You & The Start
One of the challenges and potentialities of living in an individualistic culture is that everything may reside on the individual. We have achieved some of the highest levels of individual expression, personal freedoms and a real sense of sovereignty. With this comes the full weight of that responsibility.
“We are on our own” 😀 and “we are on our own” 😬.
The more we assert individuality the more our systems are inclined to oblige and move further away from us. In the realm of money and financial matters, we have seen that to be the clear.
Yet, in our individuality, we are keenly aware that we are not alone, that we are not free agents independently operating, and that we are bound to some communal structures that enable us all the hopeful opportunity to succeed. Each of us has a profound responsibility to ourself and to those we are connected to.
As individuals, we have inherited a major financial crisis, perhaps one of the most challenging and ethically alarming ever. This has not been done entirely to us as we have been willing participants for much of what has happened over the past 50 years. On one hand, we have not been forced to buy every new product Apple produces and yet we also are unable to function in society without keeping up. All of this leads to a section on individual responsibility and one that I personally find to be the most challenging to write.
It is quite true that three of the key financial metrics for personal financial success (no debt, high savings and home ownership) are way off from what is ideal. Debt is high, savings are low and home ownership is declining rapidly. This is why everyone from me and other financial advisors and the financial media personalities preach similar methods. It’s nothing new and it is nothing a single guru or advisor can claim as proprietary in way. It simply is the basics.
So what are we to do given this upside down nature of our basic financial equation?
We simply cannot put the genie back in the bottle and reduce everything back to 1970’s levels. That would be its own type of catastrophe far worse than the current one we are living in. It is also certain that we cannot simply point the finger at the 5 social structures and absolve ourselves of responsibility. That would be our undoing as well given our current operating within them and our dependence upon them for individual and social progress.
You have inherited a financial crisis and you have inherited financial opportunities like never before. It may not be building the next Amazon but opportunity is available to make shifts and play a different financial game than the one we inherited and the one we were taught.
Start.
When is the best time to start planning?
Probably… yesterday.
I say that not to make you feel bad or to add any further ‘financial guilt’ to what we already feel. I say yesterday to emphasize what is known as ‘the cost of waiting.’ Every day of delay in beginning to look seriously at this aspect of your future life means it will only be that much more challenging to change course.
Most people wait to be in a “better” financial spot before starting. This does not work and does not exist. I cannot stress this fact enough - TIME is the greatest variable in relation to money. To wait is to intentionally choose to make it more challenging on yourself.
Meet with a Pro.
If starting is taking a first step, meeting with a financial professional is the second. I mean an actual person. Not a robot investor. Not an online algorithm. This hurdle is one that is not easily jumped over and the majority of people never do it. One of the most recent number showed that less than 25% of people ever meet with a financial professional of any kind. Of that 25%, the majority did not decide to do it until they started making over a 6-figure income.
This stat reveals some overarching myths that must be overcome. The myths of “not having enough money” or “not being where we’d like to be” or “we have nothing to invest” prevents people from pursuing any sort of professional. This makes perfect sense given the amount of guilt and shame that is associated with money in our society. We have a financial psychology built on appearances and comparisons to others that leads us to feel bad about where we are. More than that, the idea of revealing our financial matters to anyone is likely to amplify that!
None of us wants to go to someone for guidance only to hear that we suck.
But what if that is not the outcome?
What if instead of making you feel like crap you are helped forward, encouraged and given the support you’ve been looking for? And as a result, you are better off and your anxiety around money is not as high. That is the reframe we need.
It can be confusing to understand licenses, credentials, fees, commissions, banks, investments firms and life insurance companies. Then there are people able to provide financial advice without licenses or regulation of any sort.
How are we to make sense of it?!
If you’re unsure where to turn or who to go to start with these available resources. You are not obligated to use any of these people or their products but they are there to be utilized. Don’t feel ‘bad’ for taking up their time either. It is part of our profession to provide sound advice and the majority of us are good natured and truly want to help people.
Please go to a professional with any sort of license and not online, not tik tok and not to a one size fits all box sold by a guru.
More than likely, the bank you already go to has someone that is licensed to do investments and provide financial direction for the clients of the bank. You can begin with the simple inquiry, “I’m concerned about my retirement and have some planning questions.” If this service is not provided by your bank, go to a big national brand bank.
The other place I recommend turning to is to request a meeting with an agent/advisor from a large mutual life insurance company. This is a second free planning resource. Many life insurance professionals have the licenses that are needed to do most of the financial planning you require.
What if you don’t trust life insurance companies? Fair enough.
You may also utilize me or search for someone like me that does financial consultations and planning for people.
Meeting with a professional in the financial industry has two significant benefits that their knowledge can provide. Benefit number one is that they now shoulder a large portion of the financial anxiety load for you. This load is in knowing how the industry works, which financial vehicles accomplish which goals, they devote much needed time to your financial situation and they can give direction that you may not have had previous.
My theory is that the knowledge and time is at the heart of much of our financial anxiety so wisely share that burden with someone else.
Accountability is the great second benefit. A professional is there to make sure you follow through to your goal or help pivot if the aim becomes different. They are also there to help you not make a poor decision when things are down. It is proven that those with an advisor average a greater return than those that do not use one. The studies show that the reason for this is more about helping people stay on course more than any investment advice or stock picks.
Some of you may want to start getting a handle on things for yourself. That is perfectly fine to do.
Get an estimate of your social security income. You can do this by setting up an account on ssa.gov. No one knows exactly what the condition of social security will be in 20-30 years but there will be some sort of benefit despite predictions it will have no more money it very soon. A program like this is too important to go away and each of us has been faithfully contributing to it our entire working years.
Take an inventory of what you currently have saved in the bank, in investments and/or cash value life insurance, in retirement accounts like IRAs and a 401k and if you have any home equity. This is helpful in knowing what you are building. You would be surprised by the number of people with “orphan” accounts and money they have saved but have no idea where it is at.
Now you can start to ask yourself that all important question.
“If I were to stop working today, how would I passively make $5,000/month?”
How much money would you need to have saved to have the same income you have today?
Current Income X 25 = your number
All of this can help to give you a start.