Family Finances

How I Work Virtually as a CFP®

How I Work Virtually

Although it’s more common to work virtually with a financial advisor than pre-pandemic, many people still have questions about it.

How secure is it to meet virtually? In the beginning of the pandemic there were security concerns about certain online platforms, more notably for telehealth visits than for financial meetings. But the platforms quickly invested in measures that enabled corporations, medical providers, governments, and everyday users to provide a secure place to meet. That being said, no platform is 100% secure. We began with GoToMeeting but now use the Zoom Pro platform because more clients are familiar with Zoom.

How do you get all the documents you need securely? We provide a secure link. You can upload as many documents as you like. We suggest uploading at least 2 weeks before the scheduled meeting.

Will I be able to see my plan clearly on a small screen? We don’t recommend using a smartphone, however, anything from tablets/iPads to full monitors work just fine. We can manually zoom in and out on our end to make the content more viewable on your screen.

What if I need to share my own documents or spreadsheets during the meeting? We can enable two-way screen-sharing so you can share your own documents.

What if the technology breaks? Hey, it happens! We have a couple of backup plans.

What is the backup plan? If the problem is audio, switching to speakerphone is pretty seamless. If the problem is video on one end, we can usually figure the issue out within a few minutes. When there is a video problem on both ends, that usually indicates an internet or connection problem. Although rare, if that happened, we would suggest rescheduling but proceed as audio-only if that’s your wish.

How are you audited or regulated from your home office? We are regulated by the state of Florida who now conducts audits virtually.

How do you keep distractions to a minimum? It’s difficult when the view of the yard, birds and butterflies is so nice! Fortunately the location is quiet except for the occasional leaf blower.

How can I have the best experience meeting virtually with a financial planner? Great question! In the same way we would have you as a guest in person, we want you to be as comfortable as possible during your meeting. Here are a few tips:

  • Consider crafting the ideal spot for you. That might or might not be your office or desk chair. Couches are cool. So are pillows and pets.
  • Dress more comfortably than you would for a meeting in person. Socks and sweatsuits encouraged.
  • When more than one person is participating, we find it makes for a better experience if you each have your own screen. If you are in the same room, turning off one device’s audio will eliminate echo and still allow for us to hear each other just fine.
  • Grab a beverage and your favorite snack.
  • If you feel uncomfortable at any time, don’t hesitate to ask for a break or a few minutes to change rooms/couches/chairs.

Working Virtually Has Advantages for You

People have shared how much they appreciate:

  • Time savings of not traveling to Seminole (no Howard Frankenstein bridge!)
  • Meeting in the comfort of their own home or office
  • Not feeling the need to get dressed up
  • Having their pets close by

Our hope is that by removing pressures of extra time and effort to meet in person, and being a little more comfortable in your own environment, some of the stress that can come with financial planning and decisionmaking is reduced.

What other questions do you have about meeting virtually? What have been your experiences, positive or negative, with virtual meetings? Share your comments and thoughts below, or tell us first-hand by contacting us.

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Holiday Spending Hangovers

holiday hangovers

Holiday spending hangovers: What do holiday overdrinking, overeating, and overspending have in common? We can get stuffed in over our heads before we know it, leading to regret later. The holidays can test our temptation to overcelebrate. While holiday alcohol- or food-induced hangovers are commonly discussed, spending hangovers can bring about equal regret.

Thinking Ahead

To avoid regret, it helps to think ahead. You might call it an “awareness strategy.” What events are coming up that might bring about a temptation to overspend?

Nowadays, that strategy might start in October. Halloween is now the second biggest holiday for consumer spending after Christmas. What used to be a couple hours of candy collection with a homemade costume and a paper grocery bag is now practically a national holiday. Multi day trunk-or-treating. Elaborate costumes. Yard decorations needing extensions upon extension cords. On November 1, where does all the Halloween stuff go? In the attic, the garage, the storage unit, or the garbage? And what about the candy? Halloween often leads to sugar, spending, and stuff hangovers.

Next comes Thanksgiving, where we stuff ourselves with, literally, stuffing. Some then stuff our brains with football and TV. Some families stuff all the important conversations for the past year into a few hours at the table. The air is stuffed with emotions. And spending can often be a coping mechanism for difficult emotions. It seems all the Thanksgiving hangovers – food, football, TV, and feelings – start with stuffing.

And finally if you celebrate it, Christmas, the king of holiday hangover potential. Must-have new decorations, the tallest tree, fancy food, family gatherings, parties, gotta-get gifts, candy, cake, and alcohol all stuffed into a few short weeks. Moderation choices might start out strong. But decision fatigue can quickly take over. Come January, depleted bank statements and depleted emotions can bring on the same headaches as too much cookies and eggnog.

