This episode might be a bit counterintuitive. We’re going to question the real impact of common financial habits. Are the strategies you consider beneficial actually working in your favor? We explore the pros and cons of practices like ignoring account statements and strict budgeting. Join us for a practical discussion, as we uncover the unexpected effects of everyday money decisions. Are your good money habits holding you back?
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Episode Transcript
Note: This transcript was produced using AI, so please excuse any typos and inaccuracies…
00:02
Any successful plan requires wisdom and preparation and retirement is no different. It’s time for the plan wise retire free podcast.
Marc Killian 00:11
Hey everybody, welcome into plan wise retire free with Jude Wilson and myself here to talk investing finance and retirement once again into the new year of surfers podcast back into 2024. And Jude and I are going to talk about some good money habits. are they holding you back? And it might seem a little counterintuitive, but we’re going to have a little fun here as we usually do and look at some good examples but then also think, Hmm, am I maybe going a little too far in one direction or another? So that’s the topic this week here on playing wise retire free. Jude, my friend what’s shakin, how are you? Man? I’m
00:43
so thrilled that New Year is here. No man
Marc Killian 00:47
looking forward to it. Yes,
Jude Wilson 00:48
sir. You know, people are always excited and bringing the new year new opportunities, new diet and exercise plan. Hey,
Marc Killian 00:58
I did it. I’ve lost 12 pounds already. So yeah. Oh, congratulations, my friend. Yeah, man. So I’d never do that resolution thing. But I thought you know, something’s got to change. I’m really uncomfortable. How about you? Are you resolution guy?
Jude Wilson 01:10
Well, I think I found six of the 12 pounds. You lost?
Marc Killian 01:14
I did? I did. I did mail them to you. So
Jude Wilson 01:18
I don’t know if I should say thanks. But yeah, I’m a resolution guy. At the end of the year, I put down all of my goals. For next year, I’m more goal scorer than resolution.
Marc Killian 01:27
And that’s what I did. Yeah, I learned an interest. I had another client as well as you I talked to and he’s like, you know, write it down. And I was like, I’ve never been big for that. He’s like, write it down, make it a goal, and then see if it sticks a little better. And maybe it worked. So you know, it’s good thing. There we go. It’s a good thing. It’s a good habit.
Jude Wilson 01:46
It’s a good habit, what a good transition
Marc Killian 01:48
are like that like that. All right, well, let’s have some fun with this. We’re into the New Year’s and let’s talk about some good money habits. Now certainly good habits are definitely a good thing to have. But again, let’s see if we can kind of pinpoint where maybe they go a little too far. So let’s open up with an ignoring. I’m saying ignoring your account statements, easy to do, right? You get these things in the mail, you throw them in the financial junk drawer or the filing cabinet, I don’t want to look at it. Well, I guess the good habit to this dude is when the markets are rocky and up and down. You don’t have to panic and look at it and see it moving every other month and feel like you got to take action or do something crazy. So I suppose there’s the good side to that. But the bad side is you’re also really not paying attention. Yes.
Jude Wilson 02:27
And I tell clients that with our system, we have a system called wealth compass where our clients can see all of their finances in one place. So they don’t have to necessarily wait on their statements to see, you know, their their assets, their liabilities in real time. But you don’t want to look at it every day, you know, because it’ll drive you crazy. On the flip side, you don’t want to ignore it either. Because there are little things in your statement that you may miss that could actually be costing you money, give you an example. So what we had a client who’s in one of our portfolios, and the portfolio manager had a reverse split that they had announced, right? We put out on my email campaign notifying all the clients that this reverse split was coming. It was on the statement, and it was announced in two of the previous statements before it happened. But the client never never looked at their statements. And then when it happened, I got a call immediately, dude, what’s going on with my account? Right? And so I had to explain to them again, what a reverse split is what it meant to them. And that, you know, they weren’t in a worse position financially, right? So things like that you need to be aware of Yeah, definitely.
Marc Killian 03:50
Right? It’s okay to occasionally you know, not look at some of these things so that you aren’t doing that daily stressor or weekly stressor, or whatever it might be. But you also don’t want to take your eye off the ball either. And I think balance is going to be the key in this overall conversation, which is usually the key for I think a lot of things in life, right? So let’s do number two. So keeping a budget or even a strict budget, okay, obviously good habit here. It ensures discipline on your spending and your saving helps you achieve financial goals. But people also hear that b word especially as they get close to retirement. I don’t want to be on a budget. Well, you know, like anytime in life, dude, right? You gotta watch the encode the inflow and the outflow. Yeah.
