Did the recent 35-day partial government shutdown affect you or someone you know? It’s quite possible, considering it forced 800,000 federal workers to miss paychecks and hurt many small businesses. And since the three-week spending bill expires soon, there could be even more financial repercussions.
These recent circumstances certainly give reason to pause and wonder: are you prepared for a financial shutdown in your life? If that question feels too broad, what about this one: if you were in a serious accident and had to miss work, how long would your current financial situation carry you? 35 days? 6 months?
This is about more than just creating an emergency fund – though you should, since it’s widely touted 40% of Americans can’t cover a $400 emergency. And it’s not just about having proper insurance coverage, though that’s certainly important, too. The bigger issue is thoughtfully creating a financial plan and knowing where to turn if the bottom falls out.
As a plan sponsor, you might feel the pieces in your plan are well-aligned. That’s positive news! But can the same be said for your employees? If they can’t currently address a $400 bill, how would they handle a total shutdown if it occurred? You can help prepare your team by proactively providing education and wellness opportunities, offering useful resources that speak to real situations, and taking the fear out of financial conversations.
Employees don’t get off the hook that easily, though – everyone is ultimately responsible for themselves. Consider the last time you gave yourself a financial checkup. Start with a budget you’ll actually follow, build up your emergency fund, and pay off debt. Then push deeper – ask for help to balance college funding, utilize a health savings account, max out your retirement account options, and optimize tax strategies.
The Shepherd Financial team is always only a phone call away. Whether you’re currently in a financial crisis or want to create a plan to see you through one, we want to help.
It’s easy to see why January is considered the start of new things – there’s a fresh calendar year and a plethora of resolutions get shouted from the rooftops. This feels like a chance to hit the reset button in many areas of life. At this point, you can see the race has a clearly-defined finish line – and it’s 12 months away. Of course, for some people, January is really right in the middle of the action. Maybe you’re gearing up for your second semester and looking at a somewhat shorter distance to the finish line.
No matter the length of your particular race, though, it’s helpful to have a good idea of what you’re getting into. As runners will tell you, there is a vast difference between sprinting 100 meters and grinding out a marathon. From race preparation and strategy to gauging your pace along the way, you will benefit from having a plan in place before your feet ever leave the starting line. At Shepherd Financial, we believe financial wellness is one important piece of whole-life wellness. So while we hope financial goals are part of your plan (and want to help you set and achieve those goals), don’t stop there. Pause and think for a moment about how financial well-being could positively impact the rest of your life. Do you want to pay off debt? Save more for retirement? Increase your charitable giving? Send your kids to college? Travel more? We can help you create a plan and work toward those goals.
It’s also important to realize not all runners are built the same. If you’re a sprinter, don’t force yourself into strapping on a hydration belt to run 26.2 miles. Set yourself up for success by running your race. You may find it useful to set smaller goals with shorter timelines. We believe each of our clients has a unique lens with which they see the world. Getting to know you, as well as your strengths and weaknesses, is part of our process – if we craft a financial plan that doesn’t fit your specific needs, it doesn’t make sense to pursue it.
Don’t forget your running buddies! When you head out to pound the pavement for a few hours, it’s nice to know you have a support system by your side. Think through what you want to accomplish, then find the teammates who will encourage you to get there. Because our focus is creating retirement-ready individuals, our team is constantly producing new tools and educational resources. We love finding customized solutions for retirement plan sponsors, participants, and individuals.
To our friends, family, and clients in Houston, know we are thinking of you.
Ten years ago, our country was on the cusp of a terrible recession. The housing market crashed, unemployment spiked, and American households lost trillions of dollars in net worth. Considering we are currently approaching 100 months of economic expansion, are we about to see another downturn? It’s the question market analysts keep asking.