Thinking ahead to all of the opportunities to spend gives you a head start on avoiding regret later. Ask

  • What is coming up where I will want or need to spend on a holiday?
  • What does the spending event entail?
  • What are alternative ways to achieve my goal for the spending event?
  • Imagine it’s January. When you look at your bank and/or credit card balances, what’s a reasonable figure for you to be at then? Start with that as your goal.

Release Self-Judgment

Before launching into ways to criticize decisions before you have even made them, remember that it’s ok to splurge. It just takes a little thinking ahead, strategy, self-care and balance. Deprivation generally doesn’t work.

Mindful Spending Strategies

For some people, simply having a January bank balance goal is enough to help them stay focused throughout the season.

Others need more concrete ideas. Here are a couple:

  • Plan most or all of your shopping at one or two stores. Buy yourself a gift card for that store with the total amount you can spend that allows you to make your January goal. Ask for your remaining balance with each purchase. When the gift card is spent, you have made your goal.
  • The old-fashioned envelope approach. Withdraw the amount of cash that allows you to make your January goal. Put it in one or more envelopes, organizing by spending category. For some people, watching the physical cash dwindle is the best way to stay focused.

Keep Track

The gift card and envelope approaches are one way to keep physical track of how you are doing on your spending goal.

If you find yourself resisting or unsure about the idea of having a January goal, simply keeping track of your spending as you go can work, too, as a reminder to rein in overspending.

Weight Watchers has used this approach for decades. The best tool of the program for me was the daily journal. Logging what I ate every day had more impact on my diet decision making than any other single factor.

Similarly, when a group of experimental homeowners were given an electric meter next to their thermostat, they used 7% to 19% less electricity than those with outside meters.

So writing down what you spent each day can take the form of a note on your phone, or a physical notepad or journal.

Every bit of awareness can help.

Credit Cards and Overspending

What if you must use credit cards, or really like getting the points? (Although the points rarely work as well as cash back, but that’s another blog post.)

Using a credit card is like having the electric meter on the outside of the house. You never get to compare what you have spent to a predetermined goal. Additionally, psychology studies show that when used in stores, as the credit card is handed back to us it reduces the feeling that we have spent anything. Our wallet looks the same afterward.

To build spending awareness and still use credit cards, sign up for a daily or weekly reminder of your charges and the current balance. (Not all companies will do this, tragically.) Each day or week, transfer your charges for that period from your bank account. At the extreme, you might make 30 payments on your credit card over the holidays, but so what? It’s helping you avoid the hangover.

Public Service Announcement

And a final Public Service Announcement: if you’re concerned about hangovers of a different kind, you’re not alone. There is help. AA.org helps with all kinds of addiction. Al-anon.org is for friends and families of alcoholics or addicts. Or, call a local Certified Addiction Professional for more one-on-one advice.

See our Resources page for recommended books on the psychology of money.

Imagine getting through January with no hangovers!

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Free Financial Mentoring: Savvy Ladies

empowered women

Free financial mentoring from Savvy Ladies

Savvy Ladies is a not-for-profit organization formed to provide free financial mentoring to women.

How does it do this?

An army of volunteers, to start. Any woman can sign up for a pro bono 1 hour mentoring consultation with a Certified Financial Planner™ on a wide variety of topics. Volunteers have also written blog posts and recorded webinars on specialized topics. All are available on the organization’s website, https://www.savvyladies.org.

What kind of topics?

Cash flow, investing, divorce, widowhood, caregiving, budgeting, debt, college, careers and more.

Who does Savvy Ladies serve?

Any woman of any background who has a question about money. Founder Stacy Francis recognized that, as women, we are more often in-the-dark about money issues than men. Many women have no one to talk to about it. Savvy Ladies creates a safe place where those questions can be asked and answered.

What is its goal?

More self-reliant, financially educated women. In psychological terms, “financial self-efficacy.” Having self-efficacy means feeling confident and resourceful enough to handle a problem or question. Note this does not mean having or knowing all the answers. It means having the confidence to know where you might find the answers, and that you will be successful.

Who are the volunteers?

The website features several of the many volunteer professionals. Recently as a volunteer I have spoken with women as far away as Colorado and as close as my home state of Florida.

What’s the catch?

No catch. Volunteer professionals do not solicit for business. After the one hour consultation, the recipient fills out a survey asking how well their question was answered. The volunteer also fills out a survey asking how well they thought the consultation went.

