Five Minute Finance

Do you have or know a pre-teen or teenager who’d like to be as wealthy as Warren Buffet? It’s easy. Have them begin investing in the market RIGHT NOW.

I’ve talked about this story before…Warren Buffet is worth about $80 billion dollars. $70 million of that was earned after he was eligible for Social Security benefits. The key to his success goes back eight decades. Yes, eighty years. Buffet began investing when he was 10-years old. And all that money he put away 80, 70, 60 years ago began compounding in his later years and led to him being one of the wealthiest men on earth.

Join Matt Robison and I on this week’s podcast for some quick and easy ways to get your teenager invested now in order to secure their future wealth. We discuss these simple steps:

1. Open a Roth IRA and deposit earned income
2. Consider investing in the Total US Stock Market for set-it-and-forget-it fund management
3. Add monetary gifts from grandparents, aunts, uncles, etc to the fund
4. Sit back and watch your 40+ year return of 9.5%-12%

Investing 15-20 years earlier than their peers will pay off significantly in retirement. Learn from Buffet: start investing now for your pre-teen/teenager.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

This week’s podcast is the final installment of the series with Megan Russell from Marotta Wealth Management regarding healthy spending. We began the series by identifying a core values budgeting strategy. Then we moved on to avoiding advertising in order to curb impulse buying. Our episode on waiting a week before making larger purchases really resonated with our audience as a great way to spend less. The last episode centered around buying worth and getting the most from what you’ve already spent. 

Megan’s last theme for us involves some great advice for spending less. In particular, we talk about setting up spending alerts, performing an intentional review of those alerts, becoming conscious of your spending (especially the things that you are paying for automatically and on a regular basis), establishing a price book to make sure that frequent expenditures aren’t costing you more than they should, buying in bulk/wholesale/secondhand and finally returning things that don’t live up to your expectations. Let’s explore each tip in more detail:

Spending Alerts

Set up automatic alerts with your financial institution. This could be your credit card or bank card, whichever you most often use to pay for things. On your settings page, you can choose to be alerted to any purchase that exceeds $1. You read that correctly, one dollar. Worried about your inbox being inundated with spending alert emails? That’s the point. 

Intentional Review

Every spending alert email you receive will have a dollar amount included. Now it’s time to review all of those purchases. Did you realize you have the habit of ordering lunch every Wednesday? Maybe you find that you frequent the local coffee shop multiple times every weekend. You get charged every month for Netflix, Disney+, ESPN and Hulu. Did you even know that your entertainment spending was so high?

Conscious Spending

Now it’s time to think about your core values. Does grabbing a coffee on the weekends bring you joy? If the answer is yes, great. Keep doing that! Is lunch on Wednesdays simply because Tuesday evenings is your carpool night for kids’ basketball? Maybe you can start prepping two lunches on Monday night. Do you really watch programs on all those streaming services? Enough to warrant the $1k price tag for a year’s worth of subscriptions? 

Price Book

Now that you are conscious of your spending, are you sure it is consistent? Have you ever noticed that the same pack of diapers you buy every week is sometimes $12 and other times $18? You would if you kept a price book or use a free service like camelcamelcamel to track prices on Amazon. Next time those diapers are $12, buy more than one pack, which leads us to Megan’s next tip…

Buy in Bulk

This one is a well known way to spend less on items you use all the time that don’t have a short shelf life. Check the unit price on items. A bottle of 200 ibuprofen tablets might cost $15 and the bottle of 500 is $30 and you think “that’s double the price!” But the exact same pills will cost you $.09/each in the small bottle and $.06 in the larger container.

Return

Did you finally buy that headset you had your eye on? You waited a week, you watched the pricing, you did research beyond the ad you saw on social media and now it has arrived but it pinches your ear. Return it. It didn’t meet your expectations. Send it back, get your $75 refund and start over again. Don’t let the $75 collect dust next to your computer.

Spending less is all about awareness. Use these tips to avoid that dreaded question “where did all my money go?”

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Technology is great. There are so many things people can do for themselves now that weren't possible in the past. For instance, setting up an investment portfolio used to require a broker. The real-time ticker for stock prices was only available on the trading room floor. Funds required management and careful oversight. Now, however, there are countless apps, websites and tools allowing individuals with little to no financial planning experience to set up a successful portfolio and then forget about it.

