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Setting Your Compass for the New Year - Series Recap! | Series 6.8
Episode 821st February 2022 • Enjoy More 30s: Family Finance • Joseph P. Okaly
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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)

Securities offered through TFS Securities, Inc., and Advisory Services through TFS Advisory Services, an SEC Registered Investment Advisor Member FINRA/SIPC. TFS Securities, Inc., is located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.

Transcripts

Voiceover Audio:

Welcome to the Enjoy More 30s Family Finance

Voiceover Audio:

podcast. The only podcast dedicated to making life more

Voiceover Audio:

enjoyable for young families by hitting on the financial topics

Voiceover Audio:

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

Voiceover Audio:

from simply enjoying life.

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

confidence, remove financial anxiety, basically just focus

Joseph Okaly:

solely on making your life more enjoyable. As always, if you do

Joseph Okaly:

like what you're hearing, please make sure to subscribe, follow

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us on Apple podcasts wherever you may listen. Clicking the

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stars leaving the reviews really really helps us reach the

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millions of other young families out there that are just like

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you.

Joseph Okaly:

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

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Setting Your Compass for the New Year exclamation point. I

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sincerely hope these episodes can help as you take sail into

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this new year with a positive productive mindset on the

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

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

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

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

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

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

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

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

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really good podcast episodes, you can make huge strides in

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

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

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

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

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

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episode of this specific series was in a kind of chronological

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order and walked us through the whole process of setting your

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

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

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position to have a conversation with your spouse about the

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

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even more enjoyable.

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

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

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

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

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

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

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split up responsibilities, but you cumulatively still have that

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

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

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

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

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

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there could be things to also stop detracting maybe from your

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

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maybe worrying about what would happen to your family if

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

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for more overall happiness, either through addition of

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

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

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

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

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

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

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

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and your ship now has a direction.

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

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our compass in that first episode with the goals but we

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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to save towards you. And remember this exercise is just

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

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

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

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

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

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

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

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active and intentional to save towards you. Paying yourself

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first.

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

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lot of clarity to your situation because it helps you better

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

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

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kind of a system. Your system is probably grouping things

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together and spots that make sense and allows you to find

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

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

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

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

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

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

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

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

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

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

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

that we've talked about:

a short term bucket, an intermediate

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

long term bucket, it often includes things such as

that we've talked about:

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

that we've talked about:

plan for college savings. But for younger family long term

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

short term bucket a different bank account. Second home in

that we've talked about:

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

that we've talked about:

maybe a general investment account. Retirement, long term

that we've talked about:

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

that we've talked about:

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

that we've talked about:

for all those different goals.

that we've talked about:

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

that we've talked about:

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

that we've talked about:

what I refer to as money blocking for specific things

that we've talked about:

that will increase your happiness throughout the year.

that we've talked about:

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

that we've talked about:

Maybe your favorite restaurant, the movies, really anything else

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

enjoy that activity completely guilt free. So for example,

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

essentially, if you are more intentional about setting money

that we've talked about:

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

that we've talked about:

life on a daily basis as well.

that we've talked about:

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

that we've talked about:

we've really covered how paying yourself first and separating

that we've talked about:

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

that we've talked about:

inappropriate types of investments for certain goals,

that we've talked about:

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

that we've talked about:

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

that we've talked about:

the word investments I understand not soothing to most

that we've talked about:

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

that we've talked about:

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

that we've talked about:

potential to lose money and maybe not fully understood or

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

Yes, it should likely be invested in something very

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

appropriate. This is where people run into being too

that we've talked about:

conservative. The one example we went through is two people

that we've talked about:

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

that we've talked about:

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

that we've talked about:

invested basically in a cash type account, and just receives

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

absolutely mean not hitting your goals.

that we've talked about:

Next, we went through the differences between insuring for

that we've talked about:

catastrophe, not inconvenience. So we covered the mentality that

that we've talked about:

I would recommend when looking at which pieces of this trip

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

for all the catastrophes that they should. They may insure

that we've talked about:

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

that we've talked about:

So life insurance, disability insurance, those are the things

that we've talked about:

that protect those catastrophic scenarios of losing all of your

that we've talked about:

future income potential, which again, is that most important

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

those kinds of documents are really, really important.

that we've talked about:

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

that we've talked about:

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

that we've talked about:

diversification, what it actually means, and the best way

that we've talked about:

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

that we've talked about:

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

that we've talked about:

spread out in a way that actually reduces my investment

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

packing a lot of different medical items into that first

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

needs. And what many people think when it comes to

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

just packed with the same old gauze. Diversifying, remember

that we've talked about:

means that you are using a variety of different holdings

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

Advisor 1 and Apple stock with Advisor 2 you have not

that we've talked about:

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

that we've talked about:

things more complicated. So having one person in charge of

that we've talked about:

that first aid kit means one person that now has enough

that we've talked about:

information to make sure that the first aid kit is well

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

sail and go at it.

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

one part of what a good comprehensive plan actually

that we've talked about:

should include. The planning, the comprehensive planning is

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

important than anything. And one may be having investments or

that we've talked about:

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

that we've talked about:

because they don't have any trust in financial professionals

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

Your Compass for the New Year series.

that we've talked about:

I as always appreciate you taking the journey with me going

that we've talked about:

through these different episodes. You know, you enjoyed

that we've talked about:

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

that we've talked about:

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

that we've talked about:

review with you and your spouse can instill at least one

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

that we've talked about:

to my website here EnjoyMore30s.com. That's

that we've talked about:

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

that we've talked about:

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

that we've talked about:

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

Voiceover Audio:

The conversations on this show are

Voiceover Audio:

Joe's opinions and provided for general information purposes

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

Voiceover Audio:

professional advice for your specific situation. You should

Voiceover Audio:

always seek appropriate advice from a financial advisor,

Voiceover Audio:

accountant, lawyer, or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

Voiceover Audio:

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

Voiceover Audio:

Registered Investment Advisor Member FINRA/SIPC.

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