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Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

The Connection Between Gratitude and Financial Planning

World Gratitude Day, September 21, is coming up later this week. And while Thanksgiving is the usual time we set aside to celebrate what we are thankful for, there is nothing wrong with finding more time to be grateful. No matter how you spend Thanksgiving, the fact that it is a designated time to be grateful while you may also possibly spend money on travel or a big meal, means that you may find your thoughts of gratitude drowned out by society or family expectations.

You may think that gratitude has nothing to do with financial planning but think again. When you visit a financial planner for advice and strategy you are not simply trying to get more. You have to use what you already have to find a way to ensure a financial future for you and your loved ones. But what happens if you don’t really know what you have? You may be so set on finding ways to get more that you could lose sight of the wealth you actually possess.

In “How An Attitude of Gratitude Can Help Your Finances,TheBalance.com discusses how gratitude can foster “patience when making financial decisions” because feeling grateful can prevent you from trying to make yourself feel better with unnecessary purchases. Instead, it may lead you to save up for certain purchases.

The article also talks about how once people reach a certain income level, they find new purchases to be less thrilling. If your basic needs are covered and you have extra funds to get some of the things you want, you won’t get as excited about buying new things–

“Spending extra money won’t make you happy—and it can put your financial future at risk. Instead, look for ways to feel good about what you already have by developing an attitude of gratitude.”

Clarity Financial Planning is a champion of holistic financial decision making and financial planning. We know that the numbers matter and that how you think and feel about your lifestyle and financial goals matters too.

Back to School: Improving Financial Literacy

It’s early September and while everyone is in back-to-school mode, why not take some time to hit the books and learn about some aspects of financial planning that you know little about?  Once we can read, we give less though to literacy, however the need to improve financial literacy is ongoing.

While you can rely on a Fee-Only financial planner to deal with you fairly and not pressure you to spend or invest in ways that aren’t beneficial to you, it still might be a good idea to learn more on your own. Because while your finance planner can tell you a lot, those conversations might be richer if you delved into financial matters more. And if even if you approach your financial planner with an idea that he or she advises against, you will feel better about what you ultimately decide to do if you have done your homework first.

For example, you know what the stock market is but do you really understand how it works? Or perhaps you are interested in the history of the stock market—why do we have one anyway?

You may have heard of the gold standard in school, but perhaps you don’t know why we had it in the first place (or why we abandoned it).

Over the years, you may have heard about different markets where the ‘bubble burst’ (dot-com market, housing market, etc.) but if you were not directly involved, you may not know just how this happened. Reading more about how and why speculation can go awry may help inform your own choices.

Now, if you have time to read a few books that is great. If not, some articles from reputable publications could offer the information you need to feel more informed. While it is fine to rely on the financial professionals you’ve engaged to help manage your money but there is nothing like knowing things for yourself.

Set Boundaries When Adult Children Move Back In

It’s back-to-school time: the point of the year parents look forward to sending their children off to school, knowing that another summer break is months away. However, some parents of adult children are in the opposite mode—instead of sending children away, they may need to welcome their adult children (and possible the child’s spouse and the grandchildren) back home. 

In “Thinking about welcoming adult children back into the nest? Consider these tips before deciding,” Washington Post columnist Michelle Singletary offers some advice. Overall, she writes, “No matter how responsible and hard-working your adult child is, the best-laid plans can go awry. To mitigate the issues that will come up, establish some boundaries for your boomerang adult.” 

Singletary also gets into some specifics that even those who think they are setting boundaries may ignore-

Have the end in mind—Come up with a timeframe for how long your adult child will stay with you. The timeframe may change but it helps to have one in mind. Discuss how long they expect to stay after reaching their goal of getting a job, saving for a house, or paying down debt. Also talk about how often you can ask about their progress towards this goal (once a week, once a month, etc.) without creating tension.

