Cooking Up Financial Success: A Recipe for a Fulfilling Life

Many of you know I enjoy cooking. I tend to follow a recipe, although I admit that at times I may not measure precisely. The same concept about cooking a dish and following a recipe holds true for our financial lives.

If there is too much spice, the dish will become off-putting. If there is too much spending, if we are too aggressive or conservative with our investments, if we have all our money in a single investment, the chances for a successful financial life are less likely.

Think Goldilocks and the Three Bears. We want our outcomes not too hot, and not too cold. Just like Goldilocks, we want everything to be “Just Right.”

A successful financial life isn't about having a lot of money (although that certainly doesn't hurt). It's about feeling secure, and prepared, with you in charge of your finances.

Here are some key factors I would like to have you consider incorporating into your financial life if you haven’t already.

Financial Knowledge & Planning:

Understanding your financial situation: Track your income and expenses to identify areas where you can save money or spend less. This doesn't require a degree in spreadsheet development. Take a moment and figure out what you are spending your money on. It will be eye-opening. (How much am I paying each month for cable television?)
Creating a budget: Develop a realistic plan for distributing your income towards necessities, savings, and debt repayment. This is all about knowing what amount you should spend in any given area each month.
Setting financial goals: Define both short-term and long-term goals, like building an emergency fund, saving for retirement, or buying a house.
Developing a financial plan: Work with a financial advisor (Hi there!) to create a personalized roadmap that considers your risk tolerance, investment strategies, and future needs.

Healthy Financial Habits:

Living below your means: Avoid lifestyle inflation and resist the urge to spend everything you earn. As an example, please do not fall into the trap if you receive a one-time chunk of money, changing your spending, as that money will be there month after month.
Automating your finances: Set up automatic transfers for savings and bill payments to ensure consistency and avoid late fees. This is mostly positive, but you still must review your bills to ensure they are correct.
Prioritizing debt repayment: Develop a strategy to pay off high-interest debt, prioritizing credit cards or personal loans. Interest on the money you owe is a killer. Don’t take it, fight back.
Saving and investing regularly: Consistently contribute to savings accounts and retirement plans for future needs and financial security. If you are working, take advantage of your employer programs. If you have extra money, why do you keep it in your checking account or a low-interest savings account? Consider what you are earning after you pay taxes and factor in inflation.

Risk Management & Security:

Building an emergency fund: Aim for 3-6 months of living expenses to cover unexpected costs like car repairs or medical emergencies. Life happens, be prepared.
Having adequate insurance: Protect yourself with sufficient health, life, and disability insurance depending on your needs and dependents. If you are working, take advantage of the benefits offered by your employer. If you are retired, what do you need to protect if you die or need extra care?
Diversifying investments: Spread your investments across different asset classes (stocks, bonds, real estate) to mitigate risk and potentially maximize returns. Like cooking, storing all your eggs in one basket may force you to live off of scrambled eggs.
Safeguarding your assets: Keep good credit habits, be cautious of scams, and have a plan to protect your assets in case of unforeseen circumstances. We just had a call from a client wanting money wired someplace. We questioned the client, did not wire the money, and heard from a very embarrassed and relieved client the next day. He was being scammed.

Mindset & Long-Term Perspective:

Cultivating delayed gratification: Focus on long-term goals over instant gratification. Please, take a breath, wait a day, and see if what you want to buy is still as attractive to you.
Developing a growth mindset: Embrace learning about finances and adapt your strategies over time. You don’t have to be an expert; you just have to know where to turn for support and guidance.
Taking responsibility for your financial situation: Empower yourself to make informed decisions and take ownership of your financial future. Ask questions. If you are a do-it-yourself person, do it. If you need help, call us. Don’t be the person who won’t see the Dr. because you are worried about what you might learn. Do the right thing today, or pay the price for waiting tomorrow.
Regularly review your financial plan: As your life circumstances and goals evolve, revisit and adjust your financial plan accordingly. I think you will agree that the way things were ten years ago is not how they are today. Children, grandchildren, jobs, homes, health. They may all be different and require an updated plan.

Remember: Financial success is a journey, not a destination. There will be setbacks and unexpected events. However, by focusing on these key factors and building healthy financial habits, you can feel empowered, secure, and on track to achieving a financially fulfilling life. Happy is where it is at. Let’s get happy with our financial lives.

A diversified portfolio does not assure a profit or protect against loss in a declining market. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.