Recapping all 7 ways to Set Your Compass for the New Year - you've learned the ropes, now set sail!

• If we just have one giant, 'I want to build a ship' bucket, it's hard to see where all that money is going to for the various elements we're going to need. (06:31)
• If you are more intentional about setting money aside ahead of time, you can add a lot more happiness to your life on a daily basis as well. (09:17)
• What parts are worth insuring? Hull of the ship, very very important. One of the nails the ship, really not so much. (11:43)

Quote for the episode: "But the end result of any goal is for more overall happiness, either through addition of happiness, or subtraction of anxiety." (03:08)

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Welcome to the Enjoy More 30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families by hitting on the financial topics

that tend to weigh on us, stress us out, and distract our focus

from simply enjoying life.

Hello and welcome. I'm so happy to have you today

as we recap this most recent series of the Enjoy More 30s

Family Finance podcast. If you don't know, every week, I'm

talking to you about money so you can take steps forward, gain

confidence, remove financial anxiety, basically just focus

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you.

Today we have the recap, as I said of the most recent series,

Setting Your Compass for the New Year exclamation point. I

sincerely hope these episodes can help as you take sail into

this new year with a positive productive mindset on the

opportunities you have. The goal of this series was the same as

the goal of all the other series, and we want to make sure

that we're remembering that goal. It is to remove anxiety

and financial worry so we can focus our energy on what really

matters most. We want to be enjoying more living with our

family. We want to be enjoying more living with our friends.

You don't need to have anxiety when it comes to money. And with

the right mindset, a few steps in the right direction, a few

really good podcast episodes, you can make huge strides in

this area. So every time you make a step, be proud of these

steps as you take them then. You're making life more

enjoyable then for you, and by a natural consequence, for your

family as well. And lastly, stay tuned to the end, we will have a

new series coming up and we want to tell you what it is. Each

episode of this specific series was in a kind of chronological

order and walked us through the whole process of setting your

compass for this new year. So we can really take it one episode

at a time recap along the way and it should put you in a great

position to have a conversation with your spouse about the

things that you guys want to do into this new year to make life

even more enjoyable.

The first episode was titled Goals Are a Two Spouse Exercise!

Here we spoke about the very first part, which is setting

that compass, figuring out where exactly it is you want to go.

And really not just you but more accurately where you and your

spouse both want to go. When you're married as you know you

have one ship. You may decide to have separate bank accounts,

split up responsibilities, but you cumulatively still have that

one ship and a ship that can only sail in one direction at a

time. It has one steering wheel that you and your spouse both

have to set together. You need to know what those goals are.

Now, some goals can be things to add your happiness, like more

vacations or a bigger house, there's things like that. And

there could be things to also stop detracting maybe from your

happiness. And those are things where we're removing anxiety. So

maybe worrying about what would happen to your family if

something happened to you. But the end result of any goal is

for more overall happiness, either through addition of

happiness, or subtraction of anxiety. Lastly, when you have

this list of goals, now, I highly recommend to hang it up,

make it visible, you know somewhere that you look at it

from time to time, and check in with your spouse about it every

few months to keep it in that front of mind. Remember, if you

achieve even one of those things that you hang up, just one, you

are better now than you were before. Your compass has a route

and your ship now has a direction.

The second episode was Pay Yourself First! You know, we set

our compass in that first episode with the goals but we

also need that ship to actually sail us to where we want it to

go. And as you may know, thing is ships aren't free, they don't

just give them away. And we likely need to save, pull

together funds over time, to be able to pay for the ship to go

where we want it to go. If we just give our money away every

month to other people we will not ever be able to do that. So

how much should you pay yourself every month? The minimum that I

spoke about is at least 5% of your gross income. So if you're

at $100,000 a year, then at least $5,000 a year at a bare

minimum. But if you really you know like yourself, I would

highly recommend 10% to 15% or even more because you know

you're really important, you deserve more. And the exercise

that we went through to try to help you figure out where you

may be with what you could save was that 36% ratio, what we call

Backdoor BudgetingTM with our clients. If you make $120,000 a

year like in the example we spoke about, that comes out to

$10,000 a month and the 36% ratio off of that, we get down

to $3,600 a month for those specific to you expenses, things

that you may have other people may not have. So mortgage, car

loan, student loans, not cell phone bills, you know, not

groceries not going out to eat once a while, those are the

things everyone has. So if you're saving nothing right now,

but you have a mortgage of $2,000 a month and a car loan of

$600, those are the two specific to you expenses. And that comes

at the $2,600 a month we talked about. So the difference between

that $3,600 a month and the $2,600 a month comes out to

about $1,000 a month. So that is what you should have additional

to save towards you. And remember this exercise is just

to get to a starting point. It may be a little too high, may be

a little too low but on average, this is what you should be able

to be saving every month, whether it's 401(k)s or specific

bank account buckets, or whatever it might be. That's

really what we should be getting to in savings total on a monthly

basis. Now if this is you know, too high, too low, like I said,

you could change it. But at least we're doing something

active and intentional to save towards you. Paying yourself

first.