Importantly, Savvy Ladies has received the GuideStar Seal of Transparency. Not all charities are what they appear. For more information on checking up on charities, see: https://www.hollydonaldsonfinancialplanner.com/charities-and-giving/.

Want to see more ladies get financially savvy?

If so, here are a few ways you can help.

Donate or Sponsor. Savvy Ladies relies on donations and sponsorships to keep the website, small staff, and operation running smoothly.

Refer. Refer a woman you know to the free financial helpline for a consultation. Or, refer a financial professional you know to volunteer.

Volunteer. If you are a financial professional, apply to be a Savvy Ladies volunteer. It’s up to you how much time you spend. Of course, men are welcome, too!

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NOW I Get It: 5 Lessons From Disaster Checklists

storm

Like many in Florida this time of hurricane season, I am remembering the not-so-distant past experience with Hurricane Irma. Below are 5 lessons from disaster checklists.

In that year, I thought I was prepared with a set of handy checklists. But in my Monday morning quarterbacking after that storm, there were areas where I did something right, intentionally or not, and others where I got to say, “Oh. NOW I get it.” I am a lifelong Floridian. I’ve been through hurricanes. Further, I love camping and have been doing it since I was little. But I take more time preparing for camping trips than I did for Irma.

All the official checklist advice didn’t sink in until I got a taste of the real deal.

Irma was a huge pain and inconvenience for several weeks, but in my immediate area no lives were lost or in imminent danger. I realize now, though, how unprepared I was if it had gone differently. With no property damage or bodily injury, I was given a chance to do a better preparation job next time.

So as we stare down another storm season and other climatic catastrophes, below are five lessons I didn’t expect to learn from Irma.

Checklist Confusion

What I Thought I Did Right: When Irma was one week out, I dug up the checklists and took inventory. But I became confused. One list was for evacuating the state, one was for staying at home, and another was for going to a shelter or friend’s home. I never thought I wouldn’t know which it was going to be. With a 92-year-old mother-in-law, leaving was not a simple option. Neither was staying. As we debated for five days before it hit, I bounced between the checklists, creating triple the preparation anxiety.

NOW I Get It: This could have been avoided with a kit prepared in advance for each option.

Lesson #1: If you are evacuating, and especially going to a friend’s house or shelter, the time to go is not 24 hours before the eye arrives. By then, or even 2 days before, the 50 mph wind and flooding rain has already begun. Once tree branches start flying across the highway (gee, that does happen before the eye arrives), all the stores are closed and you can’t go home for more canned soup, batteries or underwear.

Lesson #2: Prepare the kits. Decide early on (like, 5 days out) to stay or go, and stick with it.

Flashlights and Batteries

What I Did Right: All the checklists say, of course, “flashlights and batteries.” In preparation, I dug up as many flashlights as I could find. I checked the batteries. I replaced the batteries in the ones that didn’t work. The worst of the storm was to come at night, so before bed, I placed one on my bedside table and one on the kitchen counter underneath the light switch.

NOW I Get It #1: Unfortunately I waited until the day before the hurricane to check the flashlights. We were low on batteries. Batteries were gone from the store shelves five days before that. Oh, duh.

NOW I Get It #2: When I thought about needing a flashlight, I imagined the times when power has gone out before. I imagined it would be a handy supplement to dim natural light.

What actually happened was the power went out at night. The clouds were too thick for moonlight or stars. Of course, there were also no street lights. It was truly dark, windy, and scary.

Inside, hurricane shutters blocked out any sliver of light there might have been otherwise. My house was a cave. I could not see my hand in front of my face. The flashlight was an absolute necessity, not a helpful little handy supplement. I could have used one for each room in the house. Maybe two.

Lesson #3: Change checklist to “Several flashlights.” Put on calendar on June 1: “Check flashlights, flashlight batteries and battery supply.” There’s usually a sales tax holiday in Florida that week anyway. Best time to stock up.

Food and Clothing

What I Thought I Did Right: The checklists say to have three days of food and clothing. I planned ahead for having three days of healthy food for three people. On the last day before, we realized we hadn’t checked the propane so we could cook the food. By then, propane was all sold out. We ended up cooking on a small charcoal grill. Not ideal.

NOW I Get It #1: I didn’t quite understand why three days of food and clothing were needed, especially if we stayed home. It had been too long (2005) since I had gone several days without power. 48 hours after the storm, it felt like a race against time to eat or cook the food in the fridge before it spoiled. Also, in Florida when there’s no fans or A/C after a hurricane, you sweat a lot. Ick.

On Day 3 my mother-in-law’s ALF got power so then, we did evacuate. We left to a hotel for 4 more days until our house got power restored. If we had evacuated before the storm and not been able to return, we would definitely have needed more food and clothing.

