“At least I know you don’t have to shoot 65 to try to win” – Ernie Els

I was fortunate enough to hang around golf greats like Gary Player, Jack Nicklaus and Ian Baker-Finch, among others, during my days in the South Florida Section.  One of my memories was of how Mr. Player would walk down the practice tee mid-morning and completely lay into the members while they warmed up prior to going out on the course.  He’d say things like, “look at how out of shape you are! Do you know that I do 1,000 sit-ups a day and I’m 78 years old?  What kinds of food do you feed your overweight body?  Let me know if you need help getting in better health so that you can hit the ball as far as I can even though you’re half my age.”  Not exactly the type of stuff a PGA club pro could get away with saying to their membership, but it does remind me of how people need catalysts to get them to do things that are in their own best interest.  This includes money habits, investment strategy, partnering with a professional team, etc.

We all have access to education in today’s age of technology, but how do we undergo lasting ways to change behaviors?  Just like in golf, education alone does not produce financial wellness.  According to the Consumer Financial Protection Bureau, the U.S. spent more than $670 million on financial education programs in 2013.  I don’t personally believe the federal government needs to use taxpayer dollars to pay for programs like this and it shows.  They had good intentions of teaching Americans (all 330 million of us) the importance of saving and how to do it…..but do Americans actually save after being educated?  Recent reports suggest that although people are in fact educated about saving money for their future needs and wants, 40% of the working population lacks $400 dollars for an emergency, like a car repair bill.

B P Financial Associates are trained to talk about the basics like setting up auto-deposits into your retirement plans and emergency savings accounts so that you don’t even realize the money is not part of your spending account.  Tracking your cash flow to get an idea of how much money you spend in a month/year and where it goes is always wise.  Every dollar has a purpose whether it’s for investing, saving, paying bills, enjoying a vacation etc.  Put each dollar in its own account too.  Paying yourself first is a big one – so that even if you make $50 bucks cash for a lesson, you’re paying yourself 10% minimum (aka investing it).

A research company, Common Cents Lab, designed a program along with a financial wellness coaching firm that would remove complexity from financial decision-making.  One of the things they found was that over a three-year randomized experiment, parents provided with college savings accounts showed higher social and cognitive performance.  The takeaway from this is that parents who were given college savings accounts actually changed how they thought about their child’s future.  The intervention was designed to help parents create a college bound savings account by default.  An opt-in if you will.

We agree wholeheartedly about designating an account specific to a purpose so that it has its own identity and importance.  Experience shows time and again that general funds do not work as well.

Just like when Mr. Player would walk the line in the mornings and tell it like it is, many people simply need an external push to action.  Response rates actually go up when your boss sets a reply deadline or action plan date, right!  Many of us would benefit by setting a deadline to take care of our wills, retirement plans, investing, etc.  We all crave some accountability in life, especially when decisions are tough.

What role does confidence play in your knowledge of financial decisions?  Remember when you had to elect healthcare benefits or updated your retirement account at work.  The glazing of the eyes happens almost immediately.  We are asked all the time how to select the investments within a client’s 401(k) plan because people have no idea and the more they try to learn the less confident they become.  In fact, there is research available that suggests people will shy away from making a decision at all….. even after given technical and advanced descriptions of the choices.  The subjects in the study decided not to invest regardless of whether the fund was low or high risk.  What good does that do in the end?

The goal, often times, is to improve financial well-being throughout life so that money is available for whatever is next for us.  Sometimes we each need a kick in the pants to get us to act and being honest with ourselves is a good start.  Let us know if you need some help or simple guidance on a direction to take.  Nobody is going to care about your financial wealth as much as you do.

 

Blake Parrish
Senior VP, Portfolio Manager
Phone: (503) 619-7237
E-mail: blake@bpfinancialassoc.com

Certified Financial Planner Boardof Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”