Well Written Blog Archive
Blog Home All Blogs

Living a Life of Legacy

Posted By Brent Hines , Friday, October 19, 2018
Updated: Wednesday, October 17, 2018

According to a study from AARP, 83% of Americans have at least some form or fashion of a plan for death. This is really a surprisingly high number given that somewhere around only 50% of baby boomers even have a simple will...by the way, only 28% of you millenials out there have a will!

Happy grandparents sitting on a dock with grandchildren.However, I pose a very different question...rather than asking what percentage of Americans have a plan for death, why aren’t we asking what percentage of Americans have a plan for living?  

A plan for living is called Retirement Planning...a plan for dying is called Estate Planning...combining them both is called Life and Legacy.

When it comes to investments and retirement planning, there seems to be a very polarizing phenomenon that occurs between far too many financial professionals and the average, hard-working family. The financial professional seems to lose all emotional intelligence and exchanges the role of counselor or advocate for the role of “Know-it-all.” 

Forgive me for just a moment, but this isn’t helpful! It’s like they are rehearsing for their potential 15-minutes of fame on Bloomberg or CNBC. Newsflash…we don’t care that you can use financial industry lingo. We want a coach, not a prima donna!
So, instead of going straight down the financial rabbit hole of focusing on all the tactics, techniques and tools, let’s take a step back and recalibrate to confirm alignment; through the philosophy of Purpose-Planning-Product.

Define your purpose before building your plan, and by all means, before choosing a financial product (stocks, bonds, mutual funds, annuities, real estate, etc.). Now, with this mindset you will remove a ton of the stress and anxiety around the actual investment choices you make. If you have a rock-solid purpose defined, then that will drive the design of your financial, retirement and legacy plans because it will be all about your needs and dreams, not the advisor, not the market, and certainly not the financial product du jour.

 

1. Beware of the Silent Assassins; Taxes and Inflation!

 The three phases of our financial lives are the Accumulation Phase, Spend-down Phase, and Legacy Phase. Think of it as taking on the challenge of climbing Mt Everest. The Accumulation Phase is like the ascent, the Spend-down Phase like the decent, and the stories told about it for years to come is like your Legacy Phase. Two keys to success in all three phases is to have a tax balance approach. Meaning we are paying attention to the tax consequences of our decisions today, and in the future. Where are tax rates today in comparison to where we believe they will be in the future? Additionally, putting the money aside (aka savings) is the beigest hurdle, but once we do set it aside, can we really afford to put it under a rock for the next 5, 10, 30 years? The answer is no, and the longer the time horizon, the more important each percentage rate of growth matters. Don’t forget, use the Purpose – Planning – Product philosophy as your compass.

 

2. Daydream a bit.

What will that first day of retirement look like? – Let that inner-child out right now and dream out loud for a bit. Day-one of your ideal retirement will look like what? What time does the alarm go off (or does it at all)? Where are you? What scene do you take in while sipping that first cup of retirement coffee? What will you wear that day; flip flops, boat shoes, ski boots, or are you barefoot? Seriously, dream and write. Write down everything. The color of the house, the temperature, who’s with you, how you feel. OK, this is fun and all, but what’s the purpose of all this warm and fuzzy feeling stuff? A budget. A retirement budget. 

Hopefully, we’re already living by our budget now (if not, START today!). It is very difficult (and probably unrealistic) to build a retirement budget out of thin air and expect it to be accurate. Yes, our retirement budget is best built on the foundation of our pre-retirement budget. Some expenses will go away entirely, other expenses my go up (hopefully some fun ones!) and some new expenses that we’ve never had prior may need to be added. Regardless, the budget in retirement is mission critical. It should be aligned with your vision and values and, it becomes your playbook for what is hopefully the most joy-filled years of your life.