Lesson #4: Have 3 days of food and clothing packed just in case. Maybe 5.

On Your Own

One of my checklists says, “After an emergency, you may need to survive on your own for several days.”

What I Did Right: Food and flashlights. That’s about it.

NOW I Get It #1: When I read the above sentence, I thought, “On our own? That can’t mean the suburbs. That’s for people in the country.” Now I realize we were lucky our county had generators to run water and sewer services for 500,000 people for several days. Otherwise, we could have been, yeah, on our own. (Hola, Puerto Rico. I see you.)

NOW I Get It #2: Now I recognize that just because the storm is over doesn’t mean you can get home. After the eye passed and the sun was out again, 60 mph winds on Irma’s backside took down huge trees that blocked our street. It took neighbors with chainsaws a couple of days to clear them so cars could get through.

NOW I Get It #3: We had been in our neighborhood about a year when Irma hit. We had met the neighbors, had them over for Superbowl, and waved as we were coming and going. We knew them, sort of, but had no idea how much we would come together in a crisis. I did not think of counting on my neighbors, nor did I give a thought to them counting on me.

But as Irma’s track got clearer, we formed a texting group, including a young couple who moved in the week prior. We checked in as soon as the sun came up. One shared their freezer operating on a generator. Others immediately helped cut and clear fallen trees. We shared our stories and asked how we could help each other. As long as I live here, I know I will not have to survive “on my own.” We will be helping each other.

Lesson #5: There are many little lessons from Irma that I can recount, but this last one was the big V-8, SMH moment. We are not all “on our own” if we have a community. I am lucky to be part of a caring community that pulled together, whether it was unlucky tree karma in your yard or failing to buy batteries and propane in time. When I hear the same old story on the news from a natural disaster, “We all pulled together,” “This is a community who cares,” NOW I know what that kind of community feels like. I feel very fortunate about that.

Still, I will do a better job taking care of my needs so I can be better prepared next time to take care of others.

NOW, I get it.

Need a checklist? Here’s Pinellas County’s Emergency Management page.

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Parents, Aging and Finances

Parents, aging, and finances. Talking about aging with parents can be one of those difficult conversations we want to put off for another day. Like other difficult conversations, though, avoidance usually makes it harder.

Transitions in aging can fall into four broad categories: financial matters; health care decisions; living arrangements; and transportation. This week’s post tackles the topic of finances.

Helping Parents With Finances

The downside of the digital age is that it makes seniors more susceptible to fraud and scams. They can send or spend money anywhere, or divulge sensitive information, with one click. Without being physically present, adult children might not be as quick to catch the warning signs that a parent has become susceptible.

The most common kind of elder financial abuse occurs from people close to the parent. Sometimes it can be a new person in their lives – a girlfriend or boyfriend, a housekeeper, or a companion caregiver. Checking up on new friends and companions might not feel good, but is a necessary step.

Are parents located far away? In her wsj.com article, Veronica Dagher interviews financial advisors and aging experts on how to help parents with finances from a distance.

By volunteering to help with bill paying, the person with the DPOA can begin to get acquainted with the parent’s accounts, particularly what kind of expenses are normal and which are not.

Parents: Start Early, Small and Often

Parents would be wise to communicate early with adult children. While the topic of money is taboo in many households, it will make everyone’s life easier if the parent is open and communicative. It’s helpful to know how many accounts there are, how the accounts are managed, and approximate amounts or a range of amounts in each. Describe how the transition of help with money would go in an ideal world. Other steps:

  • Provide contact information for the financial advisor, investment manager, lawyer, and accountant.
  • Arrange an annual family meeting with any or all of the above.
  • Begin conversations early with small topics first. Allow everyone involved to grow into their roles.
  • Build on that trust to expand financial duties as time goes on.

Adult Children: Start Early, Small, and Often

For the adult children, instead of anticipating one future difficult conversation, experts recommend thinking of each topic as a continuous conversation to be had over a number of months or years. Following are some pointers.

Start the conversation with curiosity.

“Mom/Dad, if you should ever reach the point where you’re unable to (balance your checkbook, drive on the interstate, feel confident about a medical decision, feel comfortable living on your own), what would you like to have happen?”

“What would be an example of something that would indicate the point at which you would like help?”

Listen intently. Even if it is not what you would like, check for understanding by repeating back what you heard. For example, “So what I hear you saying is that, if you have a fall, that’s when you’ll ask for help. Is that true?” Sometimes when we hear things back, we change our minds, or clarify.

