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Financial Habits

“We are what we repeatedly do.” ~ Aristotle

 

I am obsessed (at the moment) with habits – understanding them, creating them, breaking them, and using them to fuel my success. The Power of Habit (Charles Duhigg), Mini-Habits (Stephen Guise), and The Compound Effect (Darren Hardy) all have provided the impetus for this fascination with the powerful psychology of habits. Brian Johnson (optimize.me) and his Habits 101 (and nearly every course he teaches) succinctly and powerfully present the background and the practical wisdom for helping you identify and refine your habits.

 

In the course of actively creating new habits, it occurred to me that all of our interactions with money are likely running on habit – some of those are propelling us toward our goals (auto-saving to our 401k) and some are getting in the way (eating lunch out every time I work in the office.) Today as you go about your day habitually doing the things you do, try to be in the moment when you pull out your wallet or credit card and identify if what you are doing is habitual or consciously-chosen.

 

“Habit is a cable; we weave a thread of it each day, and at last we cannot break it.” ~ Horace Mann

 

To take it a step further, try to identify all of your financial habits and then classify them as either moving you toward your goals and dreams or pulling you away from them. This one exercise will prove very enlightening. Knowledge is power and once you have the knowledge, it is within your power to take action to break a bad habit, build a better habit, or create a new habit. Duhigg has some great resources on his website and the book is filled with great info – check your library as I’ll bet they have a copy (I was able to download one to my Kindle).

 

The real power, though, is in following Guise’s Mini-Habits advice (or as Martha Beck would say, “taking turtle steps”). Stupid small behaviors are so ridiculously easy to do that you can’t fail. His example was his workout plan of one pushup a day. So easy – why wouldn’t he do it? Boom, 3 seconds, and he has a win! What could your “stupid small” financial habit be?

 

“It’s not the big things that add up in the end; it’s the hundreds, thousands, or millions of little things that separate the ordinary from the extraordinary.” 
~ Darren Hardy, The Compound Effect: Jumpstart Your Income, Your Life, Your Success

 

Identify your habits; decide which you want to keep and which you want to ditch; replace a bad habit with an empowering habit; make it stupid small; make it a habit; win every day.

 

To your financial (habits that lead to) success!

Tana

 

Disclaimer: The views expressed herein are the personal views of Tana Gildea and are not to be construed as individual advice or the advice or opinions of Homrich Berg; They should not be considered recommendations as each person’s financial situation is unique to her; they may or may not apply to your situation. If you believe that something communicated may be relevant to your situation, Tana strongly encourages you to consult with your individual tax or financial advisor prior to taking action so that the totality of your unique situation is considered.

I’m Glad I Can Cry

“I’m so glad that I can cry in front of my advisor,” a client told me recently. Of course, you can cry! Laugh, rage, pound the table if you want. Her need to shed a few tears had nothing really to do with the dollars and cents; it was the knowledge that her and her husband’s lifetime of saving had provided enough that could help their child who was struggling without unhinging their own goals and dreams for themselves.

Money touches everything in our world – you are sick – money helps; it might not cure you, but it can buy a lot of treatments and specialists and care-givers. Your child is in trouble – money helps for treatments or legal fees or therapists. Your parents are struggling to cover their costs – money helps to buy care-givers and drivers and deliveries. You lose your job – money helps cover your costs until you can land the next job. Have a great passion? Money helps to fund it or develop it or further it.

Everyone knows this; it’s why our whole society is built on the pursuit of the mighty dollar. But when you really stop to look at the list of those items, items that stir up a lot of emotion, items that can move you to tears or fire you up or drive you into action, nowhere is there any of the stuff that we throw in our shopping carts or “one-click” to buy. Yet, so many people give up saving so that they can have the latest this or that or the other thing that will end up at the bottom of a drawer or in a give-away pile or a trash can in no time. I look at my throw-away’s, give-away’s, and “what do I do this” pile and I do want to cry but for a totally different reason!

