By Kelley Muhsemann
Marketing Manager
With Halloween quickly approaching, we thought it would be fun to sit around the virtual campfire, and talk about certain aspects of finance that some folks find particularly spooky. Don’t be too frightened though! We’ve also come up with solutions for these scary situations to help you overcome your financial fears.
Fear #1: Running Out of Money.
Solution: While no one can predict the future, you can figure out how much money you will need during retirement by simply developing a budget to help calculate how much you currently spend. If you’re not sure how much you’re currently spending, download our free Budget Worksheet to help determine your cash flow. Then simply use online calculators like this one from Bankrate or Vanguard’s Retirement Income Calculator to help project future spending needs. Don’t be frightened by the numbers that derive from the calculators. The most important thing is to start saving something. If you can manage to save 5% of your income, then increase that amount to 10% when you receive a raise or bonus, and eventually increase that to 15% over the years. Keep in mind that you are not alone. Contribute to your company’s 401(k), and start automating your savings straight from your paycheck so you don’t even have to think about the money. If a 35-year-old waits just one year to start saving, they could potentially have $100,000 less in their retirement fund. The moral: start saving now – even if you’re late to the game – and have a goal in mind to work towards.
Fear #2: The Unknown.
Solution: Life is full of surprises – some good and some scary. Preparing for the unknown is the best way to overcome your fear of it. For instance, taking a risk tolerance questionnaire can help to alleviate your fears. Questions surrounding how you might feel if your portfolio dropped a certain percentage, whether or not your friends would describe you as a risk-taker, and at what age you plan to retire, can help to build your portfolio strategically, and ensure that stress over the market and your money doesn’t keep you up at night. Consider speaking with a professional fee-only financial advisor about your future – the good and the bad – and they can help prepare you for any unexpected turns.
Fear #3: The Stock Market.
Solution: Some investors don’t understand that the stock market is not a casino – although there are people that treat it as one. As an investor, you can certainly walk in and put $300 on the roulette table in an attempt to “get rich quick.” However, it’s much more efficient to use the stock market for its true purpose: the ability to buy ownership shares in really good companies. There’s always risk, but as long as you have a diversified portfolio and use appropriate time horizon and risk tolerance calculations, your fears should be diminished. Keep in mind that emotions and the stock market do not mix. Therefore, finding someone you trust to manage your money so that your emotions are kept out of the equation is important for maintaining a sound portfolio. The stock market doesn’t have to be scary; you just need the right tools and knowledge to use it correctly.
Fear #4: A “Money is the Root of All Evil” Mindset.
Solution: Some folks see money as an enemy. Whether you have too much or too little, when used the wrong way, money can certainly create anxiety. However, if you try seeing money as a tool, you can learn to build a healthy relationship with it. All goals have a cost – whether they cost money, time, or eliminating things or relationships from your life. For instance, if your goal is to run a marathon, it’s going to cost you time and energy to prepare for it. You’ll need the right shoes, clothes, and attitude in order to succeed. The next time you find yourself thinking that money makes things corrupt, try to think about it as a necessary instrument that’s going to help you achieve a future goal instead.
Have we discussed your biggest financial fears? If not, please contact us to speak with one of our CERTIFIED FINANCAL PLANNERTM (CFP®) professionals for a complimentary discovery call at 631.218.0077 or info@rwroge.com or click here.
Wishing everyone a happy and safe Halloween!
R.W. Rogé & Company, Inc. is an independent, fee-only financial planning and investment management firm serving clients locally and virtually across the country, with Long Island, New York, Beverly, Massachusetts, and Naples, Florida office locations. R.W. Rogé & Company, Inc. was founded on a “client first” culture and proudly commits to acting in your best interest as a fiduciary. We help clients Plan, Achieve, and Live® the life they want since 1986. To learn more about how we do this, click here.