Things To Do Now

As noted in Dagher’s article, one of the most important documents is a Durable Power of Attorney (DPOA). If a DPOA is more than a few years old, or there has been a change in health status, have it reviewed by an elder law attorney. The attorney will make sure the powers granted are up to date with current law and broad enough for the parent’s current situation.

Since so much of our financial lives are online, it’s also wise for a parent to share emails, userids, and passwords with the person named as DPOA. Ideally, all of the financial institutions where a parent has accounts would have copies of the DPOA and confirm they recognize it as valid.

By volunteering to help with bill paying, the person with the DPOA can

  • begin to get acquainted with the parent’s accounts
  • become known to the institutions where accounts are held and
  • learn what kind of expenses are normal and which are not.

Additionally, it tends to work better if just one person is named as DPOA. Then name a backup or successor in case they are unavailable. Joint DPOAs can be a headache.

DPOA Does Not Work for Health Care

While the DPOA covers financial and legal matters, it does not address health care decisions. For those, a health care proxy or Designation of Health Care Surrogate is necessary. With Covid-19, family members may not be allowed in the hospital. Should an emergency happen, the health care proxy, as well as any living will, DNR (Do Not Resuscitate), or DNH (Do Not Hospitalize) documents should be provided to paramedics and/or hospital staff.

For a free resource specifically addressing the talk about end-of-life care, see The Conversation Project, at https://theconversationproject.org/starter-kits/. For a primer on the 4 basic estate planning documents needed by everyone, see Part 2 of 2 – The Talk That Only Gets Tougher – 4 Documents.

Simple But Not Easy

These are difficult scenarios to think about or talk about. The most important thing to do now is begin with a single step. Whether you are the parent of adult children, or the adult child of an aging parent, it’s never too early to broach the topic. Rather than waiting until it’s too late, start while it seems too soon. That kind of talk will be a lot easier.

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Estate Planning, Opioids and Addiction

Estate planning, opioids and addiction: Addiction is one of those common issues everyone thinks is uncommon.

But if it was talked about more, more people would realize addiction is a widespread illness, affecting many families. Before Covid-19, the opioid crisis was one of the worst epidemics to affect the U.S. Like Covid-19, there were outbreaks and hotspots. Unlike Covid-19, the opioid epidemic was brought about by unscrupulous doctors and pharmaceutical companies.

Below is an excerpt from a guest blog post by Mike Mastry, Esq. of Mastry Law in St. Petersburg, Florida. In it, he details how opioids and addiction are affecting families and attorneys as they document their estate planning.

Mike Mastry is an estate planning attorney located in St. Petersburg, Florida. Mike’s goal is to simplify the process of estate planning by crafting individualized plans that provide each client with peace of mind. He does this by maintaining a client centered practice that focuses on creating comprehensive estate plans that are tailored to fit each client’s unique circumstances.

Mike’s ideas are relevant for planning involving any kind of addiction – the kinds that are easier to see, like drugs and alcohol, as well as the kinds that aren’t – like gambling, sex, or porn.

All addictions, seen or unseen, hurt the addict and the people who love them. Having a good estate plan in place can’t take away the hurt, but it can hedge against making it worse.

Opioid Epidemic Now Impacting Estate Planning, by Mike Mastry, Esq.

“Estate planning often serves as a reflection of a family’s experiences. In this instance, estate planning is used to protect the family and individuals with substance abuse problems.

Estate planning attorneys hear all kinds of stories about bizarre family dynamics and difficult relatives. However, the national opioid epidemic is relatively new to the estate planning world. Sadly, it is likely here to stay.

The Pittsburgh Tribune-Review’s recent article, “Pittsburgh attorney sets up ‘opioid trusts’ for beneficiaries with addiction issues,” https://archive.triblive.com/local/regional/pittsburgh-attorney-sets-up-opioid-trusts-for-beneficiaries-with-addiction-issues/ reports that the American Family Survey, commissioned annually by the Deseret News, found that 12% of families in 2017 said they had an opioid-addicted relative. Opioid overdoses nationally were the leading cause of death for people younger than 50, according to the Centers for Disease Control and Prevention in 2017.

Attorneys Getting Creative

The opioid epidemic has led some attorneys to get creative and establish what are being called “opioid trusts.” Some folks don’t want to leave anything outright to a child with a dependency issue, because of what can happen to the money.

Estate planning attorneys are regularly asked to create trusts for beneficiaries with intellectual disabilities, who are entitled to public-health benefits through Social Security or Medicaid and receive supplemental trust payments that add to those. However, the so-called opioid trust is somewhat different.

Parents may be paying for the child’s basic support needs. However, is that money going to buy drugs? If so, have they cut him or her off completely?

