Wealth Management Blog

Posts tagged Financial Planning

Why Putting Off Your Bucket List Is a Bad Idea

By JJ Burns

February 28, 2019

Retirement is often looked at as the shining light at the end of a long professional career. Ever catch yourself thinking thoughts like these?

When I retire, I'll finally travel the world.

Once my career slows down, I'll get started on that passion project I've been dreaming of.

After my children are grown and out of the house, I'll really begin having some adventures.

The problem with this all-too-common way of thinking is that it isn't rooted in the present. Instead, it glorifies the future—retirement, specifically—as the time when you'll finally honor your truest self and check off the bucket list items that are close to your heart. It makes sense in theory, but it puts a good chunk of your happiness at a future point way down the line. As a longtime wealth advisor, I can say that this is the norm for most folks.

Unfortunately, I've seen this plan backfire more than a few times. The truth is that none of us has a crystal ball. Despite our best-laid plans, we can't control every aspect of what the future will bring. What if you or your spouse experience an unexpected illness in retirement that prevents you from fulfilling those big goals? Or an adult child needs help that takes resources away from turning your dreams into reality. These may sound like extreme circumstances, but things like this happen more often than you'd think.

This is precisely why it's so important not to put off your bucket list until after you retire. The reality is that by then, it may be too late. Sometimes it isn't a serious emergency or health crisis that changes the plan. For many others, it's things like financial restraints or insurance issues that make it near impossible to live out their long-held dreams.

There is a silver lining here, though. These seemingly opposing goals—maintaining financial stability in everyday life and checking off your bucket list—don't have to be at odds with each other. In fact, it's more than possible to nurture both without neglecting either. The answer comes down to smart, values-led financial planning. At JJ Burns & Company, the operative word is "values."

The reason there's no one-size-fits-all approach when it comes to financial planning is that we all have different values, goals and dreams. For some, it's traveling across Europe and experiencing different cultures. For others, it's volunteering and exploring service projects that make a positive impact on the world. Smart financial planning makes room for whatever you value right alongside life's most practical demands, like contributing to retirement, investing wisely, and protecting and growing your net worth. These things go hand in hand, each supporting the other.

Wise planning empowers you to fill more than one bucket at the same time without negatively impacting either. This involves creating realistic timelines and financial plans to allow you to sprinkle bucket-list experiences into everyday life leading up to retirement. The driving force, in life and financial planning, is striking a balance that feels right to you; working toward fulfilling your dreams in a way that doesn't derail your other responsibilities. This may require asking yourself some big questions and contemplating a variety of trade-offs that will ultimately allow you to enjoy the best of both worlds. This task is a lot more manageable when you have the right wealth advisor by your side to help you weigh your options, explore your choices, and ultimately create a plan that's in line with your values.

We only have this one life, and the reality is that we can't predict what the future holds. Delaying your happiness until your golden years could end up being one of your greatest regrets. (Take it from me; I've seen it firsthand!) Thankfully, better financial planning is the secret weapon that allows you to enjoy life now and in the future. It doesn't have to be one or the other.

This truth guides our financial planning at JJ Burns & Company. We're driven to help each and every client live life to the fullest today, while protecting their financial health for tomorrow.

Love & Money: Couples, Are You Managing Finances Equally?

By JJ Burns

February 14, 2019

Maintaining a successful long-term relationship, and continuing to thrive over the long haul, is a team effort. Both partners have to be all in, both emotionally and logistically. This goes beyond divvying up household duties and co-parenting: one responsibility that's easy to forget about is balancing love and money by managing your joint finances.

There is no ‘best way’ for couples to manage their money—it depends on what works for you and your significant other. Some may feel most comfortable merging all their funds into joint checking and savings accounts, while others prefer the autonomy of separate debit and credit cards. The truth is that both approaches can work, but no matter the option you choose to use, some financial details are indeed intertwined when you're a married couple.

Commingling Your Credit

When newlyweds say "I do," they're uniting more than just their families; their debt also comes under one new umbrella. In other words, your credit score no longer stands alone. Whether you're applying for a mortgage, an auto loan or any other type of financing, lenders will look at your overall financial health, which includes your spouse's credit score. Having the money talk with your partner doesn't have to be complicated. If you haven't already done so, sit down together and put your credit history and current debts on the table. This way you're both on the same page. And if there's any credit repair to be done, you can make a plan for tackling it together.

Learning to Budget Together

An effective budget is really nothing more than a financial game plan that both partners create together. Lead with laying out your joint income, followed by the monthly expenses you have both together and separately. For instance, your mortgage or rent payment would be a joint expense, while your weekly happy hour date with your best friend may be considered an individual spend.