 

3. Start talking.

 Share these dreams, plans and wishes with those most important to you. For whatever behavioral and emotional reasons, we tend to suppress way too many of our feelings, visions and desires around money. Take a few people out for coffee and share your new approach to building the life and legacy of your dreams. At bare minimum this means your spouse, you executor, your beneficiaries, your pastor, your financial planner and your accountability coach. There are many reasons why this makes good sense. Just to name a few…take your executor to an Executor’s Boot Camp (either through the Foundation for Financial Wellness, or run one on your own) and get them in shape. Additionally, it’s great to begin speaking these wishes into reality; your accountability partner will love to know what’s on your heart and help keep you on track. And one last one, would be the old load bearing truth of “If you want to master something, try teaching it.” As you begin putting spoken words to your heart-felt “why”, you’ll begin to find holes in your thinking, gaps in your assumptions, misunderstandings from your loved ones. Wouldn’t you rather work on these things now, rather than leaving it up to interpretation once you’re gone?

National Wellness Institute + Foundation for Financial Wellness

The National Wellness Institute has partnered with the Foundation for Financial Wellness (FFW) to develop financial wellness trainings.


Brent HinesBrent Hines, CFWE, CFWC is the founder and Chairman of the educational non-profit, Foundation for Financial Wellness. The Foundation’s mission is to improve people’s lives by empowering them with the knowledge and the motivation to take control of their financial lives. The Foundation’s curriculum is rooted in the principles of Behavioral Finance which makes every class topic taught by the Foundation unique, innovative and extremely valuable.


Tags:  Education  Finance  Financial Wellness 

Share |
PermalinkComments (0)
 

4 Questions About Risk We All Must Answer

Posted By Brent Hines , Monday, October 15, 2018

Each of us have different goals, preferences, and fears.

This world is full of risk. Some risks are worth taking, while others are not.

Risk comes in many flavors and variations. Just to name a few that first come to mind…risks can be physical, emotional, relational, professional, or financial.

In the financial world, we hear the talking heads associate “risk” with “return”. In essence, if we are 100% risk averse, we will experience very little opportunity for growth. However, we might be willing to take on large amounts of risk with the hope of large upside potential.

Well, not everything is black and white in this world and consumers (or investors) don’t always act rational. 

Distilled down to everyday language…each of us have different goals, preferences, and fears.

Please understand, I’m not here to tell you what specific risks you should mitigate or what insurance policies you should own, but rather, I want you to be well-informed, know the right questions to ask, and be able to put a plan in place that is tailored for you and your family.

John F. Kennedy said “There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.”

 

Regarding financial risk, there are 4 critical questions that we should all have answered:

 

What if I get sued?

You’re right to be worried. There are over 100 million cases filed each year in American courts and there are only 370 million people in the United States.  So, you do the math…in just 4 years’ time, there are as many court cases filed as there are citizens of the country.

 

What if I become sick or hurt?

This is an often-underappreciated topic. Take a moment to think through what next month would look like financially if the paycheck stopped. According to Bankrates Financial Security Index, only 39% of us have savings over $1,000. So, even needing to take just a week or two off without pay could lead to devastating financial consequences.  

 

What if I die younger than expected?

In our youth, we were invincible and would live forever. Now as adults with families we love and care for, it’s not unusual for us to begin contemplating “What if I die before I ever get a chance to grow old?”. So, forgive me for being Mr. Downer here, but over 40,000 Americans died in car crashes last year alone!  Not to mention the risk of heart attack, stroke, cancer and so on…So, if you were to die unexpectantly, what would that do to your family financially?

 

What if I need long-term care at some point?

The Alliance Health Policy research shows that 58% of men and 79% of women aged 65 and older would need long-term care at some point as they grow older; and it’s expensive. According to Genworth, in 10 years from now, the cost of 1 year of care will between $60,000 and $130,000 depending on the level care. If we don’t have a plan for this, the assets we worked so hard to save and build will be wiped out, rather than going to your family.

 

1. Cover your Assets

An umbrella policy is typically one of the cheapest policies you can purchase and for the broad type of coverage it provides, generally speaking they are worth it.  Especially when you have ‘attractive nuisances’ like a trampoline that neighbor kids play on or you have a job that is prone to lawsuits. The first step is to make a list of your assets and liabilities. We help you with that in the next section…the good news is that you may find that you look a lot wealthier on paper than you feel in real life…but that’s also the bad news because that is exactly what an attorney who wants to sue you will see as well. Umbrella Insurance can be an important protection from someone injuring themselves on your property or even in the course of your professional duties at work.

