Diversify strategies and build in flexibility

Evening out the swings in income and work-flow in business takes practice, patience, strategy, and intentionality.  Business owners should always be marketing, even when they’re busy.  They should either do it themselves or delegate it to an employee. Business owners should always be “working” on the business they brought in (again, either themselves or by employees). This evens out income and it evens out work-flow.  It takes time to make this the culture of one’s work day and one’s business. Then, on top of that, there’s the hard decisions of how much to set aside in boom times for leaner years.  Is the money best saved or reinvested in the business? All these challenges are on-going in business. Been there, done that, still doing it. The balance and the planning have to be intentional.

The same is true for your portfolio.  We use a platform that allows our clients to take advantage of the brain trust of those with PhDs and master’s degrees to determine how their money should be invested based on their philosophy(ies) and willingness to take risk.  Notice I used “philosophy(ies).”  This platform allows my clients to employ different money managers with different philosophies all at the same time. Because, let’s face it, the market is going to do what the market is going to do, and every money manager has an opinion about what you should do as a result, from “buy and hold” to “stay in cash and actively manage investments for positive returns.”  Just as in business, as in portfolios – sometimes there are tough decisions to make along the way, but if one builds in different strategies and provides flexibility for money to grow, chances increase that one will reach investment goals that serve their lives. When the time comes to make changes, changes can be made easily and with unbiased advice.

While I can’t help you directly with the business decisions, I can refer you to people who can.  And if you want to talk portfolios, please give me a call.

A few budgeting hints and strategies from the field

There are all kinds of ways to budget, from keeping detailed Quickbooks records to excel spreadsheets to pencil and paper. I thought I would share a few unique strategies that I have used and I have had heard clients use around budgeting:

• Create buckets.  I’ve seen clients use what I’ll loosely call “the bucket system.” They open—I kid you not—10 to 12 bank accounts all linked together. They typically get them for free because they make contributions to them every month (from $25/month to thousands a month).  Because online banking makes it possible to nickname these accounts whatever you want, you can call them “new car” or “vacation” or “fun account” or “Jessica’s spending money” or “property taxes” or whatever you want. As the income comes in, the money is divvied out to those various accounts each month. No tracking.  It just happens. When it’s time to spend the money in one of these accounts, they spend it.
• Make it fun. I know folks who have had severe salary cuts or have been out of work for way longer than they expected. Some of them are forgoing taking shirts down to the laundry and instead are taking up ironing.  What these folks say is that they keep it fun.  They scout out “free” things they can do with the family on the weekends at their place of worship, gym, YMCA, local library or neighborhood center. They iron in lingerie.  Or, they make the other spouse come up with three compliments for the spouse who’s doing the ironing. The result is that they save money for other family outings or for whatever it is they need.
• Make it a game.  Along the lines of the above suggestions, I know couples who make budgeting a game.  They find good deals, they have competitions about who could get money to go the furthest, or they give bragging rights to the person who saved the most money.  Some couples love sitting down over their Quickbooks or spreadsheets and finding new ways to save or divvy up money amongst family members.  I know parents whose kids are getting a lot more chores done around the house.  The kids love earning a few extra bucks.

Budgeting doesn’t have to be a death sentence or a killjoy.  When it comes from a place of self-care and is created as a way to bring fun into your lives, it can make your savings accounts look bigger. These days, that’s a ton of fun.

Find out what services are really being offered

One of the bigger issues in the financial services world these days is whether someone who handles money for another or gives or sells advice to another or sells someone a financial product should be held to a fiduciary standard.  There are different licenses to hold, different regulatory bodies, different ways of doing business, and the list goes on.  This is what makes it so hard for the government to provide uniform regulation (not to mention the power of the lobbyists) and hard for consumers to find their way.

In the mortgage business, clients learned to ask, “What is it that you do, how do you do it, and how do you make your money?”  We answer their questions. The same is true in the financial services business.  Clients need to learn to ask, “What is it that you do, how do you do it, and how do you make your money?”

Because a money manager often just manages money.  By that, I mean, this person takes a lump sum of money and keeps an eye on it and makes sure that it’s invested within the confines of the client’s needs and goals.  But that person doesn’t necessary explore what the client’s needs and goals are. That might be a different person.  A money manager often will also not provide a comprehensive look at a client’s overall financial situation and make recommendations outside managing money—for instance, the advice to get one’s estate plan done.

A wealth manager sometimes just calls him or herself that because it’s a fancy way of saying that he or she only takes clients of a certain net worth.  This person might only specialize in managing money, but often has a group of advisors that do tax and legal strategies for the client in concert with the money management services.  Yet, young people who are on their way to being wealthy may require very similar services.

By the way, everyone it seems calls him or herself a financial planner—whether they are securities licensed with no CFP® designation or are simply licensed to sell insurance.  It’s a widely abused term, just as “mortgage broker” was a few years ago until the regulatory agencies said a licensee could not use that term unless he or she actually had a broker’s license.  The same will happen with the term financial planner.  Someday.

In the meantime, get into the habit:  What is it that you do?  How do you do it?  How do you make your money?