Going into 2021, we challenge you to do two things: focus on your physical health and take steps towards becoming financially fit. The first goes without saying, health is one of the most important things we have. Without our health, our finances (and almost anything else) are meaningless. However, as financial advisors, we agree it’s more appropriate to leave health to the experts and focus on the second point right now.
What do we mean by financially fit? Perhaps the terms financial freedom or financial independence are more relative. To most of us, financial independence means that you have the ability to make life decisions without feeling overly stressed about the resulting financial implications. This concept refers to more than just your savings. It encompasses your investments, retirement plans, estate plans, insurance and more. Considering most of us are not taught these skills through basic schooling, it can be an intimidating task to handle alone. When humans become overwhelmed; we have a tendency to push things off and not do much at all. I think we can all agree on that.
If this sounds familiar, we challenge you to take steps in 2021 to view this important role as a job in your household. In a great book entitled The Next Millionaire Next Door by Thomas Stanley and Sarah Stanley, they argued that households should see their finances, budgeting, and planning as a job position. As written in the book, the posting would read as follows:
WANTED: Household Chief Financial Officer
Description: The role of household CFO is to ensure his/her household is building wealth in order to ultimately achieve financial independence.
The household CFO will oversee the household’s budgeting and financial planning. He/she will be required to create, manage, explain, defend and negotiate household budgets annually, and monitor spending and saving related to said budget. He/she will be required to plan for the financial security and longevity of the family, focusing specifically on retirement planning, college savings planning, and other larger expenses in the foreseeable future. The household CFO will be required to balance chequebooks, file tax returns, create financial plans, create estate plans, research investments, monitor investments, and generally run all financial matters for the household. The Household CFO will serve as a check on household spending, and thus will work closely with the following individuals: Household Chief Procurement Officer and his/her team members. The household CFO may choose to outsource any number of his/her responsibilities to trusted advisors, and therefore, part of the Household CFO job may include the ability to research and hire quality professionals who act in the household CFO’s household’s best interests.
Is your household CFO living up to expectations? Does your candidate have the time, energy, knowledge, and most importantly, self-discipline to excel at the role? If so, we commend you for taking action. If not, we challenge you to take action. Many households need a helping hand, and having a trusted financial advisor relationship allows your family to have more time available for a better quality of life and enjoy the little things that are important to them. That is our real value!
Lastly, we feel this analogy ties the two goals together nicely. This is a quote from an earlier book by Thomas Stanley (and William Danko) entitled The Millionaire Next Door;
Have you ever noticed those people who you see jogging day after day? They are the ones who seem like they don’t need to jog… but that’s why they are physically fit…
Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.
If this sounds familiar, take steps in 2021 to change that status. We wish you all a Merry Christmas, Happy Holidays, and a healthy 2021!