With an opioid trust, there’s no support to the child. This sounds cruel, but medical experts say it’s to get the child to embrace recovery. The goal is to get him into recovery and, eventually he might be able to stay clean long-term. An opioid trust is created to pay recovery-related expenses, such as rehabilitation bills, therapist payments and treatment bills. Optimally, the child gets a job. It’s this “tough love” that’s the only way this type of trust will work.

The money is never distributed directly to the beneficiary, nor is any property that could be easily converted into drug money. However, you can give them other, in-kind benefits, like the use of a car-but not the title to the car.

Naming a Trustee

Naming a trustee can be challenging in this kind of situation. This is a situation where a professional trustee, rather than a family member, may be a better choice. Achieva, a Pittsburgh-based organization, handles standard trust disbursements and has a team of social workers and counselors who work with trust beneficiaries.

An estate planning attorney will be able to help your family distribute assets through an estate plan that protects the family from the impact of addiction.“

Reference: Pittsburgh Tribune-Review(August 21, 2018) “Pittsburgh attorney sets up ‘opioid trusts’ for beneficiaries with addiction issues”https://archive.triblive.com/local/regional/pittsburgh-attorney-sets-up-opioid-trusts-for-beneficiaries-with-addiction-issues/

Other Resources

For families struggling with addiction and alcoholism – www.al-anon.org, www.nar-anon.org

For books addressing family dynamics with money, including enabling behaviors – see our Recommended Books page

Florida addictions counseling – www.kendonaldson.com or search for addictions counseling at the website of Psychology Today.

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Read more about the article Minimalism, Kakeibo and Happiness

Minimalism, Kakeibo and Happiness

saving money

Minimalism, Happiness and Kakeibo: Minimalism trends have been around at least a decade. They contributed to the rise of the FIRE (Financially Independent Retiring Early) movement, where 20- to 40-somethings shared ways to “retire” before the conventional 60-something age. Much of the movement’s advice questions how much one really needs to spend to be happy.

While staying-at-home one morning in 2020, my husband and I had a heartfelt talk about the future. We began with guessing how the world might change; and then how our microworld-within-the-world might change. We braved scary thoughts about health, family, finances, and society. Then we shifted to how little we need to be happy.

Choosing Wisely

In other words, should scary stuff happen, we agreed to make a choice about our response to it. The pandemic helped affirm that stuff, even money, isn’t our highest priority.

It’s possible we aren’t the only ones coming to these conclusions. Minimalism might enjoy a pandemic-inspired boost. For example, in 2020 journalist Sarah Harvey described her discovery of the Japanese art of kakeibo (“kah-keh-bo”) in this article: https://www.cnbc.com/amp/2020/01/08/how-this-japanese-method-of-saving-money-changed-my-lifeand-made-me-richer.html

What is Kakeibo?

Kakeibo is the Japanese art of keeping a written financial ledger. Writing Harvey’s expenditures down brought their relative need (or lack thereof) into sharp focus for her. It helped her spend less by watching what she spent on. As a result, she chose more wisely in her spending.

For me, I already keep a spending journal, but joining Weight Watchers also worked the same way. By tracking what I ate, I quickly learned where excessive calories came from. As a result, I ate more mindfully. More frequently, I paused before grabbing the next snack. As a result, I chose more wisely in my eating.

So, kakeibo kind of works like Weight Watchers but for wealth.

Paring Down the Excess, Like, a Car

Looking at our spending during the pandemic caused us to wonder, if we are being forced to do without, what won’t we miss? While being forced to stay home, we discovered upsides to more home-cooked meals; more family time (even if on Zoom); more movies at home; and more neighborhood bike rides. More downsides were discovered to driving, commuting, and shopping in stores.

We began to realize – could we slow down, spend less, and actually be a little happier?

For example, because we got outside more, we met more neighbors. We stayed closer to home for socializing as well as shopping and working. In fact, I was using my car so much less that it began to feel like excess. Why were we paying insurance, license renewal fees, and letting it take up room in the garage? So In July 2021, we sold it.

Minimalism, Money, and Mindset

Like an ecosystem hit by a natural disaster, some parts of our old lives may now begin to feel excessive, or may crumble and not come back. Others will adapt and grow to take their place.

Having to make do with less highlighted that happiness is more dependent on our mindset than our stuff and our money.

What discoveries have you made about your spending in the last 2 years? Share a comment below.

For more psychology of money, tax, and funny video tips, subscribe to the award-winning monthly e-letter, “The View From the Porch,” at https://bit.ly/3t2uwfn.

