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9 Ways to Find Financial Simplicity

Financial Planning Estate Planning Human Capital Factors Investment Management

“Too often, a vast collection of possessions ends up possessing its owner.” 

– Warren Buffett, GivingPledge.Org

It’s wonderful to have a meaningful career, a fulfilling home life, a busy social calendar, and ample assets, right? Then again, we all have days when we wonder why everything has to happen all at once. And that’s just in our personal lives. 

The 21st century hasn’t offered much respite in general. The pace of change is best described as breakneck. Global competition is as fierce as ever, disruptions are the norm, and tech-fueled innovations never sleep. If you’re an attorney or similar professional (think architect, hedge fund manager, bank trader, and so on), your clients clamor for you to help them navigate the deluge of risks and rewards … even as you struggle to stay one step ahead of them yourself. 

Enough! 

Out of complexity, find simplicity.

We’d like to think simplicity is a virtue for all your personal and professional pursuits; it certainly applies to your financial interests. Here are nine ways to find financial simplicity. 

  1. Find your balance. Do you spend hours trying to save $20 on a hot StubHub ticket, and then give your lifetime wealth a ten-minute annual glance? It’s a great feeling to score that sweet, discounted seat for the playoffs or a favorite performance, but you’ll score even more by also setting aside ample time for your greater financial planning. 
  2. Tame the beast. Most successful professionals have piled up money, investments, life and disability insurance out of complexity comes simplicityproducts, estate plans, and more – across accounts and relationships, at work and at home … times two if you’re a couple. That’s complicated. To seek simplicity, take an inventory of everything you’ve got. Then act on it. Consider rolling over former employers’ 410(k) assets into one place (heeding tax-wise rollover rules). Combine and close redundant bank accounts and credit cards. Consolidate loans. Check your credit reports, and correct any discrepancies. 
  3. Get ahead of the curve. Next, take some time (as a family, if appropriate), to ask three key questions: Where are we today? Where do we want to go? What might stand in our way? That last question should help you expose unaddressed financial risks. You may realize your rainy-day funds are dangerously depleted. You might need to step up your kids’ college savings accounts or put away more toward your ideal retirement. Or whatever. Take a look at your financial landscape, to shore up any shaky ground you may find.
  4. Assign dollars to your dreams. It’s not easy to peer into the future, but an informed estimate is better than no number at all. Assign dollar values to each of your lifetime goals and start saving for them. Two ways to increase your odds of success: Make best use of tax-sheltered accounts; and set up auto-savings, to simplify the process. If setting aside savings “just happens,” you won’t need to keep revisiting whether or how it should. 
  5. Write down your investment plans. Include all your investment accounts. Assign portfolio-wide allocation targets – such as half bonds and half stocks, further subdivided by sources of expected returns within each. Connect various accounts to your various goals – such as a 529 savings accounts for college funds, health savings accounts (HSAs) for medical expenses, IRAs or 401(k)s for retirement assets, and so on.
  6. Stop trying to “beat the market.” Remember, high-priced hedge funds, elaborate private equity ventures, and actively managed mutual funds are often optimized to enrich those peddling the products – not you. They’re usually needlessly complex, and not expected to outperform a simple, evidence-based investment strategy. Think low-cost, index or index-like (factor-based) funds, with a sensible and transparent set-up. This will help you participate in, instead of bet against capital markets and their expected long-term returns. 
  7. Safeguard your career (no matter what). Your human capital – your career – can create more lifetime wealth than what is your human capital worth?any of your other investments – so don’t take it for granted. Consider what could happen if you lose that income. This is so important, and so often overlooked, we’ve created a four-part series about it. For starters, most attorneys, pro athletes and other professionals should consider augmenting any on-the-job disability insurance with strong, independent coverage. Your future may depend on this simple act.
  8. Develop (or revisit) your estate plan. Many professionals find estate planning one of the last items on their priority list. After all, it most directly benefits your beneficiaries, not you. But remember, estate planning also incorporates documents to make caring for you easier if you are incapacitated. It increases the likelihood that your plans and preferences will happen as you’d hope for. In short, there’s no simpler way to safeguard your own and your loved ones’ lifestyle, than through essential estate planning
  9. Rinse and repeat. We’re almost there. Last, set up a schedule to periodically revisit all of the above. Mark the calendar; take the day off so you can focus. The pay-off is sustained simplicity. Knowing you’ve taken care of the biggest financial hurdles that could otherwise stand in your way, you can more thoroughly savor the rest of your days.

One last point before we wrap. Even if your family members, employees or community look to you as a thought leader in many walks of life, you may be less practiced at assessing all the “what if?” logistics involved in achieving and sustaining financial simplicity. Even if you do know how to proceed, you may prefer to spend your time and energy elsewhere. 

This is one of the biggest reasons to reach out to an independent, fee-only financial advisor to guide the way. At our firm, we’ve developed a Cogent Course of Action for this very purpose. Delving deep into our clients’ goals and values, we help them make smart decisions through life’s many complexities: the chaos and disruptions, the risks and relationships, the opportunities and abundance alike. 

Simply put, we help families find and sustain financial simplicity. Schedule a call to learn more. 

CONTACT US TO SIMPLIFY YOUR FINANCIAL FUTURE