The key to financial happiness is money and lots of it.
That's not true. And you know it.
Money does not buy happiness, despite what you may think and what you might hear and see in the TV's and the movies. It does make things less stressful, but it does not give you everlasting, perpetual happiness. Today, we're going to talk about things that can reduce your financial stress and hopefully make you happier.
Saving up to six months of money to live on
You hear this all the time? You probably heard it in high school. You probably heard it in college. You probably heard it in graduate school. You probably heard it from other people throughout your lifetime. It really is true.
The best evidence is what happened a few years ago when the whole world shut down.
Some people were lucky and they continued to get their paychecks. Some people were not so lucky and they lost their jobs. Those people that I know who did save money, who saved six months to a year worth of savings, it was not as bad of a deal for them because they had money saved up. They could continue to live and it allowed them to instead focus on what they could do to find another job to make money.
And because they had money saved up, it allowed them to look for other work or work from home type of work. It allowed them to continue to live and come up with fresh ideas on how they could make their life better, how they could be happy.
Contrast that with other people I knew who completely lost their income immediately. They were immediately stressed with credit card bills, mortgage payments, utility bills.
Life got really hard for a lot of people really quick.
But if you can save six months to a year for your living expenses, it's going to make your life a lot less stressful. I know that's easier said than done, but you can do it saving a little bit at a time. It may take you a few years to get to that point, but you will feel a lot happier and a lot less stressed.
Tracking your net worth in one spot.
One place where you can easily find it and see all of your assets and all of your debts. It's something that I actually learned about probably about 15 years ago when I started talking to a financial advisor.
They had this really fancy program. They put it up on the big screen and they could show me all of my assets and all of my debts.
It was really interesting to see what I actually had and what I owed. Now, I didn't actually end up going with that financial advisor because I found another place called Wealthfront, which I'll put a link to down below.
At Wealthfront you can invest money, you can save money, but it also has that same software that that financial advisor has that actually stated exactly what my assets are and what my debts are.
And at a glance, any time of the day, 24 hours a day, I can either look on my phone or I can look on my computer and see exactly where I am financially.
It really is a great stress reliever to see your financial picture as one snapshot because it allows you to track your goals, to see where you're going, where maybe you started spending a little bit too much money here and maybe need to cut back and start to refocus.
And it's a great stress reliever to actually just see everything in one spot.
Get an estate plan, get a revocable living trust centered estate plan.
With that revocable living trust centered estate plan, you're going to have all the documents that are going to protect you, dear, in your lifetime and protect your assets and your beneficiaries, your kids and your spouse after you pass away.
And I can't tell you how many clients come into our office. And once they have the revocable living, trust centered estate plan with the power of attorneys, the pore over wills, the health care power of attorneys, the advanced directive living wills, how much less stress that they have because they have taken care of a major part of their life.
If something were to happen to them and they have protected their kids and their family, if something were to happen to them, we see this all the time. Once they get that revocable living, trust centered estate plan, they then start to turn and look at their finances, what they can do to improve their finances and reduce the stress in their finances as well.
So this is a great way to get you started on your journey to reduce the stress, create more happiness in your life and it's not only just your estate plan. Like I said, it's your finances. And it's also putting together a plan of what happens. And it's all in your estate plan. If this happens, if I am injured in a car wreck, I want this to happen.
These are the steps that I want my family to take, and that could also include your digital assets. I don't think there's anything worse than when, you know, a friend has passed away and you can continue to see their Facebook page or their Twitter page or their Instagram page still up and people continually posting on it saying, Hey, how you doing?
I haven't seen you in a while. That's horrible to see. And so it can be a great relief for a person to have a plan in place for somebody designated in their estate plan to easily go in and shut all of that down or put up a memorial page, whatever you are again, it's your decision. So get an estate plan, prepare for what happens during incapacity and what happens after you pass away.
And I promise you're going to feel a lot less stress and you're going to be a lot happier about the decisions that you've made to protect your family,
Buying an affordable home and an affordable car.
I don't think there's anything more stressful when we're talking to our clients, and I can see it in their faces, in their eyes when they have bought this huge, big McMansion or they are nearing retirement and they're still living in the family home where they raised their kids.
They don't need that 3000, 5000, whatever the square footage houses, if it's got more than two bedrooms and all of your kids have left and you're probably in a house that's too big for you and the expenses start to add up. You have less income because you're starting to retire or you're already retired. The utilities are going to stay.
The same, the maintenance on the house is going to stay the same. The insurance and the taxes are probably going to continue to go up every year. One way that I've seen people reduce the stress in their lives is to get a house that they can afford. And it's not to say that you can't afford that family home, but maybe if you downsize into a home that is more appropriate for your lifestyle now that you're in retirement or thinking about retirement, then it's going to reduce a lot of stress as far as all those expenses that you have to pay.
Same thing goes with the car. You don't need to be driving the most expensive car to keep up with the neighbor down the street. I went to a charity event recently and everybody was getting out of these super expensive cars and dressed to the nines, all their designer bags and designer dresses. But the point is that the person who they are actually honoring that day, the person who actually contributed the most money, several hundreds of thousand dollars, maybe millions, they drove up in a Toyota.
They knew the value of money. They knew the value of stress. They knew the value of happiness. And they made a conscious decision not to have that expensive car. And probably if they're still driving that car now that they have all this money, it's probably an attitude that they have throughout their life. So is it nice to have that expensive car?
Absolutely. Is it nice to have that expensive house? Absolutely. But is it something that's really going to fit in to your lifestyle or is it going to create more stress in you and your family and your spouse? It's your judgment call. But I can tell you that, again, once we see people do their estate line with us, they start to reevaluate all of these things.
And usually within a year they have sold that family home, they have sold those expensive cars, and we see them driving more appropriate cars so they can plan for the future and they're able to enjoy their life and not have to worry about the money
Generating passive income.
And by this, I don't mean all those people you see in your Instagram or your Facebook feed or your Twitter feed, they're guaranteed to make you millions of dollars if you just buy their cars on passive income.
What I'm talking about here is meeting with a financial advisor and creating a plan so that you start to receive dividends on an annual basis or a quarterly basis or every six months and build that into your long term financial plan so that when you retire or even while you're working, you have income coming in from your investments.
And again, I know this is easier said than done because first you have to have the money to do it. And that's why I always advise our estate planning clients to go meet with a financial advisor and just get a snapshot. It's like I say, meet with us to see what your options are. Meet with our financial advisor to see what your options are, because putting a little bit of money each month away is going to start growing bigger and bigger with compounding.
And before you know it, you're going to have that passive income, real passive income dividends coming in to support you and your family, either during your working life or your retirement. So talk to a financial advisor
Getting the appropriate amount of life insurance.
This is another big one that I see after we have created a revocable living, trust centered estate plan for our clients and they're starting to think about their retirement or what they want to do or maybe they've already retired, is to get the life insurance policies in check.
You may have already had a life insurance policy that you've had for years and years and years. Talk to your financial advisor, talk to your insurance provider and make sure that it's still the appropriate amount of coverage for what you need and make certain that you are covered. If you were to become incapacitated, make sure your family is covered, if you were to become incapacitated, and make sure there's enough insurance to provide for your family.
If you were to actually die. And I can tell you, this is a huge stress reliever for a lot of people knowing that they have protected their family. Talk to a financial advisor, talk to an insurance provider and talk to an estate planning attorney to get your affairs in order and reduce the stress in your life.