Jude Wilson 04:30
And you got to have guardrails. And so early on in my career, we were taught that when you bring on a client, one of the first things you want to do is give them a budget worksheet. And they would find they would write in all of their expenses, all of their income sources. And what I found was people hate filling out budget worksheet for sure. It was like pulling here to go get these worksheets from these clients once we went through gave it to him. And then after a while in my career, what I found was that people are going to have their own spending habits. And it’s important to know what’s coming in versus what’s going out. So now instead of filling out a budget worksheet, what we have is we tell people give us your W two, pay stubs, or give us your tax returns, we’ll figure out what the net amount of income coming to the house is. And then we’re going to shine a light on that and show you you’re bringing in X amount. And I want you to tell me, what do you think that you’re spending on an either monthly or an annual basis? And let’s say they’re based on what they say they’re spending, there is a surplus of $2,000. Okay, well, if that $2,000 isn’t showing up in your savings account every month, then there’s a problem. And that’s when we go and do further diagnostic. I don’t think people necessarily need to have a very strict Oh, I spent X amount here and why I’m out there, right. But you do need to know what is the total amount of income coming in? And and how much should I have in disposable income, or what my deficit is so that I can address
Marc Killian 06:17
that? Yeah. And if you think about the folks who are really good at it, they’re really kind of adhering to that, that budget through life, and they’re getting closer to retirement, they also struggle a little bit more Jude with letting go right when they get to retirement. Now I don’t want to touch that money or spend it because I’ve worked so hard to save it. Well, but you you’ve worked so hard to save it, so you could enjoy it. And sometimes people have a disconnect there, which is where advisors like yourself really come in handy. Because you have that behavioral way of working with them and saying, okay, look, I get it, you don’t want to see these numbers dropped down, because you spent 40 years building it. But let’s have some fun. Let’s enjoy getting here. You know,
Jude Wilson 06:53
yeah, you know, the funny thing is with some of our clients that what I call have won the game. Yeah, you’re you’ve gotten to the point where you can make work optional. When we start to transition them over, they have that exact issue that you’re talking about spending too little. And I have to tell them, you know, Mr. And Mrs. Smith, you’ve got you’ve got a big money problem, and they’ll they’ll eyes will get bored. And what’s it what is it you I’ll say you’re not spending enough.
Marc Killian 07:24
And if you don’t fly first class, your kids will. Exactly, exactly. I’m with you. So yeah, I mean, nothing wrong with it. It’s a great habit to have. But don’t don’t deprive yourself at some point, either. Because you’ve gotten so used to that strictness or that budget that you aren’t enjoying yourself. So I think you can kind of see where we’re going with this for these good money habits that could be holding you back. Let’s go to number three jute investing in familiar stocks. Okay. You know, sometimes people get attached to whatever, totally cool, invest in what you know, right? That’s always been kind of a good, you know, financial strategy through the years. So it’s good to understand something that you’re involved in. But also sometimes people get a little too attached. And maybe they feel like, you know, I’ll use an example of, you know, mom and dad passed away, or dad passed away, and he left me XYZ stock. And it was really special to him. And it’s special to me, and therefore I can’t ever part with it, even though financially, it might make more sense for them to do so. Right. And so they got that kind of attachment to it, but it’s not really helping them financially. So be careful, right? There’s nothing wrong with having, I think an attachment to things and some familiarity, but don’t have too many eggs in one basket. I mean, it’s pretty that it’s that simple. Really. No,
Jude Wilson 08:35
you’re absolutely right. I mean, and that exact scenario has happened to me. I’ll give you two examples. So we’ve, we have one client that has a sizable inheritance that they got from their parents, and the dad used to actually work for one of the major tobacco companies. Okay, so he had this tobacco company stock as almost 60% of his portfolio, right. And that was far too much of a concentration. But when the son became a client, he was like, you know, I used to, I used to go to that to his, to his office. And this company really is what provided him his pension, and allowed us to live a great upper middle class lifestyle, so I don’t really feel comfortable getting rid of this particular company. And when we shared with them the risks that may happen, and we talked to them about diversifying, he finally did diversify. And it worked out so well for him