Financial Planners Unite!
The World Needs Us!
I recently read a study done by the Harvard Business review where they tracked the spending habits of 235 U.S households for a year. Their findings were not surprising. These 235 households had tremendous financial vulnerability in cash flow and spending.
“Read the full article here” (not endorsed by IFS)
According to the study: “Income inequality in the United States is growing, but the most common economic statistics hide a significant portion of Americans’ financial instability by drawing on annual aggregates of income and spending. Annual numbers can hide fluctuations that determine whether families have trouble paying bills or making important investments at a given moment”
“Track your cash flow, watch your spending and most importantly save save save!” -Can be heard in every financial planning meeting.
“Live below your means, pay yourself first”-is our battle cry!
This study verifies all that we are constantly preaching and Financial Planners are on the fronts lines trying to help people with this every day.
More from the article:
“Volatile income and spending needs are not problems in themselves. When a business, rather than a household, faces such volatility, it responds by building up working capital. Many people can do the equivalent in household terms: They plan, save, rely on family wealth, and use credit and insurance. But the challenge for a growing number of Americans is that they have insufficient ways to cope with the ups and downs. For households, just as for businesses with shaky cash flows, effective ways to cope with the ups and downs are least available to those who need them the most.”
This a major challenge. Building up cash reserves is very difficult for some people. And it’s no wonder why.
We are all constantly bombarded with opportunities to spend money.
We can buy things online, on our phones, on the TV, in an actual store…Someone is always grabbing at our wallets…
Because of this, doing proper financial planning is more important now than ever before.
Financial Planning is Our Super Power
By building a proper plan you can build a wall around your wallet. Or shoot laser beams out of your eyes or grow claws out of your hands…whatever your super power preference is.
How? Why?
The bottom line – because you will know what your future will cost. And to a rational person, that’s all it takes.
How much do you have to save to retire?
How much do you have to save to send your kids to college?
How much do you have to save to buy your vacation home?
How much money do you need to have in the bank in case of emergency?
and how much money do you need for whatever other goals/objectives/dreams you may have?.
The power of knowing how much you have to save to accomplish all of this is liberating. You might think its restricting, but I have seen it firsthand.
I have seen people transform from spending machines to saving animals. All it took was a plan, a roadmap and most importantly a TARGET.
Not buying that shirt, not going out for dinner again, without any justification, causes people to lose their minds.
But give them a purpose –(to have enough money to do X) WATCH OUT!
So, while this study is scary to read, as it’s my quest to help as many people as possible have financial security, I know all is not lost. There is an army of Financial Planners out there looking to help!
As always, you can consult with me to discuss your current situation.
Look for future posts on the best ways to manage your money and check out a financial planning poem I wrote.
Lastly click here to sign up for all great stuff The Art of Financial Planning has to offer!
Thanks for stopping by and I hope you achieve financial success
