How Managing Your Money Can Make You Happy

Does managing your finances bring you and your family happiness?

You are probably thinking: Josh are you insane? I do my best NOT to think about my finances. Discussing finances brings on stress and tension with my partner, not happiness.

Josh, what is your definition of happiness?

Defining Happiness

Happiness is the joy felt while pursuing one’s full potential.

Let’s break it down a bit, starting from the end of the sentence.

You can’t reach your full potential, if you haven’t defined your goals.

“One’s full potential” is something that we all want to achieve, to be our best self. We want to be engaged in doing things that makes us shine our brightest. It is what all of our short/mid/long term goals should add up to.

“Pursuing” happiness is not something that is given to you. You have to pursue it. You have to work for it. In the U.S. Declaration of Independence it says “life, liberty and the pursuit of happiness”. There is “work” involved and work is not easy. Often people don’t achieve it, it’s ephemeral in their minds.

“Joy” is something that we all want to experience… a big smile from our child, a loving embrace from our partners, shared laughter with friends.

a common pitfall I see with henry’s

Many of the HENRY’s I meet are not intentional with their money. Being financially comfortable, lulls them into a false sense of financial security.

a “henry” Is

a High Earner Not Rich Yet

As a result, they aren’t making progress towards their goals. Often they haven’t even defined their goals. And if you haven’t defined your goals, you can’t reach your full potential.

HENRY’s often feel confused and let down when they take stock of their lives. They don’t understand how despite their high income, their growing investments and net worth, they still feel something lacking. At work they keep taking on more responsibility, growing their income and yet, they have nothing to show for it at the end of the year, except for a few fancy vacation memories on their Facebook and Instagram accounts.

Being intentional with your finances, will, in fact, lead to happiness. If you work towards investing your money thoughtfully in a personal set of goals, you will be working towards your full potential. Think of those vacations in the context of the fun you will spend with family. Rather than the context of “escaping” work. It is a subtle mindset adjustment, but one of those is actually working towards a greater goal.

are you ready to be happy?

Are you ready to pursue your full potential? I help HENRY’s define their personal goals, create a plan to get to achieve those goals and intentionally manage their money. Contact me for a free consultation to discuss your game plan.

Why Everyone is Talking About Their Extra COVID Cash

Even though we are doordashing dinner, our grocery bills are exploding and we’re buying new bikes… our checking accounts are unusually flush with cash and credit card bills are low.

We’ve been forced to save during COVID-19

On average we’re spending 25-30% less due to the coronavirus.

Businesses are closed and we are staying home. Spring and summer plans were cancelled and refunds are rolling in from flights, hotel reservations and summer camps.

What Should You Do With Your extra COVID Cash?

Be intentional with that money, fund your future happiness.

If you are wondering what you should be doing with this new found stash of cash (cache of cash?), I have some suggestions:

1. Let it ride

Most people don’t have 3 month's worth of family expenses set aside in an emergency fund. If you do now, congratulations. Now more than ever, the argument for having a sizable chunk in cash is becoming abundantly clear. Set this money aside for the unexpected.

2. Upgrade Your live/work space

If you have been considering updating your furniture, splashing some new paint on the walls, or turning an extra bedroom into a study … now is the time to do it. You will likely be spending more time working from home in the future. And your kids are going to be schooling at home in the coming years (including your college kids). It all adds up to many more hours a day in your house. You might as well take the time to make it as comfortable as possible. Talk to a local designer or use an online tool. We’ve been using Havenly.

3. Upgrade your yard

Just as important as your inside living space, is your outside living space. Now is the time to invest in beautifying your yard. There are added benefits as well, as gardening is a wonderful outlet for any extra time you may have. And it is also helpful work for finding mental head space/peace.

4. Get Your Credit Cards in Control

If you have let your credit cards get a bit out of control, now is the time to pay them down, and assess what you really need to be spending. Part of that is getting control of those recurring needling $8-$100 expenses that get lost on your credit card bill. Now they are suddenly super visible. Start canceling subscriptions. Get your credit cards completely under control.

5. Fund your 529s

Invest in your kid’s education. You can put $15k into each of your children’s 529s. I typically suggest aiming to have two year’s worth of in-state tuition set aside when the kids graduate from high school.

6. Fund your IRAS

Setting aside money for your long term financial planning, is always important, and should be done a set cadence. Now could be a brilliant time to fund your 2020 Roth IRA (as well as your 2019 if not yet done). And if you have been hearing about backdoor Roth’s, it is time to implement one. A good read on a back door Roth can be found at the White Coat Investor.

