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Financial Vows for Money-Savvy Couples

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February is a good time to celebrate your relationship with your significant other—and renew your commitment to your mutual financial success. Here are some ideas to say “I do” to this month.

  • Vow to protect yourselves from emergencies

During the government shutdown early this year we learned that 40% of Americans don’t have enough money set aside to handle even a $400 emergency. Whether you determine you want an amount equal to six months’ or 12 months’ worth of living expenses, vow to set aside an emergency fund in liquid, readily-accessible accounts so that you have adequate cash on hand should you need it.

  • Vow to protect your family finances by shifting risk

Along the same lines as an emergency fund, work with a financial advisor to determine how much risk you both face from other potentially life-altering events. What would happen if one of you suddenly became unable to work or function due to a disability? What if you required nursing care? What if one of you suddenly passed away?

Insurance companies offer policies designed to shift many of life’s unexpected financial risks away from your family. Be sure to compare policies offered by multiple highly-rated insurance companies to help ensure you get the best coverage for your premium dollar.

  • Vow to put an estate plan in place (or update your current plan)

If one or both of you have children from a previous marriage, make sure all of your documents are in order so that family squabbling is reduced to a minimum if one of you predeceases the other. Most experts say that you should have at least some of your assets transfer immediately lest one of you remarries or other circumstances change and money that you expected would pass to your biological children gets spent by an unintended party.

Similarly, did you know that the beneficiaries you designate on retirement accounts and insurance policies and similar accounts take precedence over your wills and/or trusts? If you haven’t looked at that old 401(k) for decades, chances are that your ex-spouse might inherit that money regardless of your true wishes or life circumstances at the time of your death.

All of your documents need to be reviewed on a regular basis—let’s get together as soon as possible.

  • Vow to make saving and retirement planning a priority for you both

Even though retirement accounts are held separately, it’s important to have a shared vision about your retirement together. Be sure to meet with your retirement planner or financial advisor to discuss your future goals and time horizon. Other financial goals should also be prioritized so that you’re both on the same page, like saving up for the kids’ college expenses or the daughters’ weddings.

  • Vow not to keep secrets about money and keep the communication flowing

Hopefully you’ve been honest from the beginning of your relationship about your level of debt, how you handle sticking to a budget, or whether or not you have a low credit score. Understanding each other’s financial position and money habits is the first part of being able to take control of your finances together in order to achieve mutual goals as a couple.

And remember that it’s important that both of you understands your overall combined financial picture, even if one of you pays the bills or the other takes the lead role in investing. Don’t delegate this, make it a point to stay in the loop with financial decisions. Even if you have separate bank accounts to handle the day-to-day finances, you both need to understand where you’re at and where you’re headed when it comes to your financial future as a couple, especially your plan for retirement.

Even if it doesn’t seem exactly romantic, talking about money can make your relationship a more perfect union for the long-term. Aiming “for richer” rather than “for poorer” together can strengthen your matrimonial bonds.

We’re here to help. Call us at Bulwark Capital Management in Silverdale, Washington at 253.509.0395.

 

Sources:
CNN, “40% of Americans can’t cover a $400 emergency expense.” https://money.cnn.com/2018/05/22/pf/emergency-expenses-household-finances/index.html (accessed February 11, 2019).
Forbes, “6 Financial Vows Couples Should Take To Heart.” https://www.forbes.com/sites/judithward/2019/01/23/6-financial-vows-couples-should-take-to-heart/?ss=personalfinance#1a8149385241 (accessed February 11, 2019).

 

Managing Your Finances

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We work with dozens of people to help them create retirement plans. But in order to get to a successful retirement, there are thousands of small decisions along the way. Like, should you drive through your local coffee place and grab a latte this morning? Go with the office gang for lunch at that little bistro across the street, which usually costs you around $15? Should you order pizza delivered for dinner tonight because you didn’t go to the grocery store yesterday? Grab that new shirt because it’s 50% off?

Sticking to a budget is the beginning of mastering your money. But why do so many of us find it difficult?

A recent article in Forbes magazine may hold some clues as well as ideas about how to take control of your discretionary expenses. The author, Thomas Dichter, advocates writing every expenditure down, to the penny, as well as calculating how well you met your budget on an annual basis. (He usually comes within 1% of his goal, and many times comes in under, which he attributes to his meticulous record-keeping.)

Mr. Dichter explains how he started the process:

I forced myself to write down what I had spent under each category. After a week my inner accountant had emerged and I kept at it. By month six I noticed something magical: the act of tracking expenses had a feedback effect on my spending. My expenses in the categories that all of us tend to ignore (take-out food and coffee, a candy bar at a vending machine, impulse buying a shirt, or a magazine at the check out line, etc.) were going down, not because I wanted to deny myself, but because I could see what was happening.

