Thursday, December 19, 2019

Does It Really Matter…




Every new year we promise ourselves to start, finish, or complete a task…only to fail miserably! We may begin yet never quite finish.  Sometimes, we remain stuck in the thinking-about-starting phase for a list of reasons (or perhaps excuses).  You know the typical resolutions: eat healthier, lose weight, stop smoking, or start exercising.  Then, the typical money ones are pay down debt and save for retirement.  Our intentions are to improve ourselves physically, mentally, emotionally, and spiritually. 

We need to ask ourselves.  
               
Does it matter if I don’t lay off the sweet desserts?
               
Does it matter if I don’t stop smoking?
               
Does it matter if I don’t track how much money I spend?
               
Does it matter if I don’t save for my children’s education?

These questions likely trigger deep-seeded feelings of guilt.  When we don’t like this feeling, we suppress it by deferring the task to someday in the future. We would never want to make ourselves feel guilty on purpose. But you see this unpleasant feeling is a warning for us to take action.  You know what -- action wipes out guilt.  When we truthfully answer the question, we know the answer is a resounding “Yes”.  Does it matter? Of course, it does.  Everything we do matters.  We want to be, stay, and remain healthy in every dimension of our lives, financial, physical, intellectual, social, etc.

As I glance at my writings, I pondered, “Does it matter if I don’t write blogs about money management?” The answer thrown right back at me is “Yes”.  I hope I make a difference in at least one person’s financial well-being.  I hope they grow a healthy financial tree.  

We often jokingly say, “happy wife - happy life”.   Let’s take this and create a unique self-made motto, “Healthy financial tree - Wealthy me”.  This sounds a bit bizarre but if a play-on-words helps you remember why you need to do the right things, then it works.  We can’t dispute logic.



A financial tree is divided into three parts.  The top branches focus on taking care of the family’s needs first.     These items have a direct relationship to meeting a family’s needs if a catastrophic event occurs.
  • A Written Financial Plan
  • A Will and Estate Plan
  • Living Will and Power of Attorney
  • Insurance: Health, Disability, Life and Credit


The second part of a healthy financial tree is made up of the other items related specifically to money:
  • Pay yourself first
  • Registered Retirement Savings Plan (or Tax Free Savings Plans)
  • Pay your mortgage more frequently
  • Three months of savings
  • Credit:  Get it while you don’t need it
  • Registered Education Savings Plan for Children or Grandchildren

The third part, the roots, represents the type and amount of debt.  Debt will either make your tree flourish or stifle its growth.  “Good debt” often refers to mortgage or student loans. Building equity in your home or receiving an education to secure a well-paying job contributes to a person’s assets or ability to earn an income.  Excessive loans for any other purpose than these may jeopardize our financial health.  

All these branches are essential and impact your entire well-being.  Your stress is reduced when you have an action plan.  You control and drive your life.  

Your slate has been wiped clean of all unfulfilled promises.  Go ahead; create new and fresh promises with the intentions of following through.  If you’re stuck in “start” mode, focus on this favorite quote. “Do not wait, the time will never be ‘just right’.  Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.” (George Herbert).

Thursday, December 5, 2019

Shoot Close Up For Impact


“Shoot close up for impact” (SCUFI) is a great technique for taking pictures. One I will always remember because I have seen the benefits.  I learned this technique and others from a great instructor, Greg Johnson (The Tornado Hunter), in a two-day photography workshop.  The application and impact of this strategy are shown throughout this writing!  

We often say, “A picture is worth a thousand words”.  Guess what? This also applies to our financial circumstances.  One snapshot speaks volumes about our present situation; and when we apply the “rinse and repeat” process every year, we can measure our progress…all because we use the following special technique. Really!  



The creation of the Balance Sheet, also referred to as a Net Worth Statement or Statement of Financial Position, lists all the assets (everything we own) and liabilities (everything we owe) at a specific time in a calendar year. This special approach enables us to calculate our net worth, the difference between our assets and liabilities.


CIFP The Canadian Institution of Financial Planning


We are having this conversation now because a new year is rapidly approaching.  Scheduling an appointment with ourselves to do this on the same date every year develops into a new worthwhile habit.  This financial snapshot provides insightful information and comes in handy...

  • When we are applying for a loan including a mortgage,
  • When we are planning our retirement,
  • When we are developing our estate plan or writing our will,
  • When we are estimating our tax liability upon death,
  • When we are determining our life and property insurance needs,
  • When we are creating our wealth investment plan,
  • Or if we are resolving a divorce settlement.  


The initial commitment may be time-consuming but the effort will be valuable.  Once our first Net Worth Statement is created, only minor tweaks in following years will be required to keep the statement updated and current. 





The wheels of our progress will be clearly visible with each passing year and with the creation of a new balance sheet.  If we’re in a downward spiral and our net worth has decreased (rather than increased), then we know we are headed in the wrong direction and need to apply the brakes on “something”. 



You are invited to take a picture. Collect your financial information; list your assets and liabilities on a balance sheet; and then determine your net worth.  One client, who did this exercise, was astonished with the results.  He felt stressed by the impact of his newly-acquired car because he understood the impact of his newly-acquired car loan on paper.  He was dragged down with debt; and he could see clearly what changes he needed to implement. A financial picture is worth a thousand words. Here’s your opportunity to shoot close up for impact and see the results for yourself.