Once you see everything in black and white, communicate openly and honestly to come up with a monthly budgeting plan that works best for the two of you. Some couples may prefer separate checking accounts but joint savings accounts; or you might like the idea of using your spouse's income to cover housing expenses while directing yours to a checking account designated for other bills. At the end of the day, the best option is up to you, but the point is that ironing out the details should be a joint activity—not something that one partner decides and then dictates to the other. Financial knowledge is the foundation of financial empowerment, so no one should be in the dark here.

Planning for the Future as a Team

Equally managing your money also comes down to talking openly about your individual financial goals. Your spouse may be dreaming of traveling the world after retirement, or maybe you've both got your sights set on saving a down payment for a new home. Communicate freely about your big-picture dreams, then strategize as a team about how you'll get there. Building a reliable nest egg that will see you both through retirement doesn't happen overnight. Instead, it requires getting on the same page as your partner early on so that you can begin taking steps to get there—and, hopefully with as little stress as possible.

Whether it's coming up with an investment strategy, a debt payoff plan or a monthly budgeting approach, the most important thing is that you are doing it together. If one partner doesn't have a strong foothold in their finances, what will happen if he or she comes up against an unexpected death or divorce down the road? In the blink of an eye, they may be left to manage their finances on their own.

If making an effective plan feels like tricky terrain, a CFP® professional can help you and your partner clarify your goals and get on the right track together. Communication is key. From there, it's about managing your money as a team.

I Came Down with a Chronic Illness. Now What?

By JJ Burns

October 23, 2018

If you've been diagnosed with a chronic illness, you already know that it affects more than just our physical health. Digesting the news and coming to terms with this new reality often takes a toll on our mental health, relationships, family life, career and finances.

The latter is particularly important. Chronic illnesses account for 86% of our nation's $2.7 trillion annual health care expenditures. What's more, researchers say it isn't uncommon for folks with chronic health conditions to spend hundreds—or even thousands—every year, on top of their regular insurance premiums. Things obviously vary widely depending on the type and severity of the condition, but the main takeaway is that if you aren't prepared, a chronic illness could do a number on your finances.

Like anything else, knowledge is the key to empowerment. At JJ Burns & Company, we’re no stranger to serving clients who are living with chronic conditions. Our first order of business is restoring your financial confidence and putting you back in the driver's seat. Here's how.

Get a Handle on Your New Health Care Expenses

Understanding your outgoing expenses is the foundation of every financial plan. This is especially true for those with a chronic illness. Depending on your diagnosis, you may find yourself up against a long list of new health care expenses. The average person battling Parkinson's disease, for example, spends close to $23,000 every year in medical expenses. Connect with your health care providers to get a clear idea of what you can expect. Between medications, doctor visits, therapies, medical equipment, home health care aides and the like, is it possible to ballpark your annual medical needs and expenses? (Joining a support group is a great way to connect with those who are in the trenches and can provide some valuable perspective.) From there, it's time to take a deep dive into your health insurance policy to project your out-of-pocket costs.

There are a lot of numbers to crunch, which is why it's always wise to sit down with your financial advisor to map out a big-picture plan before making any moves. (We'll touch on this more in a moment.)

Leverage Tax-Advantaged Accounts

Tax-friendly funds like health savings accounts (HSAs) and flexible spending accounts (FSAs) can go a long way in easing the financial burden of a chronic illness. Each lets participants earmark pre-tax money to be spent on eligible medical expenses. FSAs have a use-it-or-lose-it setup (funds don't roll over from year to year), whereas HSAs stay with you over the long haul.

An HSA is particularly good to have in your arsenal because not only can you withdraw from it for medical expenses tax-free at any time, those funds become 100% yours, no strings attached, once you turn 65. You can spend the balance any way you wish. Just keep in mind that HSAs are only available to those who have a high-deductible health plan. They also have contribution limits ($3,450 for single folks under 55; $6,850 for families). That said, it's worthwhile to check in with your employer about whether they offer an HSA. If not, you can open one on your own if you meet the eligibility requirements.

Continue Honoring Your Life

A new diagnosis, while certainly life-changing, doesn't have to derail your dreams. Instead, it's about balancing your life with this new reality. Once you've connected with your medical team and have a firm handle on what to expect, take the time to really revisit your bucket list. What experiences stand out to you the most? Which line items ignite a sense of excitement within you?