Are we putting our money toward the really emotional aspects of our lives? Those things that bring tears to our eyes, inspire our most creative selves, change the world, or change our perspectives of it? Are we tapping into the hard-wired emotion of money to get us where we want to be instead of just giving us more of what we already have too much of?

Take a hard look at where your dollars are going and rate the emotional impact those dollars have on your life, your future, and your world. If your “emotional impact” score is not where you want it to be, shift $1 toward something meaningful and significant today. Keep doing that until your dollars inspire you.

To your financial (and emotional) success,

Tana

Disclaimer: The views expressed herein are the personal views of Tana Gildea and are not to be construed as individual advice or as the advice or opinions of Homrich Berg; They should not be considered recommendations as each person’s financial situation is unique to her; they may or may not apply to your situation. If you believe that something communicated may be relevant to your situation, Tana strongly encourages you to consult with your individual tax or financial advisor prior to taking action so that the totality of your unique situation is considered.

Are You Enrolled?

October is open enrollment for most employee benefit plan for employers. Here are some things to think about as you choose your options:

• Health insurance: Does your plan offer a High Deductible with HSA option? These can be a great deal if you are generally healthy and don’t expect to need surgery or high-ticket testing in 2018. The premiums will be lower and you can deposit up to $6,920 into the Health Savings Account (family) for 2018. (plus $1,000 for those over 55). This gives you an adjustment against income on your tax return and you can take withdrawals from the account to pay for your medical and dental expenses. For more information on the tax benefits of these accounts see IRS Publication 969.

o Insurance for your children under age 26 – run the numbers to see if your plan may be cheaper for your adult child than what they can get on their own. ACA increased the age for adult children to remain on their parents’ policies. They can pay you monthly for the cost, and they should begin to build that into their budgets, but save money if you can save money.

• Life insurance: Do you and your spouse have enough life insurance to pay off debt, fund your kids’ education, and provide for your spouse until retirement? Check your existing policies and see if you might need to add some additional insurance. It is usually pretty reasonably priced through the group plan.
• Disability: Do you have the maximum amount of disability insurance?

• 401k plan: Are you at least contributing enough to get the employer match? Are you maximizing your contributions? If not, try to do a 1% increase per year until you are getting the full $18,500/year saved plus the catch-up of $6,000 for those over 55.

• Long-term care: Is this an option in your benefit plan? If so, take a close look at it and see if you can participate. If you are in your 50’s, take a close look at the plan and see if it is something you can afford. Traditional policies can be very expensive so see if the group insurance might meet a need.
This year take a close look at your options rather than just doing “same as last year.” You may find that you can save some money.
As a part of your evaluation, pull out the life insurance policies and note the dates so you are clear on whether you are getting close to the end of the term. We all thought we’d be rich by this point but maybe we still really need that insurance. Be sure you know what you need and for how long so you can take action if needed.

To your financial success!
Tana

You Don’t Have to Be an Olympian to Go For the Gold

The Olympics always stokes the patriotic fires, ignites our love of both champions and under-dogs, and touches the spirit of greatness that lives in each of us. There are so many stories that come out of the games, some of triumph over the odds, some of defeat and loss, and others of great competition and comradery.  There is something about sports that touches us deeply and somehow makes us each want to do better, set goals, and strive hard to achieve them. When you think of athletes spending their whole lives training for races that last only minutes, it takes commitment to a whole new level.

What can you take from the Olympic spirit and apply to your life? Can you commit to setting some goals? Can you sacrifice at a fraction of what the athlete must sacrifice in order to hit your goal? Can you keep moving forward when there is no crowd to chant your name, no record to set, no line to race across?

