Power Up Wealth podcast – Episode 106 – Kickstart Your Financial Fitness Journey
James Derrick 0:00
What better time to do a financial wellness checkup than in January? I’m James Derrick, President of Smedley Financial. Today, Shane Thomas will help us embark on a journey to financial fitness.
Shane Thomas 0:15
Welcome to the SFS Power Up Wealth podcast, where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
James Derrick 0:32
Thank you for joining me today, Shane.
Shane Thomas 0:33
Thanks for having me.
James Derrick 0:34
Shane is the Vice President of Technology here at Smedley Financial. Shane, you recently wrote a newsletter article about financial wellness checkup. Tell us what is a financial wellness checkup?
Shane Thomas 0:44
Just like going to the doctor, it’s a checkup of where you are at financially at this point in time.
James Derrick 0:50
And this is a great time of year, January, to look at this. Where am I at? How did I do last year? And what do I want to accomplish this year?
Shane Thomas 0:59
Exactly, if you didn’t do this last year or the year before or before that, it’s okay. Now’s a perfect time to start. Take a look at your financial situation. Where are you at? Are you saving enough for retirement? Are you paying off any debt that you have? Look back through the year, like, if you had a car payment, how much have you paid off? You know, look at that as a goal. It’s like, oh, hey, my car payment was X amount for the year. And look how much you paid and towards that. And you know, for this year, maybe say, hey, well, if I pay just a little bit more, I could have the whole thing paid off. Or where are you at with your home mortgages? Look at that. And if you have goals like, oh, maybe all of your debts paid off, maybe a goal would be, well, how have I funded all of my retirement accounts to the maximum? Did I put enough aside to help my kids, you know, into college? If you know, whenever that time comes, or if there’s a wedding, or whatever it might be. Whatever the goal is, maybe a second home. What are your goals? Write those down and see where you’re at for the year.
James Derrick 1:58
I want to dive into each of these financial goals. Before we do let’s talk a little bit about goals of communication that you might have.
Shane Thomas 2:05
Sure a communication goal would be one to say, hey, do other people, your spouse, your children, trusted contact. Do they know about your financial goals? Do they know what the plan is like if something were to happen? Parker had some great articles this last year and some podcasts about preparing for the unknown. And do people that are your trusted contact or your spouse and family? Do they know if something happened to you, what to do, as far as like how to pay your gas or electric bill or phone bill or your mortgage if you still have one? Do they know what to do or where to look for insurance information? If you’ve got life insurance, if something tragic happened. Would they know where any of that information is? So maybe opening up the lines of communication and letting those individuals know about some of that information, even including making sure they know how to access some of that stuff, if there’s passwords, as we know, two-factor authentication codes, any of that, how can they access any of that information?
James Derrick 3:07
One of the things we talked about last year was keeping a cell phone running for a little bit even after someone has passed away, because you may need it in order to authenticate access to a website or something like that. If somebody has a will and a trust. Do the beneficiaries know where to find it? And I know, for example, that I’ve told my children, but do they even remember? So maybe I should tell them again.
Shane Thomas 3:29
Yeah, it’d be a good time to maybe set it a goal, to remind those that are going to be in charge of your stuff, where that can be found, and what to do with it.
James Derrick 3:38
And we’ve also discussed sharing values. So this would be another communication goal. You say, well, this month, I want to find an opportunity to just share this one story with my family so that they understand my values when it comes to life or money or family, so that you can share some of those that go beyond just finances, or that help explain why the finances are important to you.
Shane Thomas 4:01
Exactly that would be a reason to say, well, this is why I’ve saved the way I’ve saved. This is the reason why I spend the way I spend. So then you can pass those on to the next generation, and hopefully not only pass that on, but when they receive at some point, some inheritance, they understand the why it’s there, and don’t just frivolously spend it on on stuff. They can also teach the next generation those same values and goals of now why did grandma or grandpa or mom or dad have those goals? They understand that.
James Derrick 4:30
I think that’s a beautiful thing to share. Let’s jump into emergency planning. I think this is a good place to start. Whether you are in your 20s or you are in your 70s, you need to plan for the possibility of an emergency.
Shane Thomas 4:42
Yeah, definitely. You know, as you’re setting your financial goals for the years, making sure you’ve got some living expenses for some kind of an emergency, three to six months of living expenses. That could be for a loss of a job. It could be, you know, what, if you need a new roof on your house? There’s lots of things that could fall under being prepared for some kind of emergency. Yeah, whether you’re in your 20s, 30s or 40s, or you’re retired, having that amount set aside is important.
James Derrick 5:11
I’ve been stunned in my own personal life at the need for funds to just do home repairs. I mean, whether it’s a new home or an older home, they all need a lot of cash.
Shane Thomas 5:22
Yes, sometimes renting isn’t such a bad thing. Owning a home sometimes feels like it’s a money pit, whether it’s a new or old.
James Derrick 5:30
You do need those emergency funds. What about strategically paying off debt? Talk about how one could be strategic about it. I mean, where do you begin?
Shane Thomas 5:41
Paying off any debt that has a high interest rate is going to be beneficial. To get rid of those first off, so you can focus on not paying so much in interest and getting less to the principal, but getting those paid off first so then you can focus on making sure enough money is getting allocated to your retirement accounts and not just going to interest so you can start earning money.
James Derrick 6:03
When I think about what financial wellness means to me, one of the guide posts would be, am I putting money away every single month? Am I saving? Am I spending less than I’m making? And if I can say yes to that, then I feel like that is one step towards financial wellness.
Shane Thomas 6:20
Exactly, if you can get some of that debt paid off, and start putting some of that money towards paying off other debt that has maybe less of an interest rate, and then start making sure that you’re putting enough into your savings so that it has a chance to grow so when you’re in your 50s and 60s and 70s, that money’s had a chance to compound over time and grow for you be able to use. And that would lead me into maybe the next step would be the long-term planning. Is making sure that you’ve got a long-term time horizon. You’re looking to the future. Do you need the money today? No, is it something you’re going to use a long time from now? Yes, you know. And then, you know, put that money in there, let it grow. You know, don’t think of it as money that you can just go use for whatever purchase, put it in there with that purpose of it’s for the long-term. Your future self is going to thank you for having that set aside.
James Derrick 7:11
Absolutely. And it’s amazing how even for retirees, they need to think very long-term, because they’re going to be around a long time still. What about complex decisions and financial advice. When do you know if you need to seek a professional to help you?
Shane Thomas 7:26
You know in your 20s and 30s, maybe it’s not that important that you have someone holding your hand or helping you make the decisions for something that’s going to happen 20, 30, 40, years from now. But when you start to get older and plans start to get more complicated, as far as like, well, I’ve got stocks or stock options, or I’ve got a 401(k) and I’ve got different retirement accounts, and whether to start taking Social Security or not, should I delay it? What about health care and all of these other decisions? That’s when you need to start looking for someone that’s knowledgeable in that, not just Googling it on the internet or asking ChatGPT to help you with your financial plan, but having someone who knows and has seen different scenarios and can look at what are your goals and not be tied to the assets. They’re a third party. They can look at the decision from not maybe an emotional state. They can help you figure out which is going to be the best way to go long-term. But I would say once you reach into your 40s, you should be talking with a financial planner, someone who knows your situation and knows your goals and can help you, help you reach those.
James Derrick 8:35
I think one of the beautiful things about getting professional help is that they can help you be intentional about the direction you’re heading, and that becomes more and more important the more assets you have. Shane, thank you for coming in today.
Shane Thomas 8:47
Yeah, thanks for having me.
Shane Thomas 8:54
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
Financial Wellness Check-Up — Shane Thomas
