June 2021 NewsletterSubmitted by Dorval & Chorne on June 1st, 2021
Keagan Kinsella | June 1, 2021
Happy June! I hope everyone had a wonderful Memorial Day weekend. In this month’s newsletter we’re talking about:
- There’s no time like the present: Whether it’s flossing, or financial planning
- Question of the month: “I have group life insurance provided by my employer! Isn’t that enough?”
- It’s wedding season! A spendy trend, bachelorette edition
Flossing and financial planning... What's the connection?
If you’re not an avid flosser... you’d probably agree there is a large percentage of people who do their once annual floss on the morning of your dentist appointment! In our brains there is always a small sliver of hope that by doing so, they’ll think you’ve been a star-flosser, and the poster child for oral hygiene. When in reality, let’s face it-- the dentist knows (the bleeding gums is a pretty good giveaway too).
It’s funny, because although financial planning and dentistry are completely different occupations, we see a very similar tendency! People want to make sure they appear as good as they can be before coming to see us.
The story that inspired this was based on a woman who came in, and shared her reasoning for making an appointment. She was working on paying off credit card bills, and other debt and was struggling to feel like she was on top of things. She said it had been years of feeling this way, and she was doing the best she could to get in a better position. One day, her daughter asked her, “Mom, how much debt are you going to try to pay off before you go talk to the people about how you can pay off your debt?!” It was at that point she realized, the best time to talk to someone is now...and you don’t need to have it all together before seeing a financial planner!
We were able to give her advice and make her more efficiently use her resources to accomplish her goals, and she left feeling so much better. It really showcases the idea of how you don’t need to be perfect before creating a financial plan. If you aren’t where you want to be-- we can help you get there!
We often see this with the younger generation we help. The ones with student loans, credit card debt, and struggling with cash flow are NOT the ones who come to see us! We’ve heard people say they think financial planners can only help you “manage your wealth.” We are different in the way that we want to help people build wealth!
So the next time you find yourself thinking, “I have to have a bigger balance in my 401k” or “I have to pay off this revolving credit card balance” before you talk to a professional, think again! It’s okay to not floss the morning of your dentist appointment.
Question of the month: “I have life insurance through work, why get it on my own?”
Life insurance can feel like a complicated topic, but when it comes down to it-- it’s fairly simple! While there are no rights or wrongs, our group philosophically views life insurance as a tool to help you accomplish a goal. In this case, the goal is to protect the people dependent on your income against a catastrophic financial loss.
The first question then is...do you have someone (ie: a kid, a spouse, a business partner) for whom it would be a catastrophic financial loss if you were to die? If yes, you may need life insurance. If not, then you don’t need to worry about it yet (although I wouldn’t stop reading, because you may someday!).
The question we are frequently asked is, “I have group life insurance provided by my employer! Isn’t that enough?”
Oftentimes, you have 1x your salary provided for free, and you can pay for additional coverage. While it may seem cheap right now... it will get more expensive over time! There are a few other downfalls to group insurance:
- If you lose or leave your job, you will likely no longer maintain coverage.
- Since it is group insurance, you are being lumped in with healthy and unhealthy people. If you are young and healthy, the cost of coverage (premiums) might be higher because you are not being underwritten on your own merit.
- You are potentially not getting an adequate amount of coverage!
If you are healthy, we almost always recommend getting insurance outside of your employer. It can be more affordable, and more importantly...it is a fixed premium for the term of your coverage! It makes sense to talk to a financial planner about how much coverage you need, because it depends on your income, family, and debt. The great thing is websites like PolicyGenius and SelectQuote are convenient resources for shopping out term life insurance quotes, and getting your own policy. Let us know if you want help sorting through this!
A spendy trend- Budgeting for pricey parties
Summer is here! With that, it means “wedding season” is in full swing-- and it seems like everyone I talk to has a handful on their calendar. Of course, with weddings come bridal showers, and engagement/bachelor(ette) parties! My mouth just about dropped when I read this statistic, “WeddingWire.com found that 40% of women reported spending $1,000 or more on attending a bachelorette party, and 1 in 10 reported spending over $4,000!”
As a current bride-to-be, who has spoken with many bachelorette party attendees, and of course been to a few myself, I find it so interesting to see how much people are being asked to spend on these events!
The trend these days is to take a trip, many times involving flying across the country, to then stay in a hotel or AirBnB, and then going out on excursions, buying outfits, and of course...the food and drinks!
There is nothing wrong with going all out on a bachelorette party, memories are priceless! However, as a financial planner who gets to see the finances of many people that age, I know that it can be hard to balance all your financial obligations, and it is important to be prepared. The last thing I would want as a bride is for someone to go into debt to be at my party. In fact, I tried to keep mine as low cost as possible for that reason!
I’ve talked about it before, but one of the best ways to be prepared for unforeseen expenses like this is to budget for the unexpected. We call this making your discretionary expenses fixed. If you know you have weddings, or other celebrations in the year, it may be helpful for you to roughly add up the involved costs (travel, gifts, etc.) and add some “fluff” in there too to make it conservative.
When you look at your income, and your other monthly bills (like rent, groceries, utilities), add in this extra number to make sure you are accounting for it month to month. Some months you’ll spend more than you budgeted, and some months you’ll spend less but that’s how it’s supposed to work! Hopefully that helps relieve spending stress that you may be experiencing.
All right, that’s it for this month. Stay tuned for my next newsletter where I will continue to share and inform in new and creative ways. If you want to sign up for the newsletter email, click here (and let others know they can sign up.) Last but not least, let’s connect on LinkedIn!
Advisory services provided through AdvisorNet Wealth Management (AWM) and Dorval & Chorne Financial Advisors. Dorval & Chorne Financial Advisors and AWM are not affiliated.