Let this intuition guide you and your financial advisor so that your financial plan stays aligned with your values. Sometimes a chronic illness can be a blessing in disguise in that it reminds you what's really important in life. Taking an extended family vacation and making memories together, for instance, may suddenly feel like the best use of your money.

Reevaluate Your Investment Strategy

This really underscores the importance of having an in-depth conversation with your financial advisor as early as possible. A chronic illness complicates your finances, which is why our clients never have to go it alone. Depending on your health situation, your advisor may suggest reallocating your assets to free up more liquidity. If your illness is preventing you from working, whether temporarily or permanently, responsibly bridging that income gap becomes priority number one.

At JJ Burns & Company, we don't believe in making rash decisions. Instead, we take the long view and consider your overall financial health before tweaking your investment strategy. Remember: Our goal is to set you up for long-term success and stability. This is where estate planning comes in.

Despite the misconception, this isn't reserved only for those knocking on death's door. On the contrary, it's a simple way for anyone, regardless of where they are in life, to preserve their wealth and safeguard their family's future. After all, this is what financial planning is all about.

Does Money Really Buy Happiness?

By JJ Burns

July 19, 2018

Can lasting happiness be traced back to the almighty dollar? It's an age-old question, and the answer tends to vary depending on who you ask. Some say they'd sure be happier if they could afford to pay off their debts and live out the rest of their days in stress-free retirement bliss. Others swear that real happiness, like the feeling you get when your child wraps you in a warm hug, simply can't be bought.

In all my years of helping people manage their wealth and investments, I've learned that both are true. Happiness is hard to come by if you're plagued by financial insecurity. This is because what financial peace of mind really gives us is freedom. At its core, money is a resource that, if used wisely, opens the door for what matters to you most—things that don't have a price tag, like taking time to help your child with a school project or connect with your significant other.

When financial stress is down, we have more mental space and attention for life's true treasures, like family and friends. It makes sense that those struggling to make ends meet seem to have lower happiness levels. A now-famous 2010 research study out of Princeton University found that earning less than $75,000 a year was linked to more stress and everyday sadness. It stands to reason that once our basic needs are met, day-to-day stress tends to go down.

But the research also had one other particularly interesting finding: general happiness levels didn't improve much for folks who excelled beyond that $75,000 mark. In other words, someone making $200,000 wasn't all that much happier than someone earning $100,000 less.

Thanks to inflation, that $75,000 figure has surely gone up a tick since 2010. So how much do you need to be financially comfortable these days? According to Charles Schwab's annual Modern Wealth Index, an average net worth of $1.4 million should do it; $2.4 million to be considered wealthy. But these findings also come with a non-financial twist "Living stress-free/peace of mind" and "Loving relationships with my family and friends" are among the top definitions of personal wealth.

In many ways, true and lasting wealth has less to do with our net worth and more to do with our outlooks and values. On the same note, building wealth isn't so much about how much money and assets we accumulate—instead, it really depends on how we choose to spend our money. At JJ Burns & Company, our wealthiest clients (i.e. those whose financial choices are in line with their values) all have one thing in common: they've put their money to work for them by way of a diversified, long-term written investment plan.

Taking the long view is best here. Whether your idea of real wealth is the ability to put your kids through college stress-free, retire early and spend more time with family, or have the opportunity to travel the world and feed your wanderlust, smart investing is the best way to get there—and the time to start is always now. Thanks to the magic of compounding interest, those who start early typically reap the biggest returns.

All this means, in simple terms, is to keep our investments balanced. This is diversification, and it's essential to putting some muscle behind your money in order to ultimately fund your long-term goals. Why? The market is a notoriously volatile place, and ups and downs are simply par for the course. Diversifying is your best protection; if one area of your portfolio dips, it's not enough to tank your whole plan. The best analogy for long-term stability is to avoid putting all your eggs in one basket.

Many of us zero in on hitting a specific salary milestone or amassing a certain degree of assets to measure how wealthy we are. But I've learned that true wealth has much more to do with freedom—more specifically, having the freedom to use your time in a way that fosters true happiness. Spending quality time with family and friends, and making memories with loved ones, are easily life's greatest riches. The same goes for having the financial freedom to pursue our passions, nurture our health, and attend to our life's purpose. Our money is perhaps our most powerful resource for achieving all these things.

Being our client means knowing that when it comes to your personal vision of wealth and happiness, we're right behind you, echoing your values every step of the way. The most important part of the equation is putting a stable plan in place to help you get there.