 

2. You’d insure a money tree, wouldn’t you?

Even more than dying or being sued, the most substantial risk you face is your inability to earn an income due to an illness or an accident.  But here’s the good news; the risk of being sick or hurt is an “insurable risk”. It’s called disability insurance and often times is a group benefit offered through your employer. So, this week make it a priority to confirm with your HR person if you have long-term disability coverage. If you do, then confirm the eligibility period (the amount of time between the date of disability and when benefits begin), and the percentage of your income it covers. This is not a place to pinch pennies; crank up the percentage as high as they will allow (normally, you’ll be capped around 70%).

 

3. Build a plan, don’t just buy a policy

Here’s a question you’ll never hear asked in an insurance agent’s office, “Do you need insurance?”. Not everyone does. And, those of us who do need it, don’t always the need the same type. Through the Foundation, we teach a methodology that we call PURPOSE – PLANNING – PRODUCT. If the conversation begins with financial product (features, benefits, bells, whistles, etc.), politely excuse yourself and get out! Begin defining your purpose as it relates to life insurance and long-term care insurance. Start simple. Take three sheets of blank paper. On the first sheet, across the top, write “1-Year Perfect Day”, the second sheet write “5-Year Perfect Day”, and on the third sheet, write “10-Year Perfect Day”. On each sheet, now describe (free flowing, stream of consciousness, no boundaries, no rules) what your perfect day would look like on each of those milestone years. Then, below each of those descriptions, describe what your family members’ lives would look like on those same milestones with out you here and/or if you needed long-term care. This exercise in essence, is a gap analysis. What is the gap between your best-case scenario and your death and/or long-term care scenario? This is how you answer the question that should be asked, “Do you need insurance?”.

National Wellness Institute + Foundation for Financial Wellness

The National Wellness Institute has partnered with the Foundation for Financial Wellness (FFW) to develop financial wellness trainings.


Brent HinesBrent Hines, CFWE, CFWC is the founder and Chairman of the educational non-profit, Foundation for Financial Wellness. The Foundation’s mission is to improve people’s lives by empowering them with the knowledge and the motivation to take control of their financial lives. The Foundation’s curriculum is rooted in the principles of Behavioral Finance which makes every class topic taught by the Foundation unique, innovative and extremely valuable.


Tags:  Education  Finance  Financial Wellness 

Share |
PermalinkComments (0)
 

Out with the Budget; In with Alignment

Posted By Brent Hines, Friday, October 12, 2018
Updated: Wednesday, October 10, 2018

Shame, guilt and judgment are liars and I suggest we kick them out of here. Would you rather I try to shame you into living off a budget, or would you rather we have a two-way conversation about aligning your personal values, mission and vision? Yeah, me too.

Pulling money from your emergency cash reserves should feel terrible, agonizing, and cause loss of sleep.

Budgeting, debt elimination, and emergency cash are all foundational. However, it seems everything we’ve heard from the talking heads on this topic falls in the “How” and “What” categories and runs right past the “Why” (thank you Simon Sinek for this vernacular). The alignment of our thoughts and behaviors with our values is the nearly magical place where lives are carried out with purpose and intentionality. Once we find this untapped power source, the budget, debt elimination and emergency cash will happen. And get this…you’re going to like it. You’re going to demand it! It’s no longer a best practice or principle, it’s a way of being that comes from your most meaningful reasons. Way back when, gold old Zig Ziglar said it beautifully when he said, “You can tell a lot about a man’s heart by looking at his calendar and his checkbook.” Where does your heart live? Where is it aimed? Zig also taught us that if you aim at nothing, you’ll hit it every time.

There are endless budget templates, software and ideas on how it should be built. We have our favorites at the Foundation for Financial Wellness, but whichever you decide to use, it must be a zero-sum budget. Meaning, you must “spend” every dollar on paper before the money hits your account. Dave Ramsey tells his readers to “Tell every dollar where to go, rather than wondering where it went”.