Discuss expenses—Even if you don’t charge rent, your household bills, such as utilities, will go up with more people in the house. Talk about how and who will cover these expenses. You may also want to discuss expectations for ‘payment-in-kind’ options like cleaning or cooking in lieu of money exchanging hands.

Discuss fun money—While you may be okay with your child having fun while they are living with you to get on firmer financial footing, the reality is that if you see them spending freely, you may get annoyed. This also ties into how often you check in about their progress. If your adult child is dining out and buying a lot of things, you may wonder if they are really working towards a financial goal. It is better to set expectations before resentment builds.

Reached Your Retirement Savings Goal? Keep Saving.

In “Are you confident about your retirement savings? That could be dangerous,” USA Today and TheMotley Fool discuss a survey that found “38% of retirees say they felt either extremely or very confident in their savings before they retired.” Notice that this is how they felt before actually retiring. It is possible that these same survey respondents felt differently once they had been retired for a while.  

As the article notes, this certainty can backfire if those who are feeling confident get lax about money management. Perhaps someone approaching retirement looks at what they have already saved for retirement and think it is okay to make a big purchase, like a yacht. Or perhaps once it seems that they’ve reached a certain amount of retirement funds, someone else will stop saving as they continuously spend more overall—not big purchases, but an increase in everyday spending. While others may look at what they’ve saved, decide it is sufficient, and retire early to start enjoying life more. But will the amount you’ve set aside really be last?

“The average American age 65 and older spends around $46,000 a year, according to the U.S. Bureau of Labor Statistics. At that rate, if you were to spend, say, 25 years in retirement, you’d end up spending roughly $1.15 million – not accounting for inflation.”

You may be one of those who spends decades in retirement, meaning that you could live longer than you imagine. And the complication is that you don’t know what this longer life will look like or what the status of your health will be.

So, while we congratulate you if you have started to save for retirement, we would caution you not to stop once you think you are near or maybe have even exceeded your goal. You don’t know what the future will bring but you do know that as you age your capacity to work may diminish so you want to set aside money while you are able to do so. You can work with a Fee-Only financial planner to set and redefine your retirement planning goals.

Should You Give Your Heirs Copies of Your Will?

One of the biggest hurdles when it comes to estate planning, is simply beginning. If you have done that, congratulations—many people avoid that first step. Once you have a will at the very least, they are other little glitches that may occur and we want you to be aware so that your diligence in planning for the future does not go awry.  (For example, we discussed what might happen if you do not sign your will.)

A columnist for NWI.com answered a question that people out there may have: Can I sign multiple copies of the will? In brief, Christopher Yugo wrote that while you can do this, you may not want to and explained why. Yugo noted that another legal expert may disagree and you will of course need to consult your own legal counsel on such a matter.

To respond to a reader’s question about giving a signed copy of a will to each of the questioner’s children, Yugo wrote: “Since the will is such an important document that you can amend or revoke, I’m not sure that it is a good idea having a couple of them floating around, even if the persons that have them are family members or loved ones.”

He went on to add that since wills contain personal information, you might not want to give an actual copy to others. You can certainly outline the terms of your will but you may not want to give out copies.

And whether you’ve seen a scripted drama with multiple wills or heard of a real-life family crisis involving multiple wills (such as the debate over Aretha Franklin’s estate), you can imagine that different wills could cause some turmoil. If you need to change your will for any reason, you might feel obligated to inform all the people who have copies of the old will and depending on the changes, that might cause some distress.

Remember that professionals like estate planning attorneys and Fee-Only financial planners will stick to the ethical codes of their profession and advise you as best they can about what is within the law and what is not. They may also, as an aside, let you know when something is legal but perhaps not advisable.

Women: Are You Investing Enough?

Sallie Krawcheck of Ellevest told CNBC that “The No. 1 investing mistake women make has nothing to do with where they invest.” In fact: 

When it comes to investing, the biggest mistake women make has nothing to do with where they’re choosing to invest their money — in fact, women tend to earn higher returns than men.

Rather, the issue is they’re not investing enough in the first place.”

