1.Its’ not about the money… it’s what the money allowsyou to do.
Mindy Gasthalter:Money is a tool. It gives us freedom and flexibility and allows us to make choices. For example, money allows us to make gifts to our children while we are alive to see them enjoy it, rather than wait until we are no longer here. Money allows us to make decisions about work, and to move on to another job if the one we have no longer suits us. We can help our grandchildren go to college, or we can make a difference in the world by giving to charities and organizations that are important to us.
Money gives us freedom and peace of mind, but it is not an end in itself.
2. Small changes result in big gains.
Barbara Ristow:There’s one financial planning concept that I find myself using again and again in everyday life: Increasing savings by a small amount can have a dramatic impact on your long term growth.
I use that same idea when setting my running goals for the year. My tracking spreadsheet shows the total miles I plan to run, broken down by week and day. When I increase my total miles for the year, I look at the incremental increase required for each run to see if the goal is realistic.
3. Roxanne Fleszar: If it sounds too good to be true, it probably is.
Investment firms may employ cold calls, emails, newsletters and seminars etc. to entice you to investwith them. While most firms are reputable, watch out if they tell you how much they can earn. No one can predict the future so how could they promise a 12% annual return if you invest in their real estate deal? Or how can they assure you of a 12 to 15% annual return on a stock portfolio? Unfortunately, we read about investors who lose it all in these types of “assured” investments often. (Madoff investors obviously bought his story and did not verify the holdings on their statements for many years).
First, work with an advisor who will tell you upfront that they cannot assure you of an expected return…that is the simple truth. Second, it is incumbent on you to choose an advisor and their firm that can explain the investment methodology, the fee structure and the services they offer in understandable terms. Note, if your advisor is a fiduciary they have to act with your best interests in mind. So don’t be afraid to ask the question, “Are you a fiduciary”? Third, employ the “gut check”. Are you comfortable discussing your financial affairs with this person (s)? Finding a trusted advisor can be very beneficial to your long term financial well-being.
4. Practice ‘drive-thru’ communication.
Deb Kriebel:Follow the McDonald’s drive-thru lesson: When you’re listening carefully to someone, always repeat what you just heard the person say. Sometimes what you hear isnot what the person thinks he or she said (or vice versa).
By simply repeating what you hear, you can clarify what the person really said or intended to say.
5. In decision-making, focus on consistency rather than perfection.
Jake Mason:Financial planning has taught me a straightforward process for making smart decisions:
1. Do your research (or get assistance from a professional).
2. Understand the pros and cons (risks and rewards).
3. Prioritize the pros and cons.
4. Make the decision that best balances the two.
If new information later emerges that makes you second guess your decision, try not to obsess over it. Remember that consistently making smart decisions will lead to much better overall results, even if there are occasional mistakes along the way.
6. Always be flexible.
Solon Vlasto:In financial planning there are a number of areas where we cannot predict exactlywhat willhappen. For instance, we have no sure way of knowing how the market will perform, or what tax laws will change, or how healthy we’ll be in the future. We plan around these uncertainties and do what we can to control as much as possible, but we know we’ll have to make adjustments in the future. No matter how much preparation we do, we always need to remain flexible.
The same is true in daily life. Imagine planning a vacation: We research where to stay, what flights fit our schedule, even where to eat – and we often include some alternatives in case an option is unavailable. But despite our best efforts, there will be inevitable hiccups during the trip. That’s when it’s time to let the unexpected play out and try to make it work for you. The fact is, you just can’t plan for every eventuality.
7. Make no major decisions or life commitments during your first year of retirement.
David Kauffman:Your first year of retirement is an important transition period, and you have to ease into it before making additional life changes. Spend your first year getting adjusted to your new life: You’ll have fewer regular duties, you’ll be living on a fixed income, and you’ll be spending more day-to-day time with your spouse — all of these things will require an adjustment.
By the second year, most of this will have settled out. You’ll have an idea of your real budget, the suitability of your location, and how you’ll spend your days. With that done, you can begin to consider making more significant life changes.
8. You have a lot to learn (and you always will).
William Bissett:Financial planning has taught me that I have a lot to learn. Many of the clients I work with are twice my age, with long and rich life experiences. For example, the other day, one of the couples I work with told me they had $40 in the bank after they bought their first house. When the sale closed, they celebrated by going to a movie and buying popcorn. While they would be paid the next day, the couple went to bed that night with less money than what my son has in his piggy bank. (Now, of course, they have two homes, including one at the beach, and live debt-free.)
Financial planning is about creating and then following a road map to achieve your goals and aspirations. Be informed, be flexible as the need arises and enjoy the journey.
Co-Authored by Roxanne Fleszar, CFP, ChFC & the CFP’s of Pinnacle Advisory Group, Inc; Financial Resources Management Corp. is an independent affiliate of Pinnacle.