Debt elimination is a really interesting, (and unfortunately all too common) topic. We teach two types of approaches; 1) Mathematical approach, and 2) Behavioral approach. The mathematical approach would have you pay off your debt in order of highest interest rate (most expensive) to lowest. This is logical. The behavioral approach has you pay off your debt in order of smallest balance to largest balance. This is emotional. The emotional brain gets the chemical release quickly by knocking out the smallest first, then builds momentum by rolling those payments into the next debt item, and so on.

The vast percentage of people we have taught through the years prefer the behavioral approach, and for good reason. The best approach is the one you complete! Not to mention, it was emotion, not logic that got you into the consumer debt, so likely, it will be the power of the emotional brain that gets you out.

Finally, the third component of the financial trifecta, emergency cash. Nothing sexy about it. But then again, there’s nothing sexy about an Ambien either, and it’s debatable which one helps you sleep better at night.

 

1. Busting budget myths!

 Make a point this week to get real, call out and write down your own personal self-limiting scripts. Then, write down an empowering belief to replace each one. Be sure to share these with someone who cares about you. Here are just a few examples to get the juices flowing…

  • “Budgeting means being deprived and uncomfortable.”
  • “I make enough money to pay my expenses so I don’t need a budget.”
  • “This will take too much of my time to maintain. I have better things to do.”
  • “I’m comfortable with my current spending habits.”
  • “I’ve tried this and never stick to it anyway so why bother.”

 

2. Gate check your pride

 This flight is bound for freedom! Gate check your pride and take care of business. Start selling “stuff”! Seriously, sell all that junk!! Apply it to your debt elimination plan. Stop pretending and get real. If that makes you uncomfortable, then you’re really not going to like this one. Get a second, or third, job! I know you already work hard. So what? Are you going to choose to be, a “Victim” or “Owner” of your current situation? Sorry, nothing but tough love here my friend. If you want sugar cookies and tea, call your grandma. I know…I know, it’s probably a bit much, but this is serious. This is your future, your life, your financial freedom. Why am I more fired up about your life than you are?!

 

3. Define and commit to your new “zero”

 Define it. Calculate it. Protect it. It’s that simple.

  • Define what an emergency is before it happens. Meaning, it looks a lot more like a hot water heater going out than it does a new flat screen the week prior to the Super Bowl. You decide.
  • Calculate your minimum emergency cash reserve balance. There is a really simple rule of thumb for this. Go to your budget and determine which of the line items are “non-negotiable”. They must get paid even if your income went away. Then, multiply that number by at least 3. The reason for this is because most long-term disability policies have an “eligibility period” of 3 months (more on this later, so just trust me for now).
  • Protect it means not putting it at risk. Market risk, liquidity risk, default risk…no risk! So, basically this means putting it in a checking, savings or money market account that is preferably just out of arms reach from your sweaty little fingers! Pulling money from your emergency cash reserves should feel terrible, agonizing, and cause loss of sleep. This dollar amount of emergency cash is your new “$0.”

National Wellness Institute + Foundation for Financial Wellness

The National Wellness Institute has partnered with the Foundation for Financial Wellness (FFW) to develop financial wellness trainings.


Brent HinesBrent Hines, CFWE, CFWC is the founder and Chairman of the educational non-profit, Foundation for Financial Wellness. The Foundation’s mission is to improve people’s lives by empowering them with the knowledge and the motivation to take control of their financial lives. The Foundation’s curriculum is rooted in the principles of Behavioral Finance which makes every class topic taught by the Foundation unique, innovative and extremely valuable.


Tags:  Education  Finance  Financial Wellness 

Share |
PermalinkComments (0)
 

Financial Well-being — No one is coming!

Posted By Brent Hines, Wednesday, October 10, 2018
Updated: Tuesday, October 9, 2018

Financial wellness is different than just financial education.No one is coming. No white knight, no silver bullet, no bail out. This is up to each of us to get right, and our lives and legacies depend upon it.

