The early years of starting out on your own or what we refer to as the Foundations period are exciting, stressful and filled with a great deal of uncertainty!
We have seen how these emotions can impact one’s savings and investing goals. Emotions can really steer one’s relationship with money for good or bad. These emotions often play out in various ways: creating supersavers, overspenders or overwhelmed people.
Often these patterns lead to tears of sadness, frustrations, bouts of reluctance, anxiety or great stress which forces many into procrastination or poor decision making. The worst part is that typically individuals do not seek guidance from a professional planner because they believe the focus is the dollar amount or believe fees are too high. Doubts like “Who would meet with me I only have $X” are prevalent.
Financial planners understand that you cannot amass savings or investment wealth without control of your mind, heart and wallet. Give an advisor a call, the right one will understand your situation!
The Price of Just Getting By
What happens when one lives with disregard for or is overwhelmed by their personal finances? They may find themselves with accumulated credit card, auto and other personal debt. Justifying their debt with the thinking that there is good, bad and possibly even necessary debt is a common trap. What is really going on is a lack of understanding about the high cost of interest on debt over time and an unwillingness to figure out or commit to a personal budget.
The Price of Overspending
What happens when a person habitually overspends thinking that they deserve whatever they want now and that miraculously the salary will catch up. Lots of people feel they must have things they cannot afford and get caught up with the social media influencers telling themselves they will do better next month! When this decision making becomes a pattern, it leads to more than insurmountable debt. It can ruin marriages, long-term financial security, and cost dearly in terms of interest payments, late fees and even possibly bankruptcy.
The Price of Procrastination
What happens when one does nothing or simply procrastinates? Spinning in the emotion and using it as an excuse, they miss out on valuable time and the power of compounding! They say things to themselves like “I will save more later on down the road when I am making more.” Often we meet clients who have saved well for 15 to 20 years; however, they have missed out on the power of investing. This results in 40-year-olds who have spent sparingly and saved well, but still find themselves “behind”. At this point, they will need to make up for lost time by either taking on more risk in their investment allocation or saving greater sums to achieve a desired nest egg. Time is no longer on their side in the formula of wealth accumulation.
Breaking Bad Habits?
Identify the source of this emotion; and then, take serious inventory of who you are, what you want to accomplish and what resources are at hand. At WPC, we do this every day. Schedule a Discovery Meeting where together we will uncover what is most worrisome to you. And find answers to the question – Why do I feel this way and act like this when it comes to money?
After your emotions are in check and you understand the relationship between your head, heart and wallet, you will begin to tackle the obstacle with newfound clarity and confidence!
Here are some common situations we encounter with our next generation clients…
Having Little to Nothing Saved because of a Lack of a Spending or Savings Plan
Can’t figure out where all of your money is going? Frustrated with yourself, because you make a good salary but don’t seem to have as much in the bank or 401(k) plan as you feel you should. You want to buy a house but can’t seem to accumulate the down payment? Are you worried about the family security if something happened to you or your spouse.
Let us help you put a plan into action and coach you how to:
- Know and track your net worth
- Build an emergency fund
- Define your short- and long-term goals
- Understand your investment allocation
- Analyze your life insurance needs
- Understand the impact of taxes
Once you have a simple financial foundation in place, you can build upwards funding college educations, paying down your mortgage, and saving for retirement!
Having Too Much Debt and Mismanaging Student Loan Debt
Are you worried about student loan debt or does it feel like no matter how much you pay down, you still feel trapped? How do you manage this debt without feeling the associated guilt and anxiety?
First identify the source of emotion, face it head on and remind yourself this is a current challenge and you knew this was part of the deal going into college. Taking out loans was always part of the plan and structuring a repayment schedule is now what you must do. Line up your resources; make a realistic but aggressive as possible payment schedule; realize it will take some time; and work towards the end goal. Move past the balance due and focus on the years ahead!
With an outlined repayment plan, you will feel the progress and begin building out your savings for a near-term emergency fund and ultimately your retirement savings!
One of WPC’s commitments is to teach the next generation the foundations of financial success. We want to be partners with you and your family to listen to your concerns, simplify the complex and create your ideal vision.