We’re not going to tell you.
You already know.
You know you should have insurance. You know you should save for retirement. You know you should limit credit cards. Here at Your Managers, we believe that customers don’t need to know their problems but instead need real workable solutions.
Saving for retirement is one these areas, and one many have heard about since they were fresh out of high school. “If only you started saving $xxxx then, what would life look like today?!”
Don’t feel bad, life does not work like this. While some are perfect savers, the vast majority of people face different life situations that force them to budget differently. So with a few years of work left, it’s perfectly normal to feel like you need to kick it up a notch and get a better understanding of your personal finances.
To help, we have put together a list of four things you can do to boost your retirement savings in your final working years.
1. Stop Being an Ostrich with Your Head in the Sand
It can feel a little ugly the first time you go through all your expenses: “Maybe we didn’t need to eat out three times a week”. But that’s ok! Just like ripping off a band-aid, doing a full audit of your finances is critical in getting to grips with them. You’re going to see some things you don’t like, but through that you will finally have an understanding of ways you can actually generate more income without giving up all the things you love!
Without an audit, we can be guilty of making assumptions. “If I stop buying coffee every day, I’ll have $xxxx more a month!
That may be true, but is it really realistic to give up 100% of your coffees? By doing an audit, you’ll find realistic expenses that you can reduce, and set realistic budgets. Instead of focusing on not drinking your coffees, you instead can set a $10.00/week budget for them.
2. Road Map Your Future
Things will change when you retire. Time goes up, income goes down, and CPP/EI contributions end.
What are you going to do?
This is a loaded question, but knowing the answer can help you plan ahead, and in turn know how much you need for retirement. Are you golfing every day, or planning to spend your time in the garden? Big worldwide trips, or small ones to visit grandchildren?
It’s important to note that your first few years of retirement will probably be your most active but that doesn’t mean that expenses will go down as you age. There is always the possibility of needing a little help here and there, and those expenses are just as important to plan. Understanding what you’ll need then will help you understand what you need to save now.
3. Automate Savings
What does pay yourself first mean?
No matter how painful, you gotta pay your bills right? Well, apply those same principles to your savings. Take a fixed percentage and bill yourself that amount each month. As long as you do it first, that money will gone and you’ll be forced to make adjustments to your current expenses.
This method can be used at any age, but nearing retirement you should think of increasing the amount you put away. Just remember that in a few years you will have the ultimate freedom and time to take on anything, so it’s ok to take it a little slow right now.
4. The Fire Drill
How often do those two words sneak into your brain? What ifs are strongly tied to memories and thoughts of younger years. What if I saved more? What if I took that job? What if I married that girl? What if we had moved sooner?
In retirement, the what-ifs associated with your finances tend to pack a stronger punch as they are not as easy to fix as they once were. Without a full-time job, you may feel at a loss for ways to pick up the slack, so proper planning is important.
An easy way to tackle this is to sit down and write out what your life would look like if you retired today. How long would the money last? What kind of things could you afford to do? What if you or your spouse was to get sick? Could you afford to support your adult children?
This exercise will not only help find things you’re missing but will also identify the things that matter most to you! Both will give you the motivation to put more money away for when the day finally comes.
Make It Happen.
Small tweaks over the course of 30 years can make an enormous impact on your retirement, but you have to make them happen! Hope is not a strategy, and the help of a Net Worth Manager to coach you can be invaluable. If you have any questions, or want to discuss how to start building your own plan, send us an email today.
Everyone who works in any company, anywhere in the world, is guilty of assuming they know what their customers need.
It’s not always intentional, and often comes from a good place. You work with customers every day, have been through many experiences, have received great reviews, and more.
Yet time and time again, we make the mistake of thinking that we know best, because accepting that you might be wrong is hard, and can bruise the ego.
Where are your priorities Mr. Advisor?
Financial advisors often fall into the trap of thinking they know best. They are experts, who are supported by industry-wide knowledge that allows them to funnel each customer into a box based on their income, number of kids, age, etc.
The result, is a service heavily based on discussing investments, tax, and insurance.
This is a missed opportunity, as per a study from MIT that looks into what clients actually want from their advisors.
View full study: https://live.cloud.api.aig.com/life/connext-fdm/download/100AicF6FGkgO9MMYvefTIwGZOHF-Esu0KvZFiQhEicAY7wfK5VVnCaVYzZ5cIUZERQqWozuDVX4mNBdCTguzuUY1g
85% of customers state they want to discuss goals and aspirations. 77% want to discuss job transitions, new careers, and retirement. 72% want to discuss future- proofing their financials, and 62% are looking for advice.
A Position of Trust
That feeling when someone is looking through your credit…
It takes a lot to open up about money. It’s a deeply personal thing, often protected, private, and stressful. As a financial planner or advisor, we forget just how much it took for your client to call you up and agree to spill their darkest secrets. Because honestly, they probably feel stupid for all the mistakes they think you’re going to see.
No retirement savings, awful credit, maxed credit cards, and even hidden wealth are money topics people don’t like to discuss. When you are brought into their lives, the level of trust often extends past that of a normal client relationship, and things can become personal. Advisors need to understand this fully, and serve their customers accordingly. As so many things are tied to financial health, you should be prepared to consult on any number of life events & factors.