When asked just who is her firm’s biggest competition, Krawcheck does not name another investing company; she says her competition is inertia. Women are hesitant to begin investing and when they do begin investing, they are hesitant about investing a lot of money.

She notes that women want to do their research and make sure they are investing in the right places…however between being busy and wanting to research, many women put off investing. And over time, they lose out on compound interest because of these delays.

She does discuss some budgeting percentages that she thinks are advisable, adding that it is difficult for some people to get to the point where they are investing 20% of their earnings. But she also notes that not investing enough and not starting sooner rather than later may be a bigger drain on a woman’s net worth than the gender pay gap.

In contrast to women, Krawcheck says that men tend to overtrade and be overzealous.

While Krawcheck doesn’t get into all the reasons why women do not invest more money, she does say the women tend to want to leave 70 cents of each dollar in cash. And you can imagine why: there is safety in having cash liquid and ready at hand. The risk of having money tied up in investments is one that many women feel they can’t afford to take,

If you are unsure about investing more or about investing at all, why not sit down with a Fee-Only financial planner? A planner who is not obligated to convince you to buy certain financial products can look at your financial outlook and retirement goals to help you find an amount you feel comfortable investing.

Read and Reflect on Fiction with Financial Themes

Summer isn’t over and there is still time to relax on the beach, the park, or your own backyard with a good book. And when we say good book, we don’t necessarily mean a book with financial advice.

USA Today’s “Alpha women and fancy yachts make for good summer investing and finance reading” offers suggestions for recreational ways that you can get more insight into your money management and your own financial habits. Reading informative texts is needed to learn about finances but you can also learn from fiction and memoirs. You read about other peoples’ triumphs, mistakes, and financial habits which give you a chance to reflect on your own. USA Today’s suggestions include books about women getting into venture capitalism, a Depression-era book about investments that may be too good to be true, and two books with financial parables, including one that goes back to ancient Babylon.

There has been research to show that reading novels can help you develop empathy for others. And perhaps reading novels in which characters find themselves in financial hot water may help you develop empathy for yourself or for others who make financial missteps. You may also find that reading novels that illustrate the complexities of being wealthy or of struggling financially can help you to feel more for people across the financial spectrum.

We wrote about “The Nest,” a book that tells the story of a family and the fallout that comes when an expected inheritance doesn’t turn out to be what a group of siblings thought it would be And even you are not in this particular situation, you may be able to understand that when you spend in the present relying on money to arrive in the future (be it an inheritance, a tax refund, or the lottery), you may find yourself on shaky ground.

And fiction stories are also a great way to start conversation with your children about spending and saving money.

Simplify Your Life and Improve Your Finances

The first week of August is Simplify Your Life Week. If you find that tackling money management directly is difficult you may find that if you can streamline and simplify your life, you may also find ways to save money. Once you see the benefits, you may seek out more direct financial planning help. You can simplify your life and improve your finances.

Decluttering: There are a number of sources that talk about the psychological effects of being surrounded my clutter. It can weigh you down and interfere with creativity. A cluttered environment can take up valuable time since you may not be able to find what you’re looking for.

Even if you aren’t sure that clutter really affects you psychologically, consider that on a practical level, more money is spent when you live in clutter. Some people streamline and find that they have purchased the same item in multiples—and this goes for necessities like cleaning supplies as well as recreational items like books.

Meal Planning: Another way to simplify your life is to plan your meals. If this has no appeal to you, consider that they are many ways to plan meals. Some people eat the same meals week after week. Others use meal planning apps with shopping lists that they follow for variety each week. Someone else may order meal prep kits. No matter how you do it, meal planning offers an opportunity to curb your food shopping budget and save time.

Set up Automatic Payments and Savings: We all have a lot to keep track of and one of the most important things we need to keep up with is bills and other financial obligations. Automating payments is a great way to simplify your life because you don’t have to worry about forgetting. And setting up automatic savings transfers allows you to make sure that you are saving money on a regular basis without having to remember to do this.

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