Jan and Bill are married, have two kids, and within the last few years have moved into a new home. Both Jan and Bill work full-time, contribute to their employer 401(k) plans, and have started saving for their kids’ college. They have some additional savings that they have accumulated as well. One day over coffee, they took the time to open up the discussion and determined that while they were saving in a few spots, they weren’t sure how intentional they were really being with their money. Not certain if they were saving enough for the kids’ college, for their retirement, or for some of the goals they have for improvements to their home.
After meeting with Jan and Bill, we found their term “intentional” to be a common theme that’s missing with many of the people with whom we meet. Whether it’s a married couple or single mom or dad, life’s busy pace has often taken the intention out of the mix. Lot’s of great work is being done toward education and retirement savings costs, yet, with a bit more intention, we believe greater success in meeting those goals can be achieved.
Let’s take a moment to think about college for example. What if you just decided to go to the nearest college to get your degree and didn’t give it–well–much additional thought? Versus, thoughtfully considering where you want to go to college and why you may want to go there. Wouldn’t you research which colleges have the degree program you are interested in, how they are ranked among other colleges with your program of interest and what your proximity is to the college? Perhaps you even review how the costs compare among the colleges that offer similar choice. Then, you go on a college visit, and if you like it, you apply to get in, not only to one school but to the several you are interested in.
Which do you think has the better chance of providing you with a more successful result? A search that is thoughtful and intentional or choosing based on just one attribute such as proximity?
Or, think about your garden for instance. There have probably been years in which you have diligently watered, organically fertilized, pulled the weeds and watched it blossom. Years when you had a goal in mind of how you wanted it to look and tended to it regularly to make it happen. But, in the years when you didn’t take the time to think much about it, haphazardly watered, didn’t pull the weeds regularly, nor have a plan of how you wanted it to look—well–the result was probably just as you might think, a garden– but certainly not in bloom.
Successfully navigating you and your family toward your financial goals and peace of mind begins with making your financial decisions more intentionally. How do you do that? It begins with educating yourself on your own personal financial situation as well as beginning to learn what you don’t yet know. So how might one do that?
Let’s start with a short financial literacy quiz and see how you do…
Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy:
a. more than it does today
b. exactly the same
c. less than today
In the past decade, how much on average annually has tuition and fees increased for in-state public four year institutions including inflation? (average rate of inflation over past decade was 1.97%)
What is the average amount a 65-year-old couple can expect to spend on healthcare in retirement?
a. $ 50,000
What percentage of Americans today don’t have basic estate planning in place such as a will or trust?
If interest rates rise, what will typically happen to bond prices?
c. Stay the same
d. There is no relationship
We’ve created this quiz, not because we think it’s all you need to know, but because it includes a few basic concepts that we think you should grasp, especially today.
- Be aware of inflation’s impact on your money.
- College tuition and fees continue to rise.
- Healthcare costs may share a large part of your retirement nest egg.
- Basic estate planning such as a will and trust shouldn’t be ignored.
- Bond prices react to interest rates and rates have been on the rise, so know how your bonds will react.
Our series of blogs on “Being intentional with your financial life” will continue next week as we write on inflation and how it impacts your money. While inflation has been low in recent years relative to history, from here, even a normalizing rise will impact your money, and we think it’s important to understand exactly how.
Quiz answers: c,b,d,e,b
Important Note: The views expressed in this post are as of the date of the posting and are subject to change based on market and other conditions. This post contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and should not be taken to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Lenity Financial, Inc. unless a client service agreement is in place.
College Board, Annual Survey of Colleges.,