This week, think of what “winning the gold” means in your life. Maybe it’s re-committing to your savings plan or starting the holiday shopping early so that it is paid for before the big day. Maybe it is cutting up that credit card and envisioning a zero balance a year from now. We all are “going for the gold” financially in many ways – heck, some months, we are just trying to keep a little of the gold in our bank account despite all of the “musts” that lay claim to it every month. Take the athletes’ fire, strength, dedication, and commitment and transfer some of it to your life. See yourself hitting the gold medal mark in some aspect of your financial life and then cheer yourself on to victory.

Every athlete who competes in the Olympics had to commit and recommit; take a step forward and then perhaps suffer some setbacks. They all had to gut it out when it was hard, lonely, and seemed like they could never reach the mark. The Olympians are the ones who kept at it, doing what they could do every day. This week, take the Olympic spirit and direct it toward the things that are most important in your life and then go for your own personal gold.

To your financial success!

Finish Strong!

We are well into the final lap of 2015 so it’s a good time to see where you are on meeting your goals and make a last push this month to achieve some things, wrap up some things, and get some things done before 2015 fades away. Here is a quick checklist of things that it may be helpful to review:

  1. Savings goals:

  • Did you fully fund any retirement plans at work? If not, can you up that contribution to get a bit more in there before year-end?
    • As you plan for the new “open enrollment” period, can you increase the contribution a bit to stash away more in 2016?
  • Have you got 6 months of income saved in a savings account or other low risk investment?
    • If not, organize yourself now to start putting away a bit more until you get there. You don’t want holiday spending to put you further away.
  • Have you contributed savings toward college savings accounts if you have children?
    • Are you encouraging your children to save for their own education?
  • How about funding Health Savings Accounts or IRAs? You do have until April 15th to get those accounts funded but you have to have the cash to do it so be sure that you are on target to meet those goals.
  1. Reducing spending:

  • Health care enrollment is upon us. Take a close look at your plan options and make sure you are maximizing your plan.
    • If you did not meet your deductible this year, consider raising it for 2016. A higher deductible will result in lower premiums. Take a little time and analyze what you spent on medical costs during the year and what your plan covered. Compare that to other options out there.
    • Speaking of health care, have you gotten your annual physical, pap test, mammogram and other health screenings? (oops, I need to schedule my mammogram!) Take the time to take care of your health. You can’t take care of your family or your job if you are sick.
  • Take a look through your credit card statements for auto-debit items. Do you read those magazines that you are subscribed to? Could you reduce your TV package? Do you go to the gym? What is lurking that you may have cooled on? I am going to cancel a membership that I am just not using. Even $16/month adds up over a year’s time.
  • Have you looked at your home and auto insurance lately? Are your coverages appropriate? Could you raise the deductible in order to reduce the premium?
  1. Status check:

  • Life insurance – do you know when your term expires on any term policies? Buying a 20 or 30 year term policy back in your 20’s means that those term expirations are creeping closer. You will want to get new coverage in place as that date starts to get near (I would investigate it at least 6 months prior to an expiration if you still need insurance coverage.) You can also ask about conversions to permanent insurance if your policy allows it. This is a consideration if you may not qualify for new insurance due to health considerations.
  • Do you have credit card points accumulating somewhere? Last year at this time, I realized I had a lot of “points” stacked up on my card. “I don’t want to buy a bunch of over-priced stuff,” I thought. Whoa – I found out I could also buy cash back to my checking account or as payment on my credit card. I got a hook-up by using those points at holiday spending time and I now watch them like a hawk to redeem as soon as I can.
  • Have you completed any charitable giving that you plan to do? That deadline is 12/31 so you will want to make your donations now. Look for coat drives, blanket drives, clothing drives or just round up your household items for donation to any of several great organization. Keep an accurate list of what you donated and find the “thrift shop” value in order to get your tax deduction. You DO need a receipt from the organization.

With the holidays coming up, now is the time to check in on a few of these areas so that you can finish 2015 with goals met, plans made, and ducks in a row. Nothing says Happy New Year like finishing this year strong.

To your financial success