Episode 3, Use Lots of Buckets! Buckets for each goal can add a

lot of clarity to your situation because it helps you better

organize and achieve the things that you want to achieve. If you

think to how you organize your clothes, you probably have some

kind of a system. Your system is probably grouping things

together and spots that make sense and allows you to find

them more easily. And so the same goes when we build this

boat, the same thing goes when we build the ship. We want it to

take us to our goals. If we just have one giant, I want to build

a ship bucket, it's hard to see where all that money is going to

for the various elements we're going to need. Some we may need

right away, you know right up front, we may need for the boat,

some we may not need until the ship is built. And some of it is

to refuel when we get there, you know, there's different pieces

to it. And by breaking it up into different buckets, it's

much easier to see what we have for each specific purpose for

each specific goal. Now, these buckets are three general types

a short term bucket, an intermediate

term bucket, and a long term bucket. A short term bucket is a

bank account. So things that you're going to need over the

next 1-3 years say. Intermediate bucket is more of a general

investment account, usually, for maybe 4 to 10 years out more,

maybe sometimes even more than that for those goals. And the

long term bucket, it often includes things such as

retirement, your 401(k), IRAs, things like that, or even a 529

plan for college savings. But for younger family long term

tends to be you know, pretty long term. Once we have those

three general types of buckets, now we can fit our goals from

the first episode inside of them. New car next year, short

term bucket, the bank. A wedding 3 years from now, probably still

short term bucket a different bank account. Second home in

seven years. Okay, now we can use an intermediate term bucket,

maybe a general investment account. Retirement, long term

bucket, Roth 401(k), and so on and so forth. But by having all

those different buckets, it's much easier to see where we are

for all those different goals.

The next episode was kind of an extension of that called Buckets

For Fun! where we covered easy ways to set money aside, aka

what I refer to as money blocking for specific things

that will increase your happiness throughout the year.

If you've ever received a gift card to something that you love.

Maybe your favorite restaurant, the movies, really anything else

you enjoy doing. You know what a great feeling that is. It's

quite literally a free pass for fun. There's no anxiety around

it for spending for the outlay, doesn't matter what else is

going on with you in your life right now, you can go out and

enjoy that activity completely guilt free. So for example,

let's say you love getting massages, however, you may get

them sporadically or you may there's times your money is

tight during the year when you really need them, but you don't

feel like you could afford it. If you set a money blocking

schedule aside, if you use this technique, maybe every time you

get a bonus, you set $500 aside off the top, so money blocking,

and you buy a massage gift card. So you always are able to get

that one massage a quarter or a month or whatever it might be.

But you have an ability to guilt free, get that massage and make

life a little bit more enjoyable than it otherwise would be. So

essentially, if you are more intentional about setting money

aside ahead of time, you can add a lot more happiness to your

life on a daily basis as well.

The next episode was Yes, There Is TOO Conservative! And here

we've really covered how paying yourself first and separating

out your goals is all well and good. But if you're using

inappropriate types of investments for certain goals,

they may take much much longer to achieve or even worst case,

perhaps you may never achieve them at all. Now we covered how

the word investments I understand not soothing to most

people. We don't put in many bedtime stories can be

uncomfortable, scary. Anything that's really associated with a

potential to lose money and maybe not fully understood or

people are taught about it can kind of come out that way. So

when we build the ship to sail towards our goals, there can be

more of a you know, better safe than sorry kind of mentality

that we see come out in people. Sure, we don't want to be

reckless in the ocean and sink to the bottom of the sea. But

you also want to get to where you're going before you, you

know, say run out of food and supplies. We've covered how

money that you need there for the next one to three years.

Yes, it should likely be invested in something very

conservative a bank account, almost no growth, but you can't

really lose what you put into it, so to speak. Outside of

that, though, using bank or cash type savings vehicles for goals

that are 4, 5, 10, 20, 30 years out is almost certainly not

appropriate. This is where people run into being too

conservative. The one example we went through is two people

saving $500 a month. If one person is invested, say

moderately, and receives a 7% return. And another person is

invested basically in a cash type account, and just receives

1%, long term, after five years, there might not be too much of a

difference. So it was about $5,000: $35,000 vs $30,000.

After 20 years, it was over $120,000 though. And then

finally, in 30 years, it was over a $400,000 difference

ending at $610,000 vs $210,000. So too conservative can

absolutely mean not hitting your goals.

