Do You And Your Partner Have The Same Money Values?

We all know that being a part of a couple takes work and that open, honest communications is key! We read an interesting article that spoke about how individuals choose their partners and that often times, we match with those who have similar interests and values as ourselves. However, while this may be true, Jenny Olson, an assistant professor of marketing at Indiana University who studies couples’ financial decision-making, found that “when it comes to money-management styles, opposites do attract.” As financial advisors, we have seen many cases where two partners have different backgrounds and relationships with money. It is very common for partners to have different approaches to their finances, but it’s important in how they to approach the merge them.

In order to have a relationship that is strong financially, as well as emotionally, remember to regularly discuss and review your finances and goals to help make sure that you and your partner are not only on the same track, but on the right one for you as a couple. When you become serious with your partner or even get married, many couples have to sit down to talk about both their relationship with money and how the merging of finances will work. While we know its not easy, its important in order to avoid financial lies. In fact, we read an interesting article that said financial lies between partners are way more common than you’d think. The study from Forbes Advisor found that the top three financial lies American’s tell each other are relating to debt, spending and large purchases, and spending patterns. While you and your partner may not have the same spending habits or relationship with money, but finding a happy medium or compromise to allow honesty is extremely crucial.

At Sherman Wealth, we work with many newly weds, young professionals and couples on the merging of their finances and how to find a medium that works for both parties. As we have said time and time again, communication, transparency, and honesty is key to a healthy relationship, especially as it relates to finances. We know money conversations can be awkward and uncomfortable, but they really are necessary for couples wanting to build a financial roadmap.

So, let’s take a look at some important topics couples should regularly review and discuss.

  1. Retirement Plans – If you’re a young couple, retirement may not be your top priority, but remember – through compounded interest –  a small amount invested now may go a long way in the future. Be sure to reexamine your goals and your portfolio to make sure that you’re both saving enough for retirement and your asset allocation is appropriate given market fluctuations and volatility.
  2. Life Insurance – While not a pleasant topic, it’s important to discuss with your partner what will happen in the event that one of you passes prematurely.
  3. Wills and Trusts – Like life insurance, wills and trusts also are important for protecting your loved ones. They’re especially critical if you have children, or a significant amount of assets.
  4. College Funds – If you have children, or are considering having children, you definitely want to discuss your thoughts on college and how much you as parents want to fund it, if any. Discuss a saving strategy to help pay for college tuition.
  5. Health Insurance – Make sure that you and your partner are both covered, and that you understand the differences – and overlaps – in  your plans. Is there any unnecessary overlap? Should you purchase more coverage to protect yourself?
  6. Major Purchases – If you are planning to make a major purchase such as a home, or a new car, you’ve probably already talked with your partner about it. You may not have talked about how you’ll pay for it though! Talk through these goals together and set realistic strategies to achieve them.
  7. Monthly Expenses – Review your expenses each month to see where you can make changes and cut back. Consider making a budget together to make sure that you are allocating your income in the best possible way for both of you.

While financial topics can be difficult to discuss, they’re an important part of a happy and successful relationship. As mentioned prior, here at Sherman Wealth we help couples facilitate these conversations, especially when it comes to merging finances and creating combined goals. Make sure that both you and your partner are on the same page when it comes to finances, and set short and long term goals together to help keep you both on track.

If you need help going over your finances or coming up with a plan, you may want to seek working with a financial advisor to help point you in the right direction, based on your own goals, and help facilitate difficult, but important, discussions. If you have any questions, email us at info@shermanwealth.com or schedule a complimentary intro call here.

Master the Art of Saving: Smart Strategies for Building Your Wealth

In today’s ever-evolving economic environment, mastering the art of saving is essential for achieving financial stability and building your wealth. Whether you’re saving for a rainy day, a dream vacation, or retirement, implementing an effective savings strategy can make all the difference. As financial advisors, we work with clients on automating their savings to seamlessly grow their wealth and get one step closer towards their goals. In this blog post, we’ll share some valuable tips for savers on savings strategies and the prudence of creating an automated savings plan.

Before diving into savings strategies, let’s emphasize why automating savings is crucial. Automating the process of saving money towards your various goals each month or pay period makes the process more seamless and essentially “out of sight, out of mind”.