because unbeknownst to us, right, the tobacco company had to pay a major legal settlement the very next year and the stock plummeted, but we were able to diversify him before then. The other example I have for you is in my own personal life, though I always tell people the best Time to buy in the market. If you’re looking for one singular time, it’s always good to buy. But if you’re looking for one singular moment, it’s usually when people are running away from the market. So in 2020, when COVID first hit, I took a look at a bunch of companies that I thought, Oh, these companies have nothing to do with COVID. They’ve got strong financials, and I personally invested in some companies that that did amazing. But my worst buy was a company that I feel really close to, because I’m an Exercise nut and I have I own a peloton. So I bought peloton during COVID, and it’s shot up, and it’s shot back down. So sometimes you can just focus on companies that you’re familiar with. Yeah, it’s good to have a diversified portfolio and
Marc Killian 10:51
there’s nothing wrong. Again, I think it’s like certain things in your portfolio. If you want to have some things that have that personal attachment, or even the fun money, like sometimes we talked about things like what that was cyber, or as she’s me crypto, you know, it’s like, okay, fine, but let’s make it a small piece a piece that’s not, you know, a huge deal. It’s not, you know, mortgage the farm, so to speak, right. All right, number four, embracing automation, AI. All right, automation can be really cool, right? There’s definitely some good here makes investing simple. It’s saving simple. Get your bills paid on time, no penalties, you know, is it so you forget to write a check, you know, or whatever the case is not that anybody writes checks anymore. But you know, that kind of thing. Right? So there’s certainly good reasons to embrace automation. Why Why might we want to be a little careful here, though? June?
Jude Wilson 11:38
Yeah. So I, at the end of the year, I took clients, it’s really good to have a financial board meeting, you know, with yourself, your spouse, and maybe even the kids bring the kids in to start understanding finances.
Marc Killian 11:53
The CFO of you, is you. Right. Exactly, exactly. And
Jude Wilson 11:57
when you have that financial board meeting, it’s good to look at some of the things that we talked about before that the the expenses that are leaving the inflows that are coming in and looking at the statements and understanding, wait a minute, why didn’t two payments go out? Instead of one in November? Right? You know, why was I charged this extra service fee, that’s not a part of the budget. So I don’t expect people to look at their statements every month, I don’t expect them to look at their investments every day. But I do think having at least either a biannual or annual come to Jesus meeting, basically, with your financiers, without your advisor, just your family is a good way to make sure that the automation isn’t doing things behind the scenes that you don’t really you did not expect to happen. Don’t
Marc Killian 12:55
don’t become disengaged. I mean, think about like a target date fund. Okay? Automated, right. So you set up a target date fund, and you’ve got to go in and you’re thinking, hey, it’s going to auto adjust, it’s going to reduce the risk for me, that’s the point of it, as I get closer to this target date, cool. I don’t have to necessarily deal with it. But you also get complacent with it, and maybe aren’t realizing that maybe that’s not the best place, or the best strategy for you to take advantage of. So a lot of times automation can, if you want even go more simple. A we have nine different streaming services we’re paying for and we only use two, but we’ve forgotten about it because it’s automated, right? So just be careful there. Right? Don’t Don’t disengage from the process.
Jude Wilson 13:33
Exactly, exactly. It’s so easy to disengage now because of the technology exists. Yep,
Marc Killian 13:38
for sure. So it’s a good habit. It makes it easy to save that money, pull it out of that check, it goes right to the 401k You never even miss it. But just be careful, right. All right, patients, last one Jude patients, patients, patients, getting in to the Mr. Stock market there. You know, nothing wrong with doing your diligence, doing some homework, making sure you feel good about your decision. But don’t let patients also cripple you because now you’re just like, maybe maybe tomorrow, maybe next week. And
Jude Wilson 14:08
this is probably one of my top three biggest pet peeves, because people oftentimes are looking for the best time to get into the market. I don’t want to get in because I’ve heard it’s an election year or I don’t want to get in because I’ve heard the market was down 20% This year, there is never really the best time to get in the market. I know I talked about when people are running away from the market that that’s possibly a good time to get in. But I’m not I don’t want people to use that as a way to procrastinate because just missing the 10 best days in the market. And you and I are smart. You’re smarter than me.