It’s My Life
There is a book you could write on each of the following topics, but understanding them will help create a better and more productive relationship between a financial advisor and their client. Each of these are topics that an advisor can cover, should the client want to go over them:
Future Goals and Aspirations
Job Transitions/New Careers
Expenses for Future Care
Expenses for Future Family Care
Protection from Identity Theft
The MIT study went on to show that 40% of new clients viewed an advisor as a life coach, who could help guide them through topics that they just didn’t understand. Of course portfolio performance and service is critically important too, but so is the advisor’s professional network and personality.
Change is Coming
The internet is amazing. Long gone are the days where companies could hide things from unwitting consumers who had no choice but to place their trust in them. More than ever, the customer is the smartest person in the room and knows when they are being had!
This should not be a negative. Repeat. This is not a bad thing.
Instead, it opens an incredible realm of opportunities in supporting customers, which time and time again has shown to increase profits and retention. Learning how to be more to your customers than just “a financial advisor” will also increase your job satisfaction as you will get to be a part of real emotional wins. Nothing beats telling a client they can afford that trip to Disneyland.
Back in 2011, a new financial firm was created from this very concept. Focus on a client’s goals rather than their pockets, and everyone will be better off. For almost 10 years, Your Managers has based their whole model around the idea of a “Financial Life Coach” called a Net Worth Manager, who supports you in achieving your dreams.
If you are interested in learning more about financial planning, or want to find out if this model is best for you, send us an email today.
Well, the rat race of life has finally started to slow down.
It feels good to be able to come home to a place that is still clean, with no hockey practices to rush to, and a grocery bill that is under $100 for the first time ever.
As for your kids…they might not feel the same way.
Yes, it is time for retribution! Now they know how it feels to wake up at 3AM to dirty diapers. Their home will never be clean again, and exhaustion is peaking.
Ok, so in reality, we hate to see our kids struggle, and part of the journey in this period in your life is being able to guide and assist them through this whole new world.
Here, we have the top five things you can do to help your adult children achieve financial independence.
Talk About Credit
Much like the physical feelings of invincibility many of us feel in our teens, there is a certain assumption that any mistake can be fixed. As adults, we learn that one of the most challenging mistakes is poor credit, and the wish that we knew more about how to fix it.
When we first emerge into adulthood, the conversation is always on building credit. Get a car loan, use a credit card, and build your credit rating! The flipside of this whole situation is that for many people the opportunity to buy what they can’t afford is exciting. Need a couch? Finance it. Need a car? Finance it. Trip to Mexico? Definitely getting credit card points!
It doesn’t take long to dig a hole, and for many people, the answer is to hide. Of course that is the exact opposite of what you should do! The first step is to stop using your cards, and make sure to pay your minimum payment. Being smart with credit cards and financing is one thing that pays off long term.
Student Loan Debt
I’m going to college!
How are you going to pay for it?
Student Loans are a fantastic way for many Canadians to attain a college degree, and there is that warm safe feeling of getting a loan from our government and not a bank.
Unfortunately it’s still a loan, and that money will find its way back. Helping your kids understand loan repayments will help them decide how to best finance their college education. If possible, the goal should be to take the lowest amount possible, as extra money for living expenses can add up fast.
Despite university tuition averaging around $26,000 for a degree, many students walk away 30 – 50 thousand in debt, and with many entry-level jobs starting between $40,000 and $50,000, those repayments can feel draining.
Investments, Insurance, Interest, Taxes, Mortgage…..
There are an enormous number of topics when it comes to your financial life, and many of us get stuck on Google trying to learn what everything means. Give your kids a leg up early by letting them be involved in any number of financial topics that you feel comfortable sharing. Chances are in the next few years they will face their first loan, first deposit, and more.
You might schedule weekly meetings where you go over different topics. Try and help them understand why starting early is important, and what kind of risks come up over time.
Another great experience is including your children in some of the real-life financial examples that you go through. This all depends on how much you are comfortable sharing, but getting them involved in financing a car, or doing your taxes can help cement the importance of learning these things early.
This is a big one, and a sensitive topic, as many of us have been used to a variety of financial advisors and tend to hold significant opinions on which ones to use and their effectiveness. The key takeaway for your kids is understanding what they do, and how they contribute to your financial well-being.
It’s important that everyone learns about the different types of advisors, and how they get paid. There are many advisors who make a living putting your money in places that give them the best return. For example, advisors are often incentivized to put their clients’ money in actively managed mutual funds rather than into indexing.
The other key feature is how much of their financial planning is based on making you new money vs making the best of the money you currently have. Don’t forget that you need to keep living now, while you plan for the future.
Let Them Make Some Mistakes
It’s a hard thing to do. Knowing that you have gone through the same situations as your kids, but that they are determined to relive the mistakes you made. As parents, we know that our children trust us most when we trust them. Guide and teach, but never sacrifice a relationship because you disagree with a decision they are determined to make.
When they learn, and they will try to avoid the “told you so” approach, as financial mistakes tend to feel personal, and the errors obvious. It’s common to get a car loan for more than you can afford. Financing a couch often seems like a great idea (It’s 0% interest!). And it’s hard to skip on that trip that all your friends are going on. We were all young once, and from that experience we know that often the mistakes that feel the biggest are easy to fix.
The most important thing you can do is take the time to talk to your kids about money. Schools often don’t do it, and the ones that do have to deal with the teen attention span, which is usually somewhere else. Take the opportunity to spend some time with your kids, and help them get ahead.