Category

Saving

An advisor’s four-part strategy to saving

Megan Rightnowar

Now that we are more than one month into the new decade, let’s revisit the goals that you made: going vegan, hitting the gym, attending church, sticking to your budget, etc.  As we are “adulting,” one New Year’s resolution question I got bombarded with was, “Megan, where do I put the money I am going to start saving?”

I thought this would be a good time to share the specifics of what my husband and fellow financial advisor Nick and I do for our personal finances.  Let’s dive into our four-part strategy!

Megan working with a customer.Annual Review
We sit down once a year for an annual review of our budget. Yup, that’s it.  That’s how often I recommend that my clients review theirs, too.  Money does not have to control your life, and I believe that revisiting your budget once a year is sufficient if you do it right.

Expenses
We get our pumpkin cream cold brews from Starbucks and pull out our budget sheet (see below).  We use this to outline our recurring expenses, including our mortgage, groceries (aka, takeout … your girl can’t cook!), Pure Barre, our sweetest employee, Kerigan, etc.  We then determine if there are any expenses we can eliminate, such as the gym across the street that I have not gone to once. (WHOOPS!) Next, we estimate expenses that do not occur monthly but know will happen throughout the year like hair appointments.  Lastly, we dedicate 10 percent of our income to our church and other charities – SO many people and organizations doing awesome things in our community!

Savings
Now it’s time to add our savings to the mix.  We set aside $416.67 a month to our savings account so that each year our savings grows by $5,000.  We max out our Roth IRAs and Health Savings Accounts (HSA) with monthly contributions to each.  We then put money toward our non-retirement investment account and our LIRPs (Life Insurance Retirement Plan).  As business owners, we must factor in savings for taxes each month too – shoutout to all the 1099 business owners out there!

(Fun!) Income
At the bottom of the budget sheet, we include our take-home pay and then subtract our expenses and savings.  Drum roll please (with my calculator) … we have our discretionary income, aka our FUN money!  Sometimes we may only have $20 left and other times it may be $2,000.  This is my, “Girl, get that dress!” money.  Some months my closet is growing while other months I ask to borrow a dress from a friend (you know who you are!).  Because we have done the hard part first, we have no regrets, and can truly enjoy the money we have earned.

Now that you know our process, let’s get back to you.  Take a deep breath and start your own budget sheet.  Make a commitment to saving so you can have some FUN!  Need help with the savings piece?  Holla at your girl.

Monthly Budget WorksheetSecurities and investment advisory services offered through Royal Alliance Associates, Inc. (RAA), member FINRA/SIPC. RAA is separately owned and other entities and/or marketing names, products or services referenced here are independent of RAA.

My Biggest Takeaway from the Government Shutdown

Couple saving money

I felt horrible for the federal employees and their families who experienced severe financial challenges as a result of going without pay for a month. How stressful to be concerned about trying to cover basic needs and not knowing how long it would be until the next paycheck would arrive. I have tremendous empathy for these families. As a financial advisor, my biggest professional takeaway is the need for an increased focus on financial education and wellness in our country.

I grew up fortunate to have been taught the value and importance of saving money for a rainy day and for building long-term financial security. My father repeatedly preached the value of saving money for as long as I can remember. Far back in my early 20s, when my wife and I combined to make very little money, we made sure the bank continued to grow for the “what if” scenario and that retirement was funded for long-term security. I have built a career out of advising people on their finances and investments, and I believe the national experience of the last six weeks screams for a need to prioritize financial health in the U.S.

How do we do this? I believe financial wellness should become a standard employee benefit with employers receiving a tax credit incentive to help with funding this employee benefit. Public and private schools need to have basic financial education for students starting in preschool. Finally, there needs to be public service announcements educating the public on financial wellness.

A financially well person is a better employee and in general a more productive member of society. The government shutdown should be a tipping point for a national conversation and action on financial wellness.

What to Teach Your Young Child About Money – Sean Savage

Financial Advisor, Sean Savage offers some great advice to young families on the importance of encouraging your kids to form good habits in regards to savings and investing. Here is his first in a series of articles published S

Parents cannot delegate financial lessons for our children to anyone else. Teach your children the importance of saving and investing for the future before poor habits are formed. I was fortunate to learn from my parents the discipline of saving money at a young age which put me on the path to make financial advising my profession. My wife Carolyn and I have six children ages 2-22. The following are a few simple ways I teach financial responsibility to our three young daughters (age 6, 6, & 9).

  • Lead by Example – If you want your child to be a good saver, be a good saver yourself. Kids will model the behaviors they observe at home. Talk to your children about the importance of saving money for the future. This does not mean saving for a specific purpose, but saving with the idea of accumulating funds to invest.
  • Keep it Simple – The most important financial concept for a child under the age of 10 to learn is the importance of saving money. It’s something you can teach before they learn how to read. As your children earn money through chores, achievement, and gifts, encourage them save in their piggy bank and, ultimately, the real bank. Enthusiastically celebrate their savings success so they feel good about their behavior.
  • Bank Accounts – Each child should have a bank account by the time they are 5 years old. We make a big deal out of organizing their money and taking it to the bank for deposit. About every 2 months, I load the kids in the car for a Saturday morning trip to the bank. Each of them goes to the counter to deposit their money, get an update on their account balance and, of course, pick out a sucker. A small percent of the money is held back and used to pick out a toy as an immediate reward for saving.
  • Drop a Hint about Investing – I introduce simple ideas about investing and why it is important to eventually transition money from the bank to investments. Understanding investing in terms of owning part of a company and getting paid when people buy things from that company is as complex as you should be at this age.

Planting the seeds of financial discipline at a very young age is good parenting. The education must continue as your child becomes older and the message needs to change at each age bracket.

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