For a short online course on how to speak “finance” about retirement readiness, see Simple Finance Retirement Readiness: https://bit.ly/3p3BkXE

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Read more about the article Monthly Money Dates

Monthly Money Dates

couples and money

Monthly money dates sure don’t sound very romantic. However, it’s said that money and sex are the two biggest reasons for divorce*. Could it be just a coincidence they are also two of the most difficult topics for couples to discuss? So perhaps it might make sense to figure out how to talk about them. Making regular times to talk about a difficult topic can often break down walls within other relationship areas.

In fact, a money date doesn’t have to last that long. Probably at most 15 minutes. (Unlike that other difficult topic, quicker is better.) One suggested format for a money date has 3 parts, with each partner taking turns:

For Part 1: “Here’s what I contributed this month.”

And Part 2: “Here’s what I see for major expenditures coming up.”

Then Part 3: “How are we doing?”

Money Date Part 1: What You Contributed

First, telling what you contributed, no matter how big or small, starts the conversation with recognition for your efforts. If one partner stays home or is out of work, find a way to recognize other ways you contribute – whether it’s nurturing the kids or searching for that next great job.

Money Date Part 2: Upcoming Expenditures

Second, talking about what’s coming up, or could come up, leaves little room for unpleasant surprises. While this may be the hardest part of the conversation, it’s placed here for a reason. Psychological studies show that thinking about how much we spend or have spent can induce the same emotions that lead to depression. On the other hand, counting what we have induces the same emotions that lead to happiness and fulfillment. That’s why the spending question is sandwiched between the other two.

Money Date Part 3: How Are We Doing?

Third, how well you are doing? Ask, what goals are worth tracking? If you are unsure where to start, try the following four indicators: retirement accounts; savings levels; debt levels; and charitable giving. Rather than constantly comparing to an ideal number, find a way to recognize progress from where you were at some point in the past. No matter where you might see room for improvement, walk away with at least one thing you can both point to and be glad or hopeful about.

Money Date Wrap-up: What Next?

Sharing your hopes and working through challenges about money decisions, even for 15 minutes, can be an intimate couples exercise. If you follow this formula successfully, you might find you’re a little more interested in that other intimate topic that’s hard to talk about. (And feel free to take longer than 15 minutes for that one.)

For more tips on the psychology of money, subscribe to the award-winning monthly e-letter, “The View From the Porch,” at https://bit.ly/3t2uwfn, check out Holly’s book, The Mindful Money Mentality: How To Find Balance in Your Financial Future, or sign up for the online Retirement Readiness course.

*see Dr. Dae Sheridan’s Tedx Talk, “Real Talk about ‘The Talk'”

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What’s a Holiday Spending Style?

what's a holiday spending style

What’s a holiday spending style? It’s the approach you take to spending money on others.

How do you decide what to spend at the holidays, and on whom? In her program, Money Habitudes http://www.moneyhabitudes.com, Dr. Syble Solomon breaks down our money habits and attitudes into several different styles. Here are how a few of those styles might apply to holiday spending.

Spending Style: Status

After earning my first real money at 15, I made a list and a budget for each person on it. A few years later, at age 20, I looked at the list of names, each with a dollar sign beside them, and thought “Yikes!” It could appear as if each person had a price tag.

At the time, I didn’t know it, but I was operating under one of Dr. Solomon’s six spending styles, the one involving “status.” In other words, I was too concerned what other people would think about my spending decisions, and as a result, I spent too much.

So next,  I made a “total” budget, and tried to keep track as I went along on how I was doing. Yet that didn’t work very well, since I could always find an excuse to break the budget on something to keep it “fair.”

Spending Style: Security

If you spend very little on others, and on yourself, because you are concerned you may need it for an emergency, you might have the “security” spending style. You might do the bare minimum necessary to get invited back to next year’s turkey dinner. Or you might find ways to celebrate other than spending money.

Spending Style: Idealist

Idealist – If you reject the materialism of the holidays, then you might give everyone something home-made, like cookies, or your own artistic creation. You have the hardest time of all styles making a spending plan, because you despise handling money matters.

Spending Style: Spontaneous

This style can’t wait to see what great ideas are presented each year by retailers. Perhaps you make a spending plan, but you have a tough time sticking to it because of all the fun temptations and opportunities to purchase the perfect gifts presented to you right before checking out.

Spending Style: Caretaker

Caretakers see gift-giving as a way to show how much you care about people. Your spending plan might be more generous than other spending styles (but hopefully not more generous than is financially wise).

Spending Style: Goal-Oriented

Your most important concern is staying within your spending plan. It may take you longer to get your shopping done in order to find the right gift-cost combinations.

