Discipline – it’s the little things
With the summer coming to a close, school starting and everyone getting back into the swing of things in September – I think it’s impactful to focus our attention on the importance of staying disciplined to the little things is.
Good grades at the end of the school year don’t just materialize for students. They are a culmination of having the daily discipline to pay attention in class, complete homework, and practice time management to study for exams.
The NFL teams who make the playoffs every year don’t do so by accident. Every single day they are practicing, reviewing film, studying their playbook, strategizing with coaches, and creating game plans for the next opponent.
At MtM, we believe that same spirit of discipline is needed to reach your financial goals, no matter your stage of life. During your working years, it’s important to develop the daily discipline to delay instant gratification and live on less than you’re earning. This mindset allows you to save and invest a regular amount every month towards your future financial goals.
If you are rapidly approaching (or are already in) the retirement phase of your life, the playbook is somewhat different, but the daily practice of discipline remains. This time, it’s focused more on your cash flow and developing a plan and strategy around not running out of money.
No matter your stage of life, you just need to keep acting on the plan you’ve created and developed to reach your financial goals, as opposed to reacting to outside forces like the market, current events, or a new investment fad – just to name a few. It sounds pretty simple and straightforward, but that isn’t the case for most people. It’s often difficult to sit down and quantify those goals and develop a plan and strategy tailored around them.
That’s why, here at MtM, we feel it’s important for most people to have a trusted financial advisor who can help you along the way to stay disciplined and on track with your goals. We certainly understand life happens and a lot can get in the way to derail your plans. Having someone to keep you accountable and focused only increases your probability of achieving those goals.
“Somebody’s sitting in the shade today because someone planted a tree a long time ago.”
– Warren Buffet
Emergency Fund and Cash Reserves
I’ve recently had several conversations with folks about “how much to have in their checking/savings accounts for emergencies?” Of course, this question is relative to each person’s specific financial situation, but I wanted to cover some general rules of thumb to consider.
Cash Reserves to have:
- Still working: 6-12 months of your living expenses pending lifestyle and cash flow
- Retired: 1-3 years living expenses depending on overall assets accumulated, sources of guaranteed income (Social Security, pensions, etc.) and monthly spending
- Major Purchase: Any lump sum you will need for a purchase in the next 3 years. Example: $75k down payment on your future home in 2025.
Again, these are general guidelines because everyone’s comfort level and personal preference will be different. However, keep in mind the major risk of having more cash reserves than blueprinted above:
- Inflation/Purchasing Power Risk: The erosion of your purchasing power and the risk that you do not beat inflation over the long-run. To put it plainly, every year just about everything you need to buy will cost more.
Using a long-term inflation rate of 3%, someone’s monthly expenses will double in about 23.5 years. So, if you have an overabundance of cash reserves, you might have the right idea of saving money, but the wrong execution. There are most likely better alternatives to your cash reserves surplus than your bank savings, especially if your time horizon is long – and spoiler alert – everyone’s is. If you are 25 and live to 100, your expenses could double 3 times in your lifetime ($3,000 a month today could be over $27,000 a month upon your passing).
If you are sitting in short-term investments with long-term money, I would encourage you to sit down and rethink your strategy and explore alternatives that might be a better fit for your plan and financial goals.
“Inflation is taxation without legislation.” – Milton Friedman
Never Forget with Folds of Honor
This September, MtM Financial is partnering with Folds of Honor to host our 14th annual radio-thon in remembrance of 9/11. Folds of Honor provides scholarships to the families of military members fallen or disabled in the service of our country. Additionally, Folds assists the educational needs of the families of First Responders. We are very honored to partner with and support them.
The radio-thon runs from Wednesday, September 6th through Monday, September 11th. Visit our website https://www.morethanmoneyonline.com/, click the banner at the top of the page, for more details on each location of the live shows.
On September 11th, we open our More than Money World Headquarters to all who wish to remember the events of 9/11 and make a positive impact in the lives of our military veterans and their families.
You can donate in person at any of the live show locations, online or by check. I ask each of you to be generous in your donations to Folds. We need sponsors who can provide funds to match the donations of our listeners. We welcome any and all support for our efforts to care for the lives of real American heroes.
Please contact us ([email protected] or 610-746-7007) for details on Folds of Honor and how you can make a positive impact.
“On this day… 22 years ago (September 10th), 246 people went to sleep in preparation for their morning flights. 2,606 people went to sleep in preparation for work in the morning. 343 firefighters went to sleep in preparation for their morning shift. 60 police officers went to sleep in preparation for morning patrol. 8 paramedics went to sleep in preparation for the morning shift. None of them saw past 10:00 am Sept 11, 2001. In one single moment life may never be the same. As you live and enjoy the breaths you take today and tonight before you go to sleep in preparation for your life tomorrow, kiss the ones you love, snuggle a little tighter, and never take one second of your life for granted.”
Thank you for being my clients, it’s a privilege to serve you.
Until next time,
Variable annuities are long-term investments suitable for retirement funding and are subject to market fluctuations and investment risk, including the possibility of loss of principal. Annuity guarantees, including guarantees associated with benefit riders are subject to the claims-paying ability of the insurance company. Surrender charges may apply if money is withdrawn before the end of the contract.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should be relied upon when coordinated with individual professional advice. This information is not intended to be a substitute for personalized financial planning, tax planning, or legal advice.
Securities offered through The Strategic Financial Alliance Inc. (SFA), Member FINRA, SIPC. Advisory and tax services offered through MtM Financial Group, LLC which is otherwise unaffiliated with SFA. 4505 Hanoverville Road, Bethlehem, PA 18020. SFA does not provide tax or legal advice. Supervising office 888-447-2444.