Financial Windfalls: Money Changes, Life Changes

A few months ago I heard Susan Bradley from the Sudden Money® Institute say something quite profound regarding our relationship with money and financial windfalls:

When life changes, money changes.
When money changes, life changes.
The order in which change happens makes a big difference. The latter statement, referring specifically to financial windfalls, is a much harder change to handle for most people than the former statement. Let me explain.

Life Changes
Life changes are a constant: marriage, babies, a new home, family milestones, divorce, promotions, demotions, getting fired, moving to a new city, kids going to college, changes in health status (ourselves or in a loved one), growing old, and death. These are some examples of life changes. As with any change, anticipated or otherwise, we make budget adjustments and plan ahead. The unknown can become overwhelming at times. This is why we often tell clients to do what you can. We help find solutions for what’s possible....

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A Fresh Perspective on the Budget

 

Many of you have heard the old adage, If you fail to plan you plan to fail. Your financial planning begins with your cash flow planning – your budget, in other words. This spending plan keeps you focused on working toward achieving your financial goals. The order of operations is this:

Establish and quantify financial goals
Think this through carefully: How much do I need in my emergency fund? How much debt do I have to repay? How much should I accumulate in my retirement accounts?

Your budget – write down income and expenses
Here is where the budget comes into play. Use the budget as your roadmap to make sure you achieve your goals. Empirically I can tell you: after just 3 months of budgeting, 8 out of 10 people say they feel more in control of their money. We have a great budget template that we’d be glad to share with you. Send an email to [email protected] with the request and we’ll send it out.

Budget for the year
The budget should run out a full...

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What’s it Like Working with a Financial Planner?

 

What’s it like working with a financial planner?
I know many people reading this blog post have never engaged a professional financial planner before, and may be a bit reticent about what to expect. So let me tell you all about working with a financial planner at CameronDowning.

We always offer a complimentary first meeting. This is so we can determine, together, if we’re a good fit to work together. We want to know all about you – not just your financial life but about your family, your ultimate goals, to whom do you want to leave money, and whether you have any special needs children who need to be provided for. We want to know how your parents doing. Could you become financially responsible for them at some point in life? Do you have an expectation of a legacy? Do you have any lawsuits pending? We need to know all of these things! Where do you hold your current assets? Are you pleased with your current advisor? If not, why not? How did it happen that you came to...

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Financial Planning for Millennials

As a Millennial, you are in a unique position to start strong when it comes to your money. Financial planning for Millennials looks very different than planning done for Baby Boomers, and requires special attention. Here are the top three financial priorities of Millennials, by far, in no particular order:

  • How do I pay down my student loans?
  • When do I begin saving for the future?
  • What is the best way prepare to buy a first home?

In a nutshell, this is the heart of financial planning for Millennials.

Millennials are hungry for sound financial advice
Where do you start? Start by working with a qualified professional to help you identify and prioritize these important money decisions. Find a financial planner who specializes in working with young professionals.

Who does financial planning for millennials?
Not many financial planners take on younger clients because Millennials rarely meet advisor’s investment asset minimums. In other words, who wants to work with a Millennial with...

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Dependent Care Flexible Spending Account

A flexible spending account (FSA) is an elective benefit offered by many employers. There are generally two types: the FSA for healthcare expenses, and the FSA for dependent care expenses. This is part two of a two-part series. Here I describe the dependent care flexible spending account. You’ll find my post on the healthcare FSA here.

Dependent care flexible spending account
The Dependent Care FSA is a great way to fund, on a pre-tax basis, childcare expense incurred so that the parent can go to work. You must claim the child as a dependent on your tax return. Also, the child must be under age 13. The maximum tax-free reimbursement under a dependent care FSA is $5000/year. If married, both spouses must work in order to benefit. There is an exception if the non-working spouse is a student or disabled. If one spouse earns less than $5000, the benefit is limited to the earnings of that spouse.

What are the eligible expenses?
There are many. Before and after-school care, but not...

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Financial Wisdom

In these days of market volatility and high emotions, I’d like to contribute a little financial wisdom to the discussion. To wit:

Buy low and sell high.
Amazing how many people do exactly the opposite. Say we’ve spent quite a bit of time ascertaining your risk tolerance. We go through the Riskalyze software exercise, and you score into an allocation that should, over the next 6 months, produce returns in the range of -8% to +16%. You agree that an 8% drop wouldn’t bother you. You could still sleep at night, knowing that markets are cyclical, and the long term trend is always up. We subsequently invest you appropriately. Yet, during a market correction, you call all worried about China and the price of oil and Puerto Rican bonds and the Brazilian recession, and instruct me to sell you out.

What happened here? Either you replied untruthfully to the questions the software program uses, or you let emotions cloud your judgment. Studies show that as much as 90% of...

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