August 2024 Blog Newsletter
August Captain’s Log
Make Sure to Enjoy the Road to Financial Independence
I have been blessed to have thousands of different conversations with my clients about the purpose of their money over the last nearly 20 years. All of the answers from clients to a question such as, “What is important about money to you?” are so different!
In my weekly reflection, I want to share what I believe to be true as a result of these client conversations over the years. I believe you need to enjoy the PATH to financial independence as well as reaching your financial independence. Financial independence, to me, means the point at which someone can choose not to work and instead live off their investments and other sources of income.
My belief is it’s often true that clients need to enjoy the money they are creating on the path to financial independence. Otherwise, most clients find it hard to transition to spending money on the things they enjoy in retirement once they reach financial independence. In other words, it’s difficult to go from being a hardcore saver to a spender by simply flipping a switch.
On your path to financial independence, find a few things you enjoy spending your money on and start doing them during the journey. This will make it easier to spend money on the things you enjoy when you reach retirement. For example, my family loves to go out to eat and travel. While we are building up our retirement savings towards financial independence, I feel it is important to allocate money to enjoy the process. For us, that means eating out and taking vacations.
If you allocate $250 per month to go out to eat, do it. Enjoy the process towards financial independence and the experiences along the way.
This advice assumes that you are debt-free besides the house, as I would recommend paying off consumer loans and having an emergency fund before increasing your monthly allocations to vacations and dining out for example. When you are debt-free (besides the house) and working towards financial independence, be sure to enjoy the process and find a few areas where you enjoy spending your money. Otherwise, you may not be able to enjoy the fruits of your hard work once you reach financial independence!
End of Summer is a Great Time for a Financial Check-up: Here are the Top 5 Things Retirees Should Review Mid-Year
As summer winds down, it’s the perfect opportunity for retirees to take a step back and revisit their financial goals. Conducting a mid-year financial check-up can allow you to make any necessary adjustments before the year ends. Here are five easy steps to ensure your retirement plans are right on track:
Give Your Budget a Quick Check-Up
Your budget is the foundation of your financial health, especially in retirement. Think of it as the roadmap to your financial health. Have your expenses been in line with your expectations? Identify areas where you might have overspent and look for opportunities to cut back. An effective budget is crucial for maintaining financial stability in retirement and adjusting your budget now can help you stay on track for the rest of the year and make your savings last.
Review Your Savings Accounts and Income Sources
How are your savings holding up? Check the balances in your savings and emergency accounts to ensure they can cover any unexpected expenses. If not, consider adjusting your budget to allocate more funds towards these accounts. Also, revisit your retirement income sources like Social Security, pensions, and annuities to see if they’re meeting your needs. You might find opportunities to optimize withdrawals or delay Social Security benefits for a higher payout later.
Look Back at Summer Spending
How did your summer spending go? If you built up a little debt, don’t worry—now’s the time to address it. Now is the time to address any leftover summer costs and adjust your budget to prevent similar issues next year. Planning for next summer early can help ensure you avoid financial stress during your next vacation.
Plan for Holiday Cheer
With the holiday season approaching, it’s wise to start setting aside money each month to avoid a large credit card bill in January. By planning, you can enjoy the holidays without financial stress. Allocate funds for gifts, travel, and other holiday expenses now to keep your finances merry and bright.
Review with a Financial Advisor
Before the end of the year, schedule a meeting with your financial advisor to review your retirement accounts. Discuss your 401(k), required minimum distributions (RMDs), Roth conversions, and capital gains versus losses. This is also a good time to evaluate your investment strategy and make any necessary adjustments to ensure your portfolio aligns with your risk tolerance and long-term goals. Market conditions may have shifted, so it might be necessary to rebalance your portfolio.
As a retiree, it’s important to manage risk and ensure your investments provide both growth and income. Consult with a financial advisor, like Anchor Wealth Management, if you’re unsure about any changes you should make.
Bonus Tip: Use Budgeting Tools
Consider using a budgeting app like EveryDollar.com to help manage your finances. These tools can make it easier to track your income and expenses, set savings goals, and monitor your progress throughout the year.
Taking a mid-year financial check-up can lead to significant improvements in your financial future, ensuring you enjoy a secure and fulfilling retirement. So, take a moment to review these steps and sail smoothly into the rest of the year!
By Rianna Caswell, Wealth Advisor
Learn More about Rianna and the AWM Team
Adam’s Nightstand
I recently reread The One Thing: The Surprisingly Simple Truth About Extraordinary Results by Gary Keller and Jay Papasan. I first read this book over five years ago, and it’s so good that I wanted to go back and read it again!
The book offers a simple approach to focusing on what matters most in our personal and work lives by concentrating our energy on one thing at a time. We want fewer distractions, emails, texts, and commitments, and we want more productivity from our work, a better lifestyle, greater satisfaction, and more time with family and friends.
My favorite concept in the book is the domino effect. When the right thing is set in motion, it can topple many things. Every day, line up your priorities, find the lead domino (the highest priority),
and work on it until it falls. The key is to consistently do this over time, leading to success built sequentially—one thing at a time.
A Round of Applause
On July 11th, Anchor Wealth Managment Customer Relationship Mananger, Angie Whittenburg, took and passed her Financial Paraplanner Qualified Professional exam.
The FPQP is a three – six month study course which highlights the foundational knowledge of Financial Planning.
Angie had to learn, study and pass an exam on the following planning elements, similar to the Certified Finanical Planner (CFP):
Financial Planning Process
Business Ownership, Cash Management
Time Value of Money
Insurance Types
Investment Basics & Strategies
Retirement Planning and Tax Implications
Estate Planning
If you meet with your advisor in the Rockford office, Angie will be accompanying advisors in their meetings to take notes, research information, help build and update financial plans.
Angie is the support person for Rianna Caswell and Shane Stuart. She will be the go-to for clients when their advisor is not available.
Congraulations Angie, on a truely outstanding accomplishment.