Next, we went through the differences between insuring for

catastrophe, not inconvenience. So we covered the mentality that

I would recommend when looking at which pieces of this trip

we're designing and the most important to insure. What parts

are worth insuring? Hull of the ship, very very important. One

of the nails the ship, really not so much. So if you look at

your daily life, there's certain insurances that everybody has to

have. So let's say homeowners insurance, for example and that

$100 a month isn't fun to pay but if God forbid, your house

burns down, you don't have to come up with, let's say,

$400,000 to rebuild it. That's a catastrophe scenario. On the

other hand, you know, if you want to get insurance on your

washing machine, you can, but that's not a catastrophe that

breaks, you'll probably be able to figure it out. And the thing

is, from what I've seen, many times, people tend not to insure

for all the catastrophes that they should. They may insure

their iPhone, but maybe not things pertaining to their life.

So life insurance, disability insurance, those are the things

that protect those catastrophic scenarios of losing all of your

future income potential, which again, is that most important

asset that a young person has. Legal documents like wills, they

also kind of fall into that area. You know, it regards our

kids, if you don't want to leave these areas unprotected, getting

those kinds of documents are really, really important.

Lastly, we finished with Diversify, But With One Advisor!

Here, we covered why you've likely heard the word

diversification, what it actually means, and the best way

to really go about doing it in my opinion. So basically, when

you look at your investments, you can either say, "Hey, I'm

spread out in a way that actually reduces my investment

risk", or, "Hey, I now see I have just maybe a bunch of

similar stuff, but in a lot of different places". We also had

our last super fun nautical example, where we said how,

obviously we need to pack a lot of different things on our ship

for the trip that we're taking. And one of those would be the

first aid kit. You know, we're probably going to pack it with a

variety of different medical items. We don't know what we may

need or what we won't need. So we want to reduce the risk by

packing a lot of different medical items into that first

aid kit. We're essentially diversifying our first aid kit,

diversifying that risk spreading out the risk. What we wouldn't

do is bring 10 first aid kits that all have just gauze in

them. That would not reduce the risk for our potential medical

needs. And what many people think when it comes to

investments is that they need a lot of different first aid kits.

A lot of different accounts with a lot of different people, and

they don't spend enough time making sure that they aren't all

just packed with the same old gauze. Diversifying, remember

means that you are using a variety of different holdings

across a variety of different areas. So remember, they're

small companies, large companies, U.S. companies,

foreign companies, so on and so forth. Having Apple stock with

Advisor 1 and Apple stock with Advisor 2 you have not

diversified your holdings at all, you've really just made

things more complicated. So having one person in charge of

that first aid kit means one person that now has enough

information to make sure that the first aid kit is well

diversified, well spread out, excuse me, and well stocked for

this trip. And that brings us to the end of the recap. So now all

you have to do is set that compass for the new year and set

sail and go at it.

Now the final thing I have for you today, I want to share with

you what's next what's coming up in our upcoming series. And the

upcoming series title is Raising Your Investment Mindset. Now, to

be honest, I usually don't like focusing a whole series just on

investments. I know people like investments, it's it's one of

the things that people want to focus on. But really, it's just

one part of what a good comprehensive plan actually

should include. The planning, the comprehensive planning is

what I've seen in my 15 ish years, really, that's the thing

that helps people get them to the goals they want to achieve.

Now, that being said, I did think of a number of areas that

I feel, you know, tend to lead people astray when it comes to

investing. And that can derail their trust, which is more

important than anything. And one may be having investments or

using them at all, or maybe even worse, not having any plan

because they don't have any trust in financial professionals

anymore, that trust was eroded. And I can't have those things

happen to you guys. So, so I'm going to focus this series on

investments. And so again, that's raising your investment

mindset coming soon. So that takes us to the end of this Set

Your Compass for the New Year series.

I as always appreciate you taking the journey with me going

through these different episodes. You know, you enjoyed

all the nautical puns for sure. But overall, I really just hope

that you know, these areas that you can now take some time to

review with you and your spouse can instill at least one

positive change. So you're one step further to having life be a

little bit more enjoyable for you, a little bit more enjoyable

for your family. I always say if you can absorb all these things,

implement them, fantastic. I mean, it really feels great, I

mean it does me a favor, to think that I'm helping somebody

out there another person in this world that I may not meet. You

know, we really live in a very, very amazing time. And if it is

overwhelming though, if you do have questions, just head over

to my website here EnjoyMore30s.com. That's

EnjoyMore30s.com. Click Ask Joe to connect and I would be happy

to help. So thanks so much for joining me today and I can't

wait to connect with you again in the series to come.

The conversations on this show are

Joe's opinions and provided for general information purposes

only. They do not constitute accounting, legal, tax, or other

professional advice for your specific situation. You should

always seek appropriate advice from a financial advisor,

accountant, lawyer, or other professional before acting upon

any content or information found here first. Joe is affiliated

with New Horizons Wealth Management LLC, a branch office

of TFS Securities, Inc., and TFS Advisory Services an SEC

Registered Investment Advisor Member FINRA/SIPC.