Where to Begin???

David Bach's bestseller "Smart Couples Finish Rich" has a chapter on values. I'm not so sure he came up with the idea himself as there is a book for financial advisors called "Values Based Selling" by Bill Bachrach which educates financial advisors on the ways to sell by using people and their values. Either way, David's book is well done and very helpful in my opinion.

He states that in order to get ahead in life financially a couple needs to find out basically why money is important in their lives? Once they find this out they should choose goals that will fall in line with these values. I couldn't agree more.

When we sat down with our financial advisor he asked us values questions? "What's important about money to you?" The answers he was looking for need not be confused with goals. For example, money is important because I want to retire at 65 is not a value it is a goal. Things like freedom, security, peace of mind, family time, marriage, health, making a difference and independence are values.

Before my wife answered, I had this macho chauvinistic attitude that I needed to work 90 hours per week to make a ton of money to buy her things. I was dead wrong. She stated she wanted to have the freedom to have more family time, be secure, have peace of mind and she would be truly happy. She also said money was not that important to her and she didn't need "things". WOW was that an eye opener to me. Had I not known this, I would have worked and worked and worked to try to buy her thing she really didn't care about and creating a lot of tension in our marriage by not being around.

I also said I didn't need a lot of things, but really needed security and peace of mind. Also, I found I didn't want to work 90 hours per week. I WANTED to be with my family.

So we began our journey of financial planning by focusing on goals that would make us feel secure and have our peace of mind. We began by getting a large enough cash reserve to make us both feel comfortable. While many financial advisors tell you 3-6 months of your committed living expenses is acceptable, we wanted a year's expenses in cash. You know, if you have a year in cash and you lose your job, or your income drops unexpectedly you have enough flexibility to ride out pretty much anything. This made both of us feel secure and sleep better at night.

Next we began on our retirement. This was pre-child days, so we wanted to make sure we had the freedom to retire and have fun later in life. We began saving at least 20% of our gross income into my wife's retirement plan and Roth IRA's.

I could go on and on, but you see the point. First, ask yourselves, "Why is money important to you?" Security. "Why is security important to you?" Security gives us peace of mind. "Why is peace of mind important to you?" Peace of mind gives us the freedom not to worry and spend more time with our family...and there is nothing more important than that.

Think about it as a pyramid and when you get to the point where you say to yourselves, "There is nothing more important than this", you are done with the first step.

The next step is to identify some goals that fall in line with these values. Security-you may pay down debt or establish a cash reserve. Freedom-you may begin or increase your 401k plan. You get the idea.

So that's where I think everyone should begin. I hope this helped.


BY THE WAY...NEVER FORGET 9/11