7. Fund your brokerage account

Adding money to your mid/long-term savings can also be done through a standard brokerage account. You will end up paying capital gains taxes, sure, but the market is the best way to earn money, when your time horizon is greater than 5 years. After depositing your money in the account, I suggest dollar cost averaging in over the course of the next several months. Pick a day of the month (I like to use the first of the month), and make your purchases, regardless of the daily results of the SP500. You need some sort of forcing function to make you follow through, in the face of an ever changing market. Not sure what to invest in? Get in touch with me to talk about what to buy.

8. Financially Support Equality + Social justice

Now is the perfect time to put your money to good use, fighting for social justice, right here in the USA. Put your money where your mouth is!

Be intentional with your money, and it can help bring you joy

This time of quarantines has been an instructive time. Use it as a level set to gauge what you really need to be spending. Your extra money, needs to find an intentional place in your life. Make it work towards your ultimate happiness. Don’t let it go to waste!

Black Lives Matter... Put Your Money Where Your Mouth Is

Black lives matter! It is an easy thing to say.

Joining a local march/protest is good for building solidarity and getting educated. Have you also considered supporting the fight against racism financially? If you can, put your money where your mouth is. Here are some places to check out:

Black Lives Matter

I Run With Maud

Minnesota Freedom Fund

Official George Floyd Memorial Fund

Atlanta Solidarity Fund

The Bail Project

Buy Black Atlanta

Great Black owned Atlanta restaurants

The Woodson Center

The Equal Justice Initiative

Pandemic and Protests, Yet Stocks Continue to Climb?

Just when we thought society was at it’s rock bottom with a global pandemic, the murders of Ahmaud Arbery and George Floyd brought to light the systemic racism that our black friends have to deal with on a daily basis. Across the country there are daily demonstrations and reprisals with curfews by various cities.

Closer to home in Decatur, there have been two instances of racial instability with a group of white high school kids, confronting a black Oakhurst resident and a teenager on video making a racial threat.

The kids are out of school, with no curriculum, camps, access to friends. They wander around bored all day, when not playing video games.

Working parents are adjusting to the “new normal”. Which basically means accepting that kids will wander into zoom calls, working in 15 minute chunks of uninterrupted time and realizing their “work” friends are actual “real” friends.

The economy is showing warning signs

Unemployment dropped from 14.7% to 13.3%. And that is seen as a good sign!! (It has been hovering around 5% for 5 years.)

CBRE reported that landlords were only able to collect 30% of retail rent.

The Fed has never had a balance sheet greater than 5 trillion … it hit that mark on March 27th. As of today, the balance sheet is at 7 trillion. That is some serious stimulus money.

And yet the stock market…

The Stock market (something entirely different than the economy) has been seeing excellent returns.

Bonds are at historically low levels, the 10 year treasury is returning .007. Investors are starting to realize, to get real long term results, you need to be in stocks (and not bonds). As money has moved out of bonds and in to stocks, the market has gone up.

The Stock markets is a leading indicator … in the last 80 years, the market hits its low mark 107 days before the end of a recession. Of note, 107 days from March 23 takes us to the end of June.

Investors are saying

The Stock market is a mechanism to discount and value future streams of cash flow. And given known data, the current Stock market reflects the current information. Which means that investors believe the future is bright. And that there will be a V shaped recovery. But are Americans just ever optimistic?

I’m not so sure.

If you are invested for the long term, the market has a solid history of going up and to the right at around 9.5%. Don’t worry, keep buying in at your set cadence (every paycheck?) and dollar cost average in.

If you are heavy into bonds, it likely makes sense to move your allocation into a higher percentage of stocks, as bonds are not going to keep up with inflation.

If you are all in on stocks right now, it may make sense to increase your allocation into cash right now to 10-20%. There is solid data that shows optimism rules for the short term, after a primary dip, that leads to a nice spike in stocks. But then data comes in over the next few quarters that causes fear, and stocks drop to previous lows. Followed by a long, slow up trend.

If you took cash out of the market towards the beginning of the Covid, then you do need to dollar cost average back into the market and leave the majority of your money invested. Trying to time the market with a large percentage of your investment capital is a bad idea and almost never works.

If you need talk to someone about your allocations, please don’t hesitate to reach out to me.