“A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.” - Douglas Adams, from The Hitchhiker's Guide to the Galaxy #5

So why hire a financial planner? Maybe you don’t, because the set it and forget it model works perfectly fine for you right now. However, the greatest value a financial planner can provide is helping you with all the things you didn’t know you wanted to know.

What does that mean? Matt Robison and I discuss the value of a financial planner in this week’s podcast. In particular, we explore:

• The difference between Financial Planning and Wealth Management
• Building confidence in your path to financial success
• What is a fiduciary and how will the responsibilities of that title help you with your financial plan?

The bottom line is that a financial planner knows the right questions to ask in order to provide you with the best strategy to fulfill your individual wealth goals. Beginning with goal identification and working through all the steps that you need to build a comprehensive financial portfolio, a financial planner has the knowledge, expertise and network to insure your financial freedom.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

One of our most valuable assets is our time. How do you decide your allotments? If you find an empty space on your calendar, is your automatic response to fill it?

I’ve spoken to a couple of clients recently who expressed their desire to have more unhurried time. What does that mean, exactly? 

That’s the driving conversation in this episode. Unhurried time can mean different things to different people but the underlying value of it comes down to a simple phrase: scheduled, unscheduled time.

Imagine having two hours every Friday afternoon from 4:00-6:00pm. That time is scheduled as “free time.” What will you do with those two hours? Maybe you have a long to-do list and your goal for that time is to pick an item and get it done. Perhaps you want to spend more quality time with your kids so your goal is to do something together. 

Unhurried time is yours to do with as you please. There is no compulsion to get something specific accomplished. You aren’t scheduling two hours to get that bathroom re-grouted so your spouse stops needling you to complete the task. That’s not to say that during your unhurried time you can’t choose to get the grout job done. You aren’t scheduling a hike with your kids. But that’s not to say you can’t grab some granola and hit the trails when the time comes. 

Booking yourself some unbooked time is a great way to get the most value from your time. We live in a world in which capacity is almost always filled. Take Robert Moses’ construction of the NYC freeways, for example. He believed that by expanding the Long Island Expressway from three to four lanes would increase capacity by 33%. After years of construction and expense, the LIE went from three lanes of gridlock traffic, to four lanes of gridlock traffic. We are conditioned to fill to capacity. Our wallets, our homes, our time…

Use your unhurried time to live in the moment. What do you need when the clock stops ticking?

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

This week’s podcast is a continuation of the series with Megan Russell from Marotta Wealth Management regarding healthy spending. In past episodes we talked about core values budgeting, avoiding advertising and waiting a week before making larger purchases. 

In this episode, Megan and I discuss ways to get the most value from the things you’ve already spent money to acquire. In particular, we talk about using what you already own, squeezing out the last bits of value from items that no longer bring you joy, taking care of the things that you buy in line with your core budgeting and finally, making all the strategies above a team effort for your family.

First, we explore using what you already own. This is where the notion of good to the last drop, or in Megan’s case, sucking all the fun out of something (in a good way) comes into play. We’ve all found ourselves in a situation in which we need a particular item. Instead of buying said item, take a minute to think about two things: 

1. Do you already own the item you need? 

2. Could your need be fulfilled by something you already own? 

Have a pile of books on the floor? Do you have a bookshelf that can be cleared off? What about another piece of furniture you could stack the books on or store them inside? Don’t rush to buy something new when you might be able to get more value from something you already have lying in wait. 

If some of the things you own are no longer bringing you joy, consider if they are worth passing along to others that might find value in the items. Selling stuff that still has life left via garage sales, local social media avenues such as NextDoor or Facebook Marketplace, and even eBay can spread the wealth by giving you some money back on what you purchased. If the money isn’t worth the effort in some cases, pass the items along for free. Bringing someone else joy is just as valuable as recouping some cash on prior purchases.

Next we explore the notion of taking care of what you own. This seems like common sense but all too often, tools are discarded in random places, toys are left out in the rain, shoes are left where the dog can chew on them…

Get into the habit of keeping track of the things that you use most often that bring you joy. For instance, I use my woodworking shop when I have the time. I also love to run. Whenever I head into the workshop, I know where everything is because I have taken the time to organize my tools and keep my work area clean. I also keep a box where all my running accessories are stored. These two hobbies are part of my core values and it shows in the way I maintain my “stuff” for each.