At the end of that first full year those few minutes a day of what became compulsive recording paid off. It took me about a half hour to add up each category and then total it all (a side benefit became obvious when I had to do my taxes). Then I compared that total to my take-home income for the year and saw I was ahead, for the first time in my life. I decided to do a budget for the next year, using the past year’s expenses as a guide. At the end of that year I saw I had come within 1% of my budget estimate. Passing that self-imposed test soon became an annual goal. Each year on December 31st, I see how close I’ve come to my budget estimate of twelve months earlier. Usually I come within that 1%, sometimes over but more often under.

The author goes on to say that he believes that easy access to credit, along with an economy based on consumption, contributes to the overspending problem in America. And the main excuse for resisting his simple method—“I don’t have time”—is just a cover story for other, deeper reasons. For example, he believes that some people don’t really want to know what they spend, because it might rock their feeling that “everything is okay.” Some operate on the subconscious wavelength that it’s better to risk their financial future rather than turn into some kind of accounting nerd or tightwad.

As financial advisors who work with people every single day, we are here to tell you that managing your finances is possible, and might even be easier than you think. Let’s talk. Call us at Bulwark Capital Management in Silverdale, Washington at 253.509.0395.

 

Source:
“A New Year’s Resolution To Manage Your Finances: Why Is Sticking To It So Hard?” by Thomas Dichter, Contributor, Forbes.com. https://www.forbes.com/sites/thomasdichter/2019/01/01/a-new-years-resolution-to-manage-your-finances-why-is-it-so-hard/#38ef8202106f (accessed January 14, 2019).

 

5 Tips for Setting Better New Year’s Resolutions

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If you typically give up on your goals by March, you’re not alone. Try these tips for 2019.

  1. Go ahead and set them again.

Even if you’re one of the majority of people who have set New Year’s Resolutions in the past but gave up on them within a few weeks, try again. Because there is good news about setting goals, even if you haven’t quite mastered the follow-through.

According to one study published in the Journal of Clinical Psychology, people who set New Year’s resolutions are 10 times more likely to actually change their behavior than people who don’t make these yearly goals. Tony Robbins says, “Setting goals is the first step in turning the invisible into the visible.” So go ahead and write down your objectives for 2019.

  1. Make sure you actually want what you say you want.

Some of the most common resolutions include losing weight, making better financial choices, and eating healthier. All of these sound great—if they’re what you really want. For instance, make sure losing weight is your desire, not something you read about—or a photo you compared yourself to—in a magazine.

If you typically set goals for things you think you should want, instead of what you really do want, you will not succeed because you’re not really motivated. (And frankly, who cares, because you didn’t want that stuff anyway.) Dig deep this year to try to find out what your deepest desires are, and why.

  1. Replace a bad habit with a good habit.

At the end of the day, goals are one thing, but day-to-day habits are another. An article in Psychology Today puts it this way:

“A lot of New Year’s resolutions have to do with making new habits or changing existing ones. If your resolutions are around things like eating healthier, exercising more, drinking less, quitting smoking, texting less, spending more time ‘unplugged’ or any number of other ‘automatic’ behaviors then we are talking about changing existing habits or making new habits. Habits are automatic, ‘conditioned’ responses. You get up in the morning and stop at Starbucks for a pastry and a latte. You go home at the end of work and plop down in front of the TV.”

According to the article, there are three facets necessary to changing habits. You must choose a small action, attach it to an existing habit, and make it easy to do for three to seven days in a row.

For example, “Get more exercise” is not small. “Take the stairs each morning to get to my office, not the elevator” is a small, actionable, better resolution to make. Your existing habit of walking to the elevator can be changed to walking to the stairs, and it will become a new habit within just a week of practice.

  1. Create a new “story” about yourself.

“The best (and some would say the only) way to get a large and long-term behavior change, is by changing your self-story,” according to science.

Whether you realize it or not, you make decisions based on staying true to your unconscious self-stories, and you strive to be consistent. If you have a story about yourself that you are “realistic” because of things that have knocked you down in the past, you may have a story about yourself that keeps you in a state of cynicism about your life.

You can rewrite any story you have about yourself that might be holding you back. It’s kind of like writing a script for your own movie—you are the lead character, and the movie is your life unfolding. Instead of Mr. Cynic, moping along chained to his past, you are now your own hero, Mr. Positive, who takes new actions every day to improve the lives of others based on his experiences.

“The technique of story-editing is so simple that it doesn’t seem possible that it can result in such deep and profound change. But the research shows that one re-written self-story can make all the difference.”

  1. Tell people—or not.

For some people, telling their friends and family members keeps them on-track, holding them more accountable on the path to achieving their resolutions. But if you have friends and relatives who tend to shoot holes in your dreams, or sabotage your goals in subtle or obvious ways, keep your goals to yourself.

Consider surrounding yourself with supportive people for the year, limiting communication to “small talk” with people who aren’t on board. Take notice of people who drain your energy instead of energize you, and make choices accordingly. You have the perfect right to say “no” or “yes” more often to the activities you decide to engage in, and the people you elect to spend time with.

Have we scheduled your annual review? Let’s meet and review your financial plan in light of next year’s short- and long-term objectives. Please call Bulwark Capital Management in Silverdale, Washington at 253.509.0395 or email us at invest@bulwarkcapitalmgmt.com.