Financial wellness and financial education are two very different things. Financial wellness is based in behavioral science, adult learning theory and even in the neuroscience of improving our odds of higher performance in the financial component of this game called life.

We all want to have the tools, tactics and techniques to obtain financial well-being. But first, we need to take a step back and acknowledge that it is the doing, or better known as the behavior, that is the engine that drives our success. And, if we want to understand what fuels those behaviors, we must take one more step back and unpack our thoughts, beliefs and assumptions around money; in other words, how we are being.

This is partially why financial wellness is different than just financial education. The formula for success is more than only having the head knowledge, facts and figures. It must include the healthiest behaviors along with the empowering beliefs.

And, it’s this powerful concept of aiming how we are being that makes the financial wellness so special., and rarely understood, much less harnessed. The behavioral scientists refer to these beliefs as “scripts, tapes, or records” and the crazy part is that the vast majority were given to us by authoritative figures from the earliest years in our lives. That’s right, it’s not our fault! We were taught all of this head trash!

So, let’s make a deal. For the remainder of the time you spend with me in these writings, we agree that you’re going to leave Mom in the car…crack the windows, give her a bottle of water; she’ll be fine.

Poor Mom! OK, just kidding about Mom, but serious about the self-limiting beliefs from the authoritative figures from our youth!

 

1. Could our most powerful strength also be our biggest barrier?

 Let's take a look at how we think each and every day. Scientists estimate that the average person has 50,000 to 60,000 thoughts a day. The brain essentially wants to be as efficient as possible, so it repeats many of the same thinking processes again and again, rather than taking the effort and energy to carve out new types of thought pathways. About 90% of the thought pathways we have built, we use again. These are very efficient and repetitive. 

What science has learned is that unfortunately 70% to 85% of these repetitive thoughts are negative or have a negative connotation. If we're repeating the same thoughts many, many times a day and many of those thoughts have a negative bias, you can see how our thinking may in fact be tripping us up.

 

2. Who exactly are you trying to convince?

 Larry Burkett famously said, “We buy things we don’t need, with money we don’t have, to impress people we don’t like.”. Fear and pride are real things and play into our behavioral decision making each and every. What are some ideas that you might implement to counter some of your most common financial soothing mechanisms?

 

3. Take the helm; this is your ship.

 You’re worried about some things, and we get it…you’re not alone.  We have all faced financial distress…no matter how much money we have, our career choice or what stage of life we happen to be in. To give just a few examples which reflect American workers: The American Psychological Association’s survey on stress determined that 72% of American adults are stressed about money, at least some of the time and 26% are stressed about money most or all of the time. And factors like being female or being a parent increases the likelihood that you feel stress around money. 

In a separate report, it was found that 60% of American workers distress over financial issues impacts their ability to focus at work and has caused 1 in 3 of us to miss or be late for work because of their financial situation.

Money impacts every single area of our lives, with our work, our families and that stress certainly isn’t doing our health any favors.  So, how do we fix it?  Well it starts with our thinking.  So much so, that much of our lives are pre-occupied with negative thoughts about money.  And by allowing those thoughts to exist, we allow no space for creating solutions.  

Please don’t misunderstand, financial wellness is not some mumbo-jumbo, positive self-talk solution…instead it’s about real life, practical application that you can implement right away.  

Remember, financial wellness isn’t just about education, it’s about taking action…and sometimes that action is simply making a decision. Oftentimes, the first decision is what we chose to think or believe about money, which will then create healthier financial behaviors.

National Wellness Institute + Foundation for Financial Wellness

The National Wellness Institute has partnered with the Foundation for Financial Wellness (FFW) to develop financial wellness trainings.


Brent HinesBrent Hines, CFWE, CFWC is the founder and Chairman of the educational non-profit, Foundation for Financial Wellness. The Foundation’s mission is to improve people’s lives by empowering them with the knowledge and the motivation to take control of their financial lives. The Foundation’s curriculum is rooted in the principles of Behavioral Finance which makes every class topic taught by the Foundation unique, innovative and extremely valuable.


Tags:  Education  Finance  Financial Wellness 

Share |
PermalinkComments (0)