financial habits

Letters to Our Children #1: About Money

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This is the first in our series, Letters to Our Children. It is intended to be a guide to money and financial planning. Those things happen in the context of life, so we need to begin with a broader focus.

Money is really handy. Those who have it tend to live longer, happier lives. They are able to do things that those without money cannot. In a variety of ways, money can be traded for time, which is what life is made of.

Just as a vehicle may be used to get back and forth to work, or as a getaway car by criminals, money can also be used poorly. We believe money should be invested wisely and spent well.

One of your most important forms of wealth is not usually thought of as wealth. Your human capital is your ability and willingness to employ marketable skills for customers or for an employer. Human capital translates into earning power – for example, physicians earn more than fry cooks. A portion of what goes into human capital is free: your attitudes and habits.

Human capital only has value when somebody pays you to put it to work. It is helpful to keep in mind that all worthwhile enterprises are in the helping profession. The grocer helps people feed their families. The car dealer helps people get where they need to go. The surest path to more income and wealth is to do a superior job of helping more people. The best career insurance is to help your employer help more people.

For now, we’ll leave it like this: money is useful, and it is helpful to understand how to make the stuff. Coming editions will focus on using it, protecting it, and managing it to meet your goals and objectives.

Clients, if you would like to recommend specific topics we might cover, or visit about anything else, please email us or call.

Sacrