The Bucket List

Several years ago, I read a self-help book that promised to help me manage money better.  I do not remember much about the book, not even the title.  I do remember one exercise that was very useful.

I was supposed to create what is now commonly known as a “bucket list.”  I should list all of the things I wanted to do during my lifetime.  It did not matter how long the list was.  When finished with the list, I should then review it and think about how a change in money management practices could help me achieve those goals.  That would help me to set a budget, make more responsible spending decisions, et cetera.  After all, you need money to pay for most of the things you want to do in life.

I found the exercise to be very enlightening.  To my surprise, I saw that most of the items related to travel.  I realized that I needed to do a better job at maintaining an emergency fund and set a formal budget for travel.  I had been tapping the emergency fund whenever I wanted to visit some place new, which is a bad idea.  I setup a direct debit from my checking to my savings account so that savings could be automatic.  This act created a formal budget for both emergency savings and travel.

Today’s list is very different.  My revised list includes completing several projects around the house, paying off my mortgage a few years early, donating more money to my favorite charity, buying a nice road bike, and squirreling away more money for unexpected expenses and retirement.  Sure, there are a few personal goals that are not tied to money; I am not completely shallow.  In balance, the list is much more practical than years ago, when I wanted to see the world.

I still do not want to wake up one day at age 80 and realize all I ever did was work, work, work.  The list can help me stay focused on important things and achieve some of my goals.  Hopefully, I can strike the right balance between the practical (saving for retirement) and the fun (buying that road bike).  I encourage you to take some time to create your own list.

Then, please share your list with your financial advisor.  Goals change over time, so he or she should be aware of what you want from life.  Together, you can develop a financial plan to direct your savings in a manner that will bring you closer to achieving your goals.

Cristy Freeman, AAMS
Senior Operations Associate

 

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When Things are Going Well, Watch Out!!!

 

Before you cross the street,
take my hand.

Life is what happens to you
while you’re busy making other plans.

 -John Lennon, “Beautiful Boy”

When I built my house, there were certain things I really wanted.  Unfortunately, I did not discover a money tree on the property.  I had to face reality and eliminate some “wants.”  Lately, I have been thinking about tweaking the kitchen a bit.  I would like a new countertop and maybe a tile backsplash. 

Of course, life has a way of altering your plans.  One of my cats fell ill.  In six days, I racked up a sizable bill at the vet’s office.  Sadly, she did not survive.  As devastating as the event was, it would have been even worse if I had not squirreled away some cash in an emergency fund.  Knowing that I was financially able (to a point) to do as much as I could to save her was a relief. 

We have talked many times in this blog about saving for the inevitable rainy day.  It is one of the best financial decisions you can make.  You never know when your car might need repair, when one of your kids (human or furry) might be sick, or when you may lose your job.  These events are stressful.  Not having the funds to pay for them compounds the stress.

Automatically transferring funds to an emergency account is a great way to save.  Banks and brokerage firms will allow you to sweep a pre-determined amount from one account to another.  You determine when you want to transfer to take place. 

Conventional wisdom says to save 6 to 9 months of expenses.  I found it easier to first calculate the large, recurring bills – insurance, property taxes, et cetera.  I then added a certain amount for routine savings and overall maintenance items – upkeep of house and car; vet visits; and so on.  I took that figure and divided it by 12 months.  At every payday, my bank sweeps that sum from my checking account into my savings account.  I cannot access my savings account unless I visit the bank, so I avoid the temptation of withdrawing funds for something silly.

The automatic deduction has been wonderful.  I do not “feel the loss” because the money never stays in my checking account.  My emergency fund has saved me on so many occasions. 

You can setup automatic deductions with your investment accounts too.  I also have a sweep in place for a Roth IRA contribution.  We would be happy to assist you with setting up automatic deductions into your brokerage or other investment accounts.  Please contact your advisor if you are interested.

Cristy Freeman, AAMS
Senior Operations Associate

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