertainment a la carte instead of via subscription: movies, theatre, and music events.
  8. Hold onto things longer – your cell phone, computer, car, and oven.
  9. Ramp down the luxury a bit – buy less expensive wines, eat at moderately priced restaurants.
  10. Postpone the big vacation for a few years; enjoy smaller trips to great places.

I’d love to hear from you. What are your favorite money saving tips?

Do you want to manage your money (and life!) better?

The Happiness SpreadsheetIf you want to think differently about the relationship between your spending, your values and your happiness, then sign up to get your FREE copy of The Happiness Spreadsheet.

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