However, retirement planning takes a backseat when faced with immediate issues like finding safe housing and bottled water. It’s completely understandable to feel frustrated, confused, and scared by the world these days. In fact, those reactions are a good sign of your humanity. But there are times when these emotions can immobilize us. We don’t know what to do, how to help, or where to turn.
Doing nothing, though, produces nothing – so how do we move forward? Start by choosing to believe small actions can create avalanches – history has proven this over and over. When you are feeling overwhelmed, consider these seemingly small actions:
Fear does its best work in the dark. So take an honest look at the problems in your life and name them. Understanding what you’re facing is important; turning a blind eye tends to increase the chaos rather than help defeat it.
Equip yourself. Gather resources, knowledge, and the people you need by your side. Be humble enough to ask questions, make connections, and invest time into understanding the roots of the issue. It’s much easier to fight a battle when you are adequately prepared.
Find your lane. You can’t solve every problem – that’s like using a sprinkler to stop a forest fire. But you can figure out where your strengths lie; investing deeply into one thing can then produce a powerful fire hose effect. And remember that each person is unique, so it’s ok your purpose and passion happen to be different than someone else’s.
And finally, persist. I know that sounds unfathomable when you’re trying to take down a mountain with a tiny chisel. But enough little chips over time matter. Your small actions will create an avalanche.
Whether you’re knee deep in water and not sure how to remove it or knee deep in debt and don’t know how to budget, remember there are people who are trained to help. Make the phone call. Accept advice. Take one small action.
I’m not sure how it happened, but summer disappeared. Oh, the calendar may say it officially lasts until September 22nd, but every kid in Indiana will tell you: it’s over. Stores are packed full with back-to-school supplies, teachers are perfecting their classroom decor, and students are simultaneously excited and horrified at the thought of starting school in just a few days.
Here in the financial world, we’re probably more attuned to numbers than other people, so when we think about back-to-school time, it makes sense we’d immediately start doing the math. And in case you were not aware, having children can be expensive. Particularly when their school supply list seems to grow about a foot longer every year!
Instead of panicking, though, aim for making the back-to-school transition as smooth as possible, especially where your finances are concerned. Depending on the age and interest level of your kids, this can also be a great time to have financial conversations as a family.
To get the most bang for your buck this fall, try the following:
· Make a list of all supplies, clothes, and any other items your kids will need.
· Go through your house and determine how many of these items your family already has on hand, then update your supply list.
· Create a back-to-school budget based on this list, estimating how much money you will need to spend. Make sure your kids understand the limits they will have and encourage them to be creative in their choices.
· Highlight the priciest items (iPads, graphing calculators, backpacks, etc.) and focus on finding the best deals for them. This will involve doing a bit of research to see if there are coupons, rebates, or online-only deals to lower your costs.
· Many stores feature special sales on their social media sites, so it may be in your interest to follow them on Facebook, Twitter, or Instagram.
· If you can hold off on some supplies, wait until after the back-to-school season is over to catch some highly marked down items.
As your kids head back to school, focus on your own financial education. Learning how to make and successfully follow a budget for a specific event can give you great confidence in the ability to budget in day-to-day life. And mastering budgeting skills is the first step on the road to financial wellness.
If you need help learning to budget, want icebreakers to start financial conversations with your family, or need to figure out how to manage your debt, contact our team at Shepherd Financial for free resources and assistance.
A financial health check? Uh oh. Even the words can evoke feelings of dread. But here we are, midway through 2017. So…how are you doing?
I can practically see the wheels turning in your head:
That’s right. I was going to make changes. Make a budget, pay off debt, save more, dance my way into financial freedom…So what happened?!
I know how you feel. It’s very easy to get sidetracked from our well-intentioned goals. Life just seems to get in the way at times, doesn’t it? If you’ve fallen off the financial wellness wagon – or are barely hanging on by a thread – here are a few ideas to help you get back on board.