One of the most effective ways to save consistently is by automating your savings. Setting up automatic transfers from your checking account to your savings account each pay period or month ensures that you prioritize savings without the need for constant manual intervention. This “out of sight, out of mind” approach eliminates the temptation to spend money earmarked for savings, making it easier to stick to your financial goals.

Consistency is also the cornerstone of successful saving. By automating your savings, you establish a routine that becomes “automatic” in your financial habits. Whether you’re saving a fixed amount or a percentage of your income, committing to regular contributions reinforces responsible financial behavior and accelerates wealth accumulation over time.

In addition to automated savings, consider implementing dollar-cost averaging (DCA) as a strategy for investing in your taxable brokerage account. DCA involves investing a fixed amount of money at regular intervals, regardless of market fluctuations. This approach mitigates the risk of timing the market and allows you to benefit from market volatility by purchasing more shares when prices are low and fewer shares when prices are high.

So, given the savings strategies we just mentioned above, here are some practical tips to optimize your savings strategy:

Set Clear Goals: Define your short-term and long-term financial goals to guide your saving efforts. Whether it’s building an emergency fund, saving for a down payment on a house, or funding your retirement, having specific goals keeps you motivated and focused.

Track Your Expenses: Monitor your spending habits to identify areas where you can cut back and allocate more funds towards savings. Budgeting apps and expense tracking tools can help you gain insight into your financial behavior and make informed decisions.

Establish Emergency Fund: Prioritize building an emergency fund to cover unforeseen expenses that may arise in an emergency. Aim to save enough to cover a comfortable amount of months worth of living expenses to provide a financial cushion during challenging times.

Maximize Retirement and Tax Advantageous Accounts: Take advantage of retirement accounts such as 401(k)s, IRAs, and Health Savings Accounts (HSAs) as a way to complement cash savings and build your wealth.

Review and Adjust Regularly: Periodically review your savings goals, investment performance, and overall financial situation. Adjust your savings strategy as needed to stay on track and adapt to changes in your life circumstances or financial markets.

In all, your savings strategy will probably require discipline, consistency, and strategic planning. By automating your savings and following these tips, you can set yourself accountable in reaching your financial goals. If you have any questions on how to increase or enhance your savings strategy, email info@shermanwealth.com or schedule a complimentary meeting here.

The Financial Goals Of Americans Are Changing

It’s been quite an interesting start to the year for the US economy as we are now living in a rising interest rate and inflationary environment after a few years of historically low interest rates during the COVID-19 pandemic. So, as the US consumer is adjusting to this new economic climate, their preferences and goals may be changing, including spending habits and financial goals. Have your financial goals shifted this past year? Does your budget look different ? Are you focusing more on short-or-longer term goals? 

Well, if your goals and preferences have changed, you are not alone! We saw an interesting study that found as we are headed into 2023, many Americans are now focusing on shorter-term financial goals instead of long-term ones. In fact, according to Fidelity’s New Year Financial Resolutions study, surveying 3020 Americans, “more than half ‘53%’ say it’s more important to pay down credit card debt and set aside emergency savings over long-term objectives like retirement and college savings, and roughly half say they’re ready to ‘live sensibly’ or ‘plan ahead’. According to the data from this survey, there is a larger sense of financial pessimism than last year and many reported they feel they are in a worse financial situation than the prior year. 

While we know the start of this year as well as last year has been uncertain and a large adjustment for many with the banking crisis, rising interest rates and a higher cost of living, we found this statistic surprising. In a time where individuals are feeling financial doubt, it’s extremely important to seek financial education. Often times, individuals make financial decisions that are not beneficial purely because they are uneducated on the matter. Given this economic uncertainty we are facing and may continue to face in this new year, it’s important to not prioritize short over long-term goals or vice versa, but to make a well diversified plan that includes a way to save for both short and longer-term goals so that you are not derailing one piece of your financial plan. If you are feeling financially unsure or are uncertain how to separate your financial goals and make an achievable plan to reach them, we are here to help you! Email us at info@shermanwealth.com if you are interested or schedule a complimentary 30-minute call to discuss your financial needs and questions here

Are You A HENRY? Here’s How HENRYs Can Save and Grow Their Wealth

In today’s dynamic economic landscape, an emerging demographic has emerged: HENRYs, or High Earners Not Rich Yet. These individuals, typically professionals in their prime earning and accumulating years, are not yet High Net Worth individuals. HENRYs possess a unique opportunity to not only save but also grow their wealth substantially. Let’s explore how HENRYs can leverage their financial situation to secure a promising financial future.

HENRYs are characterized by their robust incomes, often exceeding national averages, yet their wealth accumulation is not where they might want it to be. These individuals, typically in their 20s to 40s often times despite the high income, face obstacles such as student debt, lifestyle inflation, and delayed financial planning, hindering their wealth-building efforts. So it’s extremely important that they implement smart financial habits early on, build a financial plan, and automate the process to accumulate their wealth and make smart financial decisions.

So, let’s take a look at some places where HENRYs can improve their financial habits. First, budgeting. HENRYs can harness their considerable incomes by implementing strategic budgeting and expense management techniques. By setting up an accountable and accurate budget, they can redirect resources towards savings and investment. For those with student loan debt or other debt, creating a strategic debt repayment strategy is prudent. Given the higher interest rate environment we have been living in, there are tactical moves debt goers can make to keep their financial plan in line.

Next, let’s discuss investing. HENRYs have the perfect opportunity to leverage their wealth by investing wisely and early. By allocating funds to diversified portfolios, including retirement accounts, taxable accounts, and other diversified assets, they can grow their wealth overtime to achieve their short, medium, and long-term goals.

If you’re a HENRY, but are not quite sure where to get started on your financial journey, consider seeking advice from a financial advisors or professional who can provide you with customized strategies to optimize your financial situation. Here at Sherman Wealth, we build out personalized solutions and financial plans to help all clients, including HENRYs make smarter financial decisions and strategically grow their wealth. Professional guidance helps navigate complex investment decisions, minimize tax liabilities, and plan for future milestones.

As discussed in this blog, HENRYs have a vast opportunity to maximize and optimize their financial future. Building a solid foundation early in their careers lays the groundwork for long-term growth and financial security. If you are a HENRY and are seeking financial guidance, email info@shermanwealth.com or schedule a complimentary intro call here.

How Much Cash To Have in Savings: An Art & Science

In today’s ever-changing financial landscape, determining how much savings you should have is not a one-size-fits-all answer. It’s both an art and a science, and is highly specific to your personal financial situation and influenced by various factors in your life, such as job security, interest rates, financial goals, economic conditions, and more. We want to discuss this question we get from tons of clients and prospects: How much cash should I have in my savings account? So, let’s take a look at some considerations to think about when answering this question and determining your savings strategy.   

Personalized Approach:

Your financial goals, obligations, and risk tolerance all play a crucial role in determining the ideal amount to keep in savings your savings account. As mentioned above, the security of your job and consistency/variability of your income plays a large role in this answer. For example, if your income is variable and inconsistent, you might think about keeping more liquid cash on hand due to the variability of your payments. Additionally, if you have other financial goals you are working towards, you may or may not be allocating more funds to your savings account, and rather other places or goals. So, remember that your savings approach should be personalized and unique to your situation- do not look to others for their strategy, and rather work with a financial professional to help sift thru your personal situation and goals to establish your approach.

Consider & Maximize Interest Rates:

As we have been discussing for quite some time, interest rates on savings account have spiked over the last year or so, with high-yield savings accounts and certificates of deposits (CDs) now paying close to the 5% range or higher on cash. This higher interest rate environment is impacting the way consumers are thinking about cash within their overall investment portfolio. While keeping cash in a savings account or checking account, ensure that you’re maximizing the interest you earn. Shop around for the best interest rates and consider high-yield savings accounts or CDs that offer better returns on your money.

Take Your Budget Into Account:

As the consumer is continuing to adjust to this inflationary environment and a higher cost of living, many are tweaking their budgets. With student loan payments returning this month after a three year pause, you may be feeling a bit tighter on your monthly spending to accommodate this financial obligation. Revisit your budget frequently and ensure you are allocating some of your income to your cash savings so you aren’t sacrificing your savings goal.

Include Your Emergency Fund:

Among your cash savings should be your emergency fund, which serves as your cash reserve in the event of an emergency and is essential for unforeseen expenses or financial crises. A common rule of thumb is to have at least three to six months’ worth of living expenses in this fund. However, similarly to what we have described above, the exact amount should be tailored to your individual circumstances and comfort level. Your financial well-being is not just about numbers; it’s also about peace of mind. Consider what makes you feel comfortable. If you’re uneasy about having too much cash on hand, explore alternative options like investments or paying down debt to optimize your financial situation. Conversely, if you feel that you are too short on cash, consider hunkering down and building up your cash reserve.

So, in conclusion, there’s no one-size-fits-all answer to the question of how much savings you should have. Your personal financial situation, risk tolerance, and goals will guide your savings strategy. Work with a financial professional to determine the right balance of cash savings, investments, and debt management. Continue to keep up with economic conditions and interest rates to ensure that your money is working for you. Most importantly, find a strategy that provides you and your famliy financial security and peace of mind. If you are seeking help determining the right amount for your savings reserve, email info@shermanwealth.com or schedule a complimentary intro call here.

February: Financial Fitness Month – Your Checklist for a Healthier Financial Household

As February rolls in, it brings with it not just the season of love but also an opportunity to focus on another crucial aspect of our lives: our financial well-being. February is recognized as Financial Fitness Month, a time that can be allotted to assessing, improving, and fortifying our financial health. Just as we prioritize our physical fitness, nurturing our financial fitness is equally essential for a secure financial plan. So, let’s dive into how you can leverage this month to enhance your financial household with a comprehensive checklist:

1. Set Clear Financial Goals: Start by defining your short-term and long-term financial goals. Whether it’s saving for a vacation, buying a home, or planning for retirement, having specific, measurable objectives provides direction and motivation for your financial journey.

2. Review Your Budget: Take a close look at your income and expenses. Create or update your budget to ensure that your spending aligns with your financial goals. Identify areas where you can cut back or reallocate funds towards your priorities.

3. Track Your Spending: Monitor your expenses diligently throughout the month. Use apps or spreadsheets to track every purchase and analyze your spending patterns. This awareness will help you identify unnecessary expenses and make informed decisions about where to trim your budget.

4. Assess Your Debt Situation: Evaluate your outstanding debts, including credit cards, loans, and mortgages. Develop a strategy to pay off high-interest debt more aggressively while making timely payments on all accounts. Consider consolidating or refinancing debt to lower interest rates if feasible.

5. Build an Emergency Fund: Aim to set aside funds equivalent of living expenses in an emergency savings account. Having a robust emergency fund provides a financial safety net during unexpected setbacks like job loss, medical emergencies, or car/house repairs.

6. Review Your Insurance Coverage: Assess your insurance policies, including health, life, auto, and home insurance. Ensure that you have adequate coverage to protect yourself and your loved ones from unforeseen events. Compare quotes and consider adjusting your coverage if necessary.

7. Maximize Retirement Contributions: If you have a retirement savings plan, such as a 401(k) or IRA, maximize your contributions to take advantage of employer matches or tax benefits. Review your investment allocations and adjust them based on your risk tolerance and retirement timeline.

8. Invest Wisely: Educate yourself about investment options and strategies that align with your financial goals and risk tolerance. Consider diversifying your portfolio across different asset classes to mitigate risk and maximize returns over the long term.

9. Plan for Major Expenses: Anticipate upcoming major expenses, such as home repairs, education costs, or weddings, and start setting aside funds accordingly. Establish sinking funds or dedicated savings accounts to earmark money for specific purposes.

10. Seek Professional Guidance: If you’re unsure about certain financial matters or need personalized advice, don’t hesitate to consult a financial advisor. A professional can provide guidance tailored to your unique circumstances and help you navigate complex financial decisions.

As you embark on your journey to improve your financial household this February, remember that small, consistent steps can lead to significant progress over time. By following this checklist and prioritizing your financial well-being, you’ll be better equipped to achieve your goals, weather financial storms, and enjoy greater peace of mind. Let us know if you have any questions on accountability this month and how you can improve your personal financial situation. Email info@shermanwealth.com or schedule a complimentary intro call here.

Ep. 174 Launch Financial- Consumers Face High Interest Rates On Credit Cards Amid February Financial Fitness Month

Overview: Tune into this week’s episode of Launch Financial as we discuss a slew of economic data including the Federal Reserve deciding to hold interest rates steady and signaling there may not be enough data to cut rates at the next meeting. However, amidst this economic data, the consumer is continuing the spend as interest rates on credit cards hit 21.5% and consumer sentiment remains high. 

 

Show Notes:

Check out this episode!