Getting kids to take care of what you own is another challenge. Megan gives great tips on creating scarcity and allowing kids to feel the pain of loss. If you have four soccer balls, it's not likely the kids will care if they kick one into the woods. They won’t chase after it knowing there are three more in the garage. What if you only have one soccer ball? They will need to keep track of it, put it away when they are finished playing otherwise they won’t have a ball next time they want to kick one around. Have an older child with expensive electronics? If something breaks, consider learning how to repair the item together. Lost their phone? Have them mow the lawn or shovel the driveway to earn back the money you spend to replace the item.

The best way to get the most value from what you already own is to surround yourself with like-minded people. Buying into all these money saving tips as a family will help you be far more successful than trying to do it on your own. Share your knowledge from these podcasts with friends. Frugality is contagious. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Most people have one mortgage, the rich have two.

I get asked the question often: “I have extra cash, should I put it toward paying down my mortgage?”

The short answer is sure, but no. Confused? Don’t be. The answer inevitably lies with your goals and feelings about money.

Typically, we steer clear from emotions when making a financial plan but some decisions can be made with your peace of mind at the forefront of your decisions making. One of those financial forks in the road is where to put extra cash within your portfolio. 

Should you put “extra” money towards paying down your mortgage? There are two main avenues to consider when making this decision. First, does it make fiscal sense? That answer depends on a few factors:

• What is your current interest rate? If you have a low rate mortgage, as most people do right now, you are paying around 4% interest or less.
• Do you have additional debt with higher interest rates? These should be paid down first.
• How much time do you have? Are you nearing retirement? Still 20-30 years from the end of your career? This makes a difference. 
• Do you have an emergency savings fund established and funded should you need to change jobs, move, etc.?
• Are you saving for retirement, education and other goals?

If you have a low interest mortgage, no debt with higher interest rates, are still far from retirement age, have an emergency fund and retirement savings, then you truly have extra cash. Congratulations! This is where the quote above, “most people have one mortgage, the rich have two” comes into play. Financial stability allows for the freedom of borrowing at a lower interest rate in order to invest at a higher rate of return.

Let’s start by looking at some crude numbers to demonstrate the financial ramifications of real estate investment (in your home) vs. market investment:  

• A house bought outright in 1995 for $73k and sold in 2015 for $460k made 6.3x return.
• In that same 20-year time, $1k invested in the stock market in 1995 yielded a 6.5x return.

A slight difference, until you factor in that the house cost money to maintain. There were taxes to pay, insurance, and upkeep. So was it really a 6.3x return? Very likely, not. Whereas, the money in the stock market just sat there, ignored for years and still managed to make 6.5x return.

So the long-term math argument to invest in the market vs. paying down your mortgage is sound. That’s not to say it is the right decision. Here are a few reasons why paying down your mortgage could be an excellent choice for you:

1. If you pay down your mortgage, you get a guaranteed return (whatever the rate of interest you are paying).
2. You have flexibility. You can stop and start extra payments anytime you want (instead of waiting to pull cash out of brokerage accounts).
3. It feels good. This one can’t be discounted. A lot of people sleep better at night knowing their money is going into something they eat, sleep and live in day-to-day. 

What you choose to do with extra money is completely up to you, just don’t hold it in cash. Make your money work for you. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle?  Let’s Connect.

If you Google “How much should I save for my retirement?” underneath all the advertisements for financial institutions you will get consistent results of “15% of your pre-tax income.” Great advice, but at what point in your life are you when you ask that question? Would the answer be the same if you are 25 years old or 50 years old?

Obviously, the answer would vary greatly based on your age and how much savings you’ve managed to achieve. So, let’s do a quick breakdown. If you are 30 years old, you should have 1x your salary banked for retirement. This includes 401k’s, IRA’s, 403b’s, etc. (listen to my Account Funding Priority podcast for more on where the money should be invested). So, if you make $50k/year when you’re 30, you should have $50k in retirement savings. As you age, here are the multiples of your salary you should have saved:

• Age 35: 2x 
• Age 40: 4x 
• Age 45: 6x 
• Age 50: 9x 
• Age 55: 12x 
• Age 60: 17x
• Age 65: 23x

Panicking because you just did some quick math and realized that if you are making $150k by the time you are 60, you should have $2.5 million saved? Relax, your money will be working hard for you at that point.