Two Must-Read Summer Books

By JJ Burns

August 8, 2017

Summer may be a time for light beach reads, but if you’re ready for something a bit more insightful and inspirational, here are a couple books that fit the bill. Both are highly readable and engaging, but they also deliver important takeaways that will stay with you long after you turn the last page.

Consider this a follow up to last month’s blog post about how to have a financially savvy summer!

Back by Popular Demand

Business Adventures: Twelve Classic Tales from the World of Wall Street

How can you resist a read that both Bill Gates and Warren Buffet agree is the best business book ever?

Originally published in 1969, Business Adventures by New Yorker contributor John Brooks went out of print in the 1970s. But after Warren Buffet loaned it to Bill Gates—who publicly called it his favorite business book—it was reprinted in 2014 with an updated title: Business Adventures: Twelve Classic Tales from the World of Wall Street. It’s been wildly popular ever since.

What makes this book so special? Brooks provides detailed stories of 12 defining events in business history and makes them crackle with life and wit. He also reveals plenty of insider information on what went right—or terribly wrong—in each situation.

As entertaining as he is perceptive, Brooks delivers important insights we can all learn from. In fact, his tales are so enjoyable you may even find yourself turning them into educational conversations with your kids.

Although he’s writing about incidents from the 1950s and ‘60s, Brooks’ observations remain as relevant today as they were back then. As Bill Gates put it in a blog post about the book, “the rules for running a strong business and creating value haven’t changed.”

It was particularly fascinating to read about “The Fate of the Edsel,” a fresh take on Ford’s spectacular failure to listen to and communicate with their customers. It’s a cautionary tale for business leaders today, and at JJ Burns, the story’s lessons have been helping us communicate better with our own clients.

There’s also much to be learned from Brooks’ exploration of the seemingly invincible Xerox Corporation’s downfall, which was primarily due to a massive failure of vision and innovation. This story will resonate with our entrepreneur and executive clients. Continued innovation is essential to continued success.

You’d think such high-profile failures would never happen again. And yet, only recently, Kodak followed a very similar downward trajectory, going from undisputed industry leader to bankruptcy court—mainly because of misguided innovation and strategic management failures.

They say whoever is ignorant of the past is doomed to repeat it. In addition to being a delightful piece of writing, this book helps inoculate you against that ignorance.

Enjoy it like a vintage wine.

From Searing Pain to Soaring Purpose

Option B: Facing Adversity, Building Resilience, and Finding Joy

Before reading any further, stop. Write down the three things you are most grateful for in your life.

If you’re like most of us, your answers will be drawn from the following: health, family, relationships, and the fortunate circumstances life has afforded you. We often take these things for granted as we go about living our everyday lives. 

But for Facebook’s COO Sheryl Sandberg, the ability to take such things for granted came to a crashing halt with her husband’s sudden and untimely death during a family vacation. 

Her answer to this devastating loss was to write about it with help from her friend, psychologist and top-rated Wharton professor Adam Grant. The resulting book, Option B: Facing Adversity, Building Resilience, and Finding Joy, continues to climb bestseller lists around the country.

And for good reason. Both hopeful and heartbreaking, Sandberg’s book is a generous treasure trove of wisdom and inspiration. Her personal grief and isolation in the aftermath of losing her beloved husband is interwoven with many other stories of people triumphing over adversity. It’s a moving testament to the human spirit, as well as a practical guide to building resilience and recovering from life’s inevitable difficulties. 

Sandberg rose above her own experience to bring about workplace change. She recently helped enact a new policy at Facebook that gives employees 20 days of paid bereavement leave—which is two times more than the previous amount.

Using a devastating setback as a springboard to societal change may be out of reach for most of us, but this book will certainly inspire you to a deeper appreciation of all that you have. And it is a book you may find yourself returning to the next time life sweeps away your Option A and leaves you to make the most of Option B.

Navigating Difficult Times

As financial advisors, we’re frequently called upon when clients are going through major life crises, many of which are as devastating as losing a loved one or a business. It’s our privilege to serve in these situations. Our concern goes way beyond simply answering the question, “do I have enough money or resources to get through this?”

While we can’t ease the emotional pain of loss, we can ensure that no additional suffering occurs because of insufficient planning. Making sure you’re prepared for the unexpected is one of the most important things we do.

It’s also one reason we’re very proud of our vocation. We have the opportunity every day to make a difference, to help ease life’s burdens, to provide a safety net when life’s inevitable tragedies occur—and just as importantly, to help families like yours live life to the fullest in the good times.

We consider you, our clients, to be part of the JJ Burns family. We’re here to help with whatever you need.