1. Take a deep breath (seriously – it’ll reduce your anxiety) and work your way through the list, one step at a time.
2. Think about the past six months. Have you experienced any important life changes? These may impact the goals you originally set. Be willing to reframe your goals based on your current circumstances or set entirely new ones, if necessary. Some examples:
· You made a job transition and need to determine what to do with your current retirement plan account balance
· You had a child and need to update your will
· Your spouse wants to be a stay-at-home parent, so your income stream is going to be lower
3. Pull out that budget sheet you crafted so carefully in January. Open up your checkbook or bank statements and start doing the math. Do you see any problem areas? Are you spending more than you earn? The second you start attuning to the issues, the more likely you are to actually deal with them.
4. Start looking at the other goals you set. How’s the debt repayment plan coming? Has it been derailed by a bad spending habit that’s popped up? Brainstorm ways you might be able to curb it.
5. Ask for help. Find a friend to be your financial accountability partner or make an appointment with a financial planner. There is power in a community of people encouraging you to take positive steps forward.
There are many similarities between portfolio-building and your annual March Madness bracket-building. For example, if you’re a fan of reading the small print in financial documents, you’ve likely seen something along these lines: “Past performance is no guarantee of future results.” (And you probably agree with that statement wholeheartedly if you’re prone to picking Cinderella teams like the Fort Wayne Mastodons or the Akron Zips.) But for both portfolios and bracketology, there can be a method to the madness. Consider these three steps:
Assess your risk tolerance
It’s important to remember all of your decisions regarding investing involve some degree of risk. You will need to evaluate these risks and determine if you want to take a more conservative or aggressive approach. An aggressive investor – having a high tolerance for market risk – understands the uncertain nature of markets and is willing to tolerate short-term losses in value to try and achieve better long-term results. Aggressive investors should understand the risk of loss with their approach. A conservative investor – having a lower tolerance for market risk – may favor investments that are more geared toward the stability and preservation of the original investment. Conservative investors should understand they face different kinds of risk with their approach, such as lower returns or not keeping up with inflation.
In bracket-building, understanding your risk tolerance can help you decide if it’s in your best interest to choose teams based on rank, school history, mascot name, or uniform color. The number of brackets you’re building may also affect your risk tolerance – perhaps you can afford to be very aggressive in one bracket while making more conservative selections in another.
Consider your asset allocation
In a portfolio, this is a strategy that helps you balance risk and reward depending on your chosen percentage of stocks, bonds, and cash. If you’re not sure where to start, there are many helpful investor questionnaires and online calculators to lead you through the risk tolerance and asset allocation determination process.
For your bracket, you might decide to allocate 60% of your picks on top-ranked schools, 20% on red uniforms, and 20% on teams with at least four syllables in their names. (Hey, no judgment here. It’s your allocation.)
Choose the right investments and rebalance periodically
Once you have assessed your risk tolerance and asset allocation, it’s time to select the investments to fit the strategy. Remembering not all bonds and stocks are the same, consider both the quality and investment objective of the funds you choose. Ensure the stocks satisfy your desired level of risk by looking at their category, objective, and where they invest geographically. When looking at bond funds, pay attention to maturity, yield, bond type and credit rating, and the general interest-rate environment. If you don’t feel confident in your ability to analyze these funds, ask for help. Diligent financial advisors should have carefully researched and developed models to recommend based on your particular risk tolerance and asset allocation – that’s why we’re here.
And when it comes to your bracket picks, stick to your selection strategy. While it’s thrilling to root for upsets, remember: a number 16 seed has not yet beaten a number 1 seed in the men’s tournament. Additionally, you may have to rebalance your asset allocation over time, because you certainly face the possibility of running out of four-syllable teams.
Following a thoughtful process can take some of the stress out of building your portfolio and March Madness bracket. Due to buzzer beaters, though, you’ll probably always have a little stress during the tournament. Let’s hope you picked the winner!
Asset allocation and diversification do not ensure a profit or guarantee against a loss. Past performance is no guarantee of future results.