FiveNance Dance Chapter 1:
I’ve Got One Less Problem With Moderation
So..can you guess how much this snazzy pair of running shoes cost?
Find out by checking out the FiveNance Dance v-log below!
That’s right. It’s hard to tackle this, because our society is so based on buying NOW, needing this now, get this now. I understand – we are completely bombarded with tailored ads of products & items that scream “buy me.” Why do they have to know my browser history and shove it right in my face even after I’ve left the previous page…Need some more convincing & hard factual numbers? Check out Millennial Money Man’s post: Tax Refunds. You’re doing them wrong. He’s got this down on lock, and if you need anymore convincing than what I can do – this is definitely the place to go.
Hot dang, this is getting good! So this is the idea that you have such a great amount of determination that you save your tax refund year after year, versus spending it. Even with a modest, estimated 5% return – those tax refunds you save now can equal big bucks in the future. Want to know exactly how much with your own determined numbers? Try out the Investor.gov Compound Interest Calculator. This should give you a great visualization & indication of what the money you receive now could be in your future!
I’ve got so much faith in you that you do not need to touch a dollar of that refund that’s been put into your account! Remember that study with the kids & the marshmallows…yes, delayed gratification. It’s a wonderful thing! Act as if this month is just a normal month of receiving your regular income with the idea that if you set aside your tax refund (either in savings, retirement fund, IRA, etc.) that it will be a larger sum in the future. You’ve got it in you. Here’s even a virtual high five to get you started (or fist bump, whatever you’re in to).
And who wouldn’t want to impress their future selves? I mean, I know we all have an insane amount of goals. Think about who we are now, and where we were 5 years prior. Don’t you wish that person 5 years ago did just a little more, instead of kicking yourself in the shins in the present? Yeah…me neither (not…). Surprise your future self! I know we would all be incredibly grateful in our retirement that we had that extra money to fly and see our grandchildren, travel to exotic places we did not know existed, or satisfy that Bucket List item of visiting every craft brewery & coffee shop in the U.S. (heck yes, that is one of my Bucket List items).
So…remember that one time you & some friends made a pact to do an all liquid diet and shoot, you all gave in to Sunday morning brunch of croissants, jam & mimosas (wait, that’s not a part of the liquid diet)? But wait…there’s Stacey in the corner NOT eating anything. She’s sticking to the all liquid diet, while all the rest of us faltered! She’s got some willpower & we all commend her for that (maybe there’s even a dash of jealousy too?). Or, fellas – maybe you’re all at the gym getting your work out on when all the sudden Billy over there is about to max out his bench press at 300lbs. for the day. He’s got that willpower, and now you all want to try it too. Alright, so willpower can be applicable to so many situations – so why not with money too? All of the sudden YOU are able to strictly save/invest that tax refund, while others spend it in a snap ($1,500…POOF & it’s gone)! That’s right, the masses are going to look to you & get inspired (maybe I am thinking too highly, but you’ve gotta believe you’re going to inspire a couple people). It’s kind of like those questions: “What would you do with a million dollars?” Most people would have answers such as spend, spend, or spend. But you, my friend, have that awesome answer of “I would save it (or invest it).”
Have I convinced you yet?
A: Yes, I can’t wait to save my tax refund!
Okay, so if you’re answer is A: YOU are incredibly awesome & I wish I could give you a hundred high fives (not just the one I offered above). If you answered B: that’s okay! I still like you. Just take some time to at least sit & think on it. Mull it over. I’m still triple dog daring you to not touch your tax refund, though.
The reason my fiancé (shameless plug: we got engaged last weekend!) & I decided to set up a meeting with an investment advisor at a local firm? It’s a wonderful answer: the company we work for covers the fees for it’s employees who participate in the 401(k) plan to visit with an independent financial advisor. In other words, we have access to someone who can help overlook our portfolios for retirement, offer suggestions, and provide contacts for other life events that involve finances.
So…do you have time to check out, assess & rebalance the different asset allocations of your 401(k)? Nah, me neither. I’m working 40 hours, blogging, maintaining a (somewhat?) regulated work out schedule, keeping up with family & friendships, connecting through technology & social media, collaborating, one word: Netflix, scanning books & articles, oh wait – can’t forget eating…yeah…not too sure I’ve really got all that much time for that. I know this is sounding all too familiar for a lot of you as well!