14:55
But neither one of us
Jude Wilson 14:57
are good enough. Not even Warren Buffett It is good enough to predict when are going to be the 10. Best days in in 360 to be in the market. If you missed the 10 best days, it could lower your performance by over 60%. Wow. And so you you want to be invested. You don’t want to just procrastinate. Yeah, yeah,
Marc Killian 15:21
I saw, I saw another funny kind of thing with that I forget exactly when it was due. But they said they did a little test on folks to see how they fared against the market by trying to, you know, react to news or, you know, move things around. Because, you know, news is always unpredictable. Therefore, the stock market’s always unpredictable, and all that kind of stuff. And I forget who it was. Maybe it was fidelity, maybe it’s fidelity that did this, I can’t remember. But they said, so they reviewed their accounts, and or they reviewed this little thing or whatever. And the people who did the best over this time period, or the people that forgot they even had an account with them. They never touched it. They never removed it. They just stayed the course. They just let it stay. And it’s very hard, right? Because it’s it’s the emotional response that we all have within us. It’s not great out there, right? Now I better do something, I better make a move, right? And because if you don’t make a move, you feel like you’re being inactive and making it worse. And oftentimes, you’re actually making it worse, because you’re making a move when there’s a lot of things going on. And it’s hard to do human emotions tough.
Jude Wilson 16:18
One of my favorite movies is office space, right? You know where I’m going with this. The first scene is the guy in the car on the freeway, trying to move between one lane and the other. And as soon as he makes the move to this other lane. That’s when traffic slows up in that lane. Yep. So is there there is no timing perfectly timing perfectly, you just have to be in it to win it. And if you have a bucket plan, it makes that whole philosophy of when to invest and how to invest so much easier. Yep, for sure.
Marc Killian 16:54
Well, there you go. That’s our podcast this week, folks. Just a couple of things that are good money, habits, good thing to have, absolutely. But just be careful when they turn into possibly holding you back. So as always, if you need some help, and you’d like to reach out to Jude and his team, feel free to do so stop by the website at sin trust fs.com. And matter of fact, later on this month, this is our mid June podcast, excuse me, June, well, I’m thinking about some mid January podcast, and later this month, you guys are going to be doing a tax bomb webinar. Yeah,
Jude Wilson 17:25
I’m so excited about this. Because, look, we all know that taxes are a major expense for most of us, and will probably be the biggest expense someone faces in retirement. But here’s the big thing. Taxes are more than likely going to go up into the future. And in this tax bomb webinar, we’re going to talk about why taxes are likely to go up and what you can do to prevent the ticking tax time bomb in your retirement savings.
Marc Killian 17:55
Exactly. And they’re going up regardless of conference, Congress does something or not you because they sunset currently in 2020 and 2025 going into 2026. So one way or another, they’re probably going up. So if you’d like more information, folks, and you want to attend that tax bomb webinar, again, stop by the website, it’s going to be it’s interest fs.com That’s interest fs.com Reach out to the team or call them at 807 79459 to and let them know you’d like to attend that. I know you guys are still getting the details finalized for the exact day. But they can get a spot reserved. It’s always complimentary. So just let them know that you’d like to attend that folks. And you can go from there and we’ll put a link to the website in the show notes as well for the podcast. So dude, thanks for hanging out my friends always appreciate you always enjoy our time together, buddy. Absolutely. And we’ll see you next time here on playing wise retire free with Jude Wilson.
Walter Storholt 18:53
The preceding program is sponsored by Jude Wilson, who is solely responsible for its content. Financial Planning and advisory services are offered through prosperity Capital Advisors PCA an SEC registered investment advisor, with its principal place of business in the state of Ohio centers, financial strategies and PCA are separate non affiliated entities. PCA does not provide tax or legal advice, insurance and tax services offered through centrist financial strategies are not affiliated with PCA. information received from this podcast should not be viewed as individual investment advice. Product discussions and illustrations are hypothetical in nature and will vary based on many factors including but not limited to age, health, product, insurance, carrier and product design, you should consult the insurance carrier website and policy for detailed information. For information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Advisor public disclosure website WWW dot advisor info.sec.gov. For additional information about PCA including fees and services sent for our disclosure statement as set forth on Form ADV from PCA using the contact information here in please read the disclosure statement carefully before you invest or send money
