Nick Saban, head coach of Alabama’s football team, often refers to storylines and journalism, both good and bad, as “rat poison”.  He recognizes what’s written or said in the media will be a distraction to his players, coaches, and staff.  Wisely, he understands this creates disruptions that won’t allow his team to play together and execute the gameplan.  This past week, in a postgame news conference, Nick mentioned the rat poison was “yummy” after a decisive win over Georgia.

A strong term that is correct in its description, both in sports and financial journalism.  It’s difficult to decipher what’s good and bad relative to your financial wellbeing with all that’s distributed daily.  Earlier this year, I published what investing is (and is not) to share an idea that there may be a better alternative.  Answering several questions first, which often leads to a plan, avoids the default setting of “more” taking over and defining what investing is.

The purpose of this blog is to shine the light on the benefits of active planning.  Cutting through the noise and extremes that fill our newsfeeds daily and understand how better planning decisions are possible.  Planning is more than just returns in your investment accounts.  I believe financial planning is a process, one that should be repeatable and not have to be right all the time.  The act of planning is setting aside time and reflecting so you have a north star guiding your decisions as you go about your journey.

Assessing financial and life decisions (including tradeoffs) is a necessary part of planning.  Where you choose to spend, invest, and save your money addresses the financial aspects.  There is no universal solution for families and professionals to deploy, it’s personal.  Based on your values, time, and prior experiences, where do you choose to spend, invest, and save?

Spending, we all need to do this, some of us enjoy this more than others.  Many have invested their entire lives and have difficulty flipping the switch to spend once they repurpose their time.  This may lead to saying no or not now more often than necessary.  A plan helps quantify what yes may look like when dollars are given purpose.  The same is true for those who may take spending to the other extreme.  Essential spending is needed, discretionary spending is fun.  When you look at where your money goes, what’s the relationship between need and fun?

Investing may be defined as choosing to set money aside today so income may be possible tomorrow.  There are countless ways to invest.  What matters when you do is that you are clear on your “why” and that your investment/s serve a purpose.  Our firm believes and shares the idea that the purpose to investing should be to hedge rising costs over long periods of time.  Think decades.  That’s our definition, there are others, rising costs will continue.  Should you doubt this, please take a minute to chat with someone born in the 1930s or 40s.  Ask them to describe their spending and costs today compared to where they once were.

Saving, to cash reserves allows your liquidity and short term needs to be met.  When investing become as volatile as it has been the past two years, cash reserves allow you to keep your investments where they are and not react.  As volatility works both up and down, at times this may have you question your investments.  Holding cash reserves allows you to spend in the near term while your investments contract and expand over the long term.

Balancing out what you spend, invest, and save is the cornerstone to a financial plan.  It allows you to get closer to your goals and what matters most.  The keys are periodic reviews, ideally with someone you know, like, and trust.  If you’d like to explore a conversation together and see what this means for you, reach out below.

Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Flowerstone Financial are not affiliated.

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