That’s where the amazingness comes in. An independent investment advisor is keeping up with our company’s retirement plan. They are overseeing the performance & trends and can create suggestions for where to allocate the money we are so awesomely auto-depositing from our paychecks to our 401(k) plans (what the heck are small cap, mid cap, 500, bond, stock, money markets?!) Okay, so maybe I am being a bit modest here. I actually do like re-balancing my portfolio (nerd alert)…but pretty much just once a year is when I can find the time to hunker down & do so. An investment advisor can notify us whether our choices are fairly sound, or not. So here is my challenge: if you are currently participating in a 401(k) plan through your employer, do you have access to an investment advisor (also, do they cover the fees)? If so, set that appointment up! Even a one time appointment will enlighten you.
In the spirit of DIY’s and How To’s, here is a run-down of what to expect:
“Hi there, my name is __(insert name here)__. I am looking to set up an appointment with one of your investment advisors?” Prearranged date and time for the meeting will be coordinated. You may be notified by the investment advisor/receptionist to bring any information regarding your retirement portfolio.
Easy peezey, lemon squeezey. We all know how to set up doctors appointments, dentist appointments, etc. via phone. You’ve got that step down on lock!
You will hear words and phrases such as: (1) “Let’s take a look at your portfolio.” As well as: (2) “You were up 4.2% for the past year.” Or: (3) “Here is what your plan offers and what that means.” You may be asked questions like: (4) “How much are you currently contributing to your 401(k)?” And: (5) “Are you taking advantage of your employer match?”
Here are some hypothetical sample responses/answers to above questions:
(1) Alright, let’s!
(2) That’s great news, should I diversify more to try to keep my rate of return up? (This is how much you are earning on top of the money you are contributing)
(3) Great, can you tell me what the difference is between Target Retirement Funds, Small Cap Funds, and Large Cap Funds? (You will encounter a whole slew of financial terminology that is offered in your retirement plan. Make sure to ask questions to recognize which each one means, and why you should put your money there)
(4) I am currently contributing 5%. (This is how much is being taken from your paycheck to be deposited in your retirement plan)
(5) Yes, definitely. My employer matches 4%. Since I am contributing 5%, I get to receive the full match. (To reiterate, employer match is free money you do not want to miss out on. If you are only contributing 2%, but your employer matches 4% – that’s an additional 2% of money you are missing out on! Challenge yourself to bump your contribution to the total percentage of what your employer matches to take advantage of the retirement plan)
Also, be prepared that the investment advisor may dress more formally than you – most investment advisor offices have formal dress codes. Do not feel as if you are not worthy of being there. Thank the investment advisor generously for their time after the meeting is over.
You’ve got advice, tips & guidance – now put it to use!
Throughout the meeting, hopefully you will have gathered multiple pieces of advice and suggested action plans. This could be anywhere from rebalancing your 401(k) portfolio, saving more for a future money goal, or even plans to create a household budget. After our one meeting, my fiancé & I walked away with a incredibly detailed excel spreadsheet budget to use (trumped my old school layout of a budget), contacts at local banks that we can visit for mortgages when we begin house hunting, the best things/practices we are doing currently, and how to recognize our overall financial picture. Not to mention, the investment advisor also asked us personal questions to get to know us better – as well as threw in stories about his own personal experiences. There was no sense of “stuffiness,” or intimidation whatsoever. As a bonus: afterwards Kun Fusion (a Korean BBQ food truck in Eugene) was parked outside the business center – an awesome lunch was waiting for us after a successful meeting (I hope a reward manifests itself for you as well after your first investment advisor meeting)!
Wait…so we’re talking 3 steps? That’s right! No need to experience information paralysis. If anything, one meeting with an investment advisor can assist you with eliminating the overload of financial thoughts you’ve got going on in your brain. Also, it gives you an opportunity to consult with a professional. You do not have to take on every aspect of personal finances all by your lonesome, there’s resources out there for you.
Until next time, re-balancing your personal finance mindset one post at a time…
P.S. To all my Portland contacts, I’ve got a financial advisor for you in the PDX area: her name is Sara Stillwell and she is wonderful – find her on LinkedIn & send her a message! Set up an appointment today. Her services can offer an entire holistic picture of every financial aspect in your life.