You’ve heard of Warren Buffet, right? His net worth is over $102 billion. Did you know that 99.7% of his wealth was earned after his 52nd birthday? That’s because compounding works wonders for your retirement savings in those later years.

Here’s how you can make sure you live comfortably in retirement and take advantage of compounding interest:

1. First, look at what you’ve saved and check the age chart above to see if you are where you need to be. 
2. Start saving now. Just as Google suggested, put away 15% of your pre-tax income. Are you behind where you need to be? You have options:
3. Save more - Put a higher amount into your retirement accounts than the recommended 15%.
4. Spend less - Need help trimming the fat from your budget? Listen to Wait a Week for tips on not spending.
5. Work longer - No one said you have to retire at 65. There are many benefits to delaying retirement, including significantly increased Social Security payments.
6. Automate your savings so you live off what is left in your paycheck AFTER you’ve saved. Listen to my two-part series on automation.

It’s never too early or too late to begin planning for retirement (ok, it might be too late if you are already 65!). Check out the resources below for more information on saving for your future.

• https://www.marottaonmoney.com/how-much-should-i-have-saved-toward-retirement/
• https://mortonfinancialadvice.com/captivate-podcast/which-account-do-i-use-first/
• https://mortonfinancialadvice.com/captivate-podcast/set-up-automatic-savings/
• https://www.cnbc.com/2020/09/08/billionaire-warren-buffett-most-overlooked-fact-about-how-he-got-so-rich.html

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

With the market down 22%, we’re officially in a bear market. Is the pain causing you to make changes or re-evaluate your plan? Hopefully you already had a plan going into this week. But if not, use this opportunity to make necessary changes and also update your plan going forward. Know yourself and how you’re reacting.

This bear market may be short or it could be long. It might go down further, or hover at this level. The past has shown a variety of types of markets - and you need to be ready for whatever is going to come next. Is your portfolio prepared? How about your spending? Your job? Make sure you exercise control over the things in your control - because the Bear itself is outside of your control.

A few things to consider:

• Delay taking social security
• Stay in your job an extra year, or take a part-time job
• Continue to add to your savings + retirement accounts by buying stocks while they are on sale
• Adjust your spending to ensure your savings stay high or your portfolio lasts longer

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

In part two of our conversation regarding your time and its value, Matt and I discuss the concept of intentional attention. Your time is a limited resource. How often do you find yourself scrolling through your phone on social media, clicking on videos and generally winding up down a rabbit hole? Suddenly, you look up and three hours have passed. Probably more than you’d care to admit, right? 

You’re not alone. Forty seven percent of Americans identify as being addicted to their cell phones. So how do we quit the habit?

Think about your time as currency. You are paying Facebook, Instagram, Twitter…whatever your guilty pleasures might be, with your time. That’s not all you’re spending. You are also paying them with your information which is fed to advertisers. Billions of dollars are spent and received keeping your eyeballs glued to your screen.

How can you spend less? Be intentional. 

• Organize your tech habits - make reading lists in your browser or folders in your email that you store articles or other materials you’d like to read at some point. Schedule “reading” time to go back and choose what you actually want to spend time reading.
• Set a curfew for your screens and put them away (out of sight, out of mind) during downtime.
• Make a schedule and stick to it. Give yourself a prescribed amount of time for scrolling, tweeting, reading…whatever it is you enjoy but set a timer and stick to it. 

The overall question you should ask yourself is “am I getting value from this activity?” Or, in other words, is it worth your time? Be intentional with your attention.

How do you know if you have a problem? Are you forgetting things in your life? Crucial moments with your children is something you don't want to miss, because in a few years you will wish you had it back.

What can you do? STOP, think about if this time on your phone is really benefitting you, or if it's just a time killer exercise. The chances are you don't need to be on your phone 24/7.

You will struggle! Phones are addicting, you won't be perfect, but just realizing the time you are missing out on can change your entire perspective for the better. Accept your mistakes, learn from them, and move on!

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/