As the United States slowly starts transitioning to opening businesses back up and reducing restrictions, we felt it would be helpful to provide you with a three part newsletter outlining some actionable items as it relates to financial planning.

Before I dig into it, consider the following question:
What could you do today that your future self would thank you for?

As a financial advisor, I get the pleasure of meeting many people and everyone is different with a different story. The approach to giving blanket recommendations doesn’t work, but I have been able to uncover some best practices that will serve as a guide for when you start thinking about any particular planning item.

Before you are overwhelmed and freeze, understand that we know exactly how you might be feeling. None of this happens overnight. It takes consistent changes over a long period of time to see measurable results. Play the long game. Rather than look at a full list of what you should be doing, take it in pieces. Identify what is most important to you and start there.

These are all the things that we help our clients with and we talk through this process not just at the beginning of the relationship, but over the course of working together. If you want accountability and guidance, a financial advisor can be there for that and to help with some of the heavy lifting.

1) The Budget
This is the starting place for approaching many changes in your financial life. We simply need to know:
– What is coming in (income)?
– Where is my money going?

There are many ways to approach budgeting, some like to print out bank statements and highlight and go through line by line… others will do it electronically. I recommend doing something that you will actually finish. Do whatever works for you!

Split your expenses up – Fixed Expenses & Discretionary Expenses
Fixed – these are the primary and ongoing responsibilities that you might have. April is likely one of the best months in recent history that we have a forced cut back on many discretionary expenses. We didn’t have restaurants open and unless you were buying a ton online, you couldn’t just go to the store.

A lot of the time just the activity of going through your expenses allows for the light bulb to go off and every future transaction will go back to those mental notes that you made during this exercise. You might even spot some errors or auto payments that you should cancel!

– Google Sheets Budget Worksheet

Building out a budget

2) Safety Net/ Emergency Reserve: We all hear about it and often are told to “save for a rainy day” or if we work together – You hear us recommend having at least 3-6 months of fixed expenses in cash.

The pandemic has shown us all exactly why this advice is given and highlights many jobs/positions that were assumed to be untouchable or “secure”, are in-fact fragile. The unexpected will happen again in our lifetimes. Being prepared with 3 months of fixed living expenses gives you time, it provides you with the ability to make more rational decisions and it gives you confidence.

For those that have trouble saving, we often recommend saving into an investment account. We do this because the monthly savings is something that we setup through an advisor and has to be turned off through an advisor. Cash transfers happen through an advisor…..that extra layer is just enough to keep you saving and to not stop it when things get a little tight those first couple of months.

Out of reach

If you want help with these things – please schedule a meeting HERE

Some great articles that dive in deeper:

Part 2 of 3 will be focusing on the macro implications of everything that has been done to ease the impact of the lock down and what potentially things look like as we recover. In addition to the macro discussion, we will discuss reviewing your personal insurance and how to approach debt.

– Greg & Russell