What’s Your Style?

If you exhibit more than one holiday spending style, that is a good thing. The key is not to take any one style to an extreme. If you can make a spending plan that is wise for your situation, shows your love and affection for others, and still allows for some guilt-free spontaneity, you have probably found the combination that will bring you, and those you care about, lots of joy this holiday season.

For more on the psychology of money, see The Mindful Money Mentality: How to Find Balance in Your Financial Future.

Or to schedule a call to talk about money matters on your mind, click here.

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Decision Fatigue and Shopping

retail shopping fatigue

Decision fatigue is a real thing. I discovered this poignantly on a recent shopping trip. The mission was simple: Buy a spice rack. I figured the best shot was at Bed Bath Beyond (BBB); a store I had not entered in over a year, much less at the holidays. I had a specific size and type in mind, so there was no doubt BBB would provide all the choices I needed. Little did I know that trip would be the beginning of the end of my day’s productivity.

Upon entering, I scanned quickly, bypassing a cart to stay focused on the single item I wanted. Smugly, I glided past the holiday specials to the kitchen department. Lo and behold, there were spice racks. And all kinds of other racks. An embarrassment of choices.

Because I like choices (or thought I did until this day), before long, I was nose to nose with shelves and shelves of plastic, rubber, wood, aluminum, and chrome gadgets, and doodads for kitchen storage problems I didn’t even know I had. It was an assault on my single-mindedness. More than once, something other than a spice rack caught my eye. At first, I had the mental wherewithal to ignore them.

Decision Fatigue Begins

As the minutes wore on, my brain was presented with dozens of items for which a decision had to be made. Does it look like what I came for? If yes, is it the right size and type? If no, move to next item. As this process continued, some strangely gleeful part of my brain, a la Martha Stewart, said, “It’s not the spice rack, but….is it something I COULD use? Hmmmm…it looks very handy. And sleek, too! After all….maybe it could make even more room in the cabinet?” The cabinet, of course, had nothing to do with the spice rack.

“STOP IT,” another Jean-Chatzky-part of my brain, said. “You are here to get the spice rack. Move on.”

Next doodad. Does this look like the spice rack? No, not quite. Yet, the label showed the entire matching doodad set in a fantasy-organized kitchen. Then that Martha Stewart voice again, “Oh, wouldn’t it be cool if my whole kitchen looked like this doodad’s label?”

“STOP IT,” Jean intervened. “You would have to buy every doodad like it in here, which is a) exactly what you did not come here to do and b) doesn’t even include a spice rack. Next item!”

And so it went….back and forth over a dozen items for fifteen minutes. My mental wherewithal was waning.

Finally, I found exactly what I was looking for and grabbed it.

Decision Fatigue Leads to Aimless Shopping

By then, Martha and Jean had gone 144 rounds. I felt drained. So why did I feel like, oh, taking a look around? Just to see if there was something I couldn’t live without? I got to the bath side and wondered what got into me.

To check out, I had to walk the gauntlet of holiday specials again. I actually pondered chocolates. That’s how beaten-down my willpower was.

When I left the store only $8.35 poorer, I felt like Rocky – beat up, but victorious.

I needed a nap.

Emptying the Decisionmaking Fuel Tank

Dr. Moira Somers, a decision fatigue expert, talks about the mental energy required to make decisions, particularly ones avoiding temptation. It seems we wake up each day with a finite amount of mental decisionmaking energy, like a full tank of fuel. After exhausting our tank, it’s free-for-all shopping, chocolate, smoking, sleeping, nagging, drinking, or whatever your personal favorite fallback behavior happens to be. That devilish irrational voice, (“it’s ok to have it this time” “I won’t do it again” “I can make it up later”) is most powerful when we’re depleted.

To make it more challenging, now we have online shopping. Savvy retailers are perfecting the presentation of temptations on our phones as well as they do in stores. It’s devilishly easy (and I confess, enjoyable) to click and shop.

Finally, stress of any kind (had a little bit of that the last 2 years?) burns fuel in the tank too. When we worry, we erode the ability to resist spontaneous decisions we later regret.

How To Keep the Tank Full

Some solutions? Plenty of sleep. Meditation and mindfulness. Frequent rest breaks. Having someone with whom you can share your struggles.

Also, put fewer decisions into every day by asking whether they can be:

  • automated
  • delegated
  • eliminated or
  • date-activated (meaning putting it on the calendar so it doesn’t take up space in your head).

For more on decision fatigue, see Dr. Somers’ work at http://moneymindandmeaning.com, or Chapter 6 of The Mindful Money Mentality: How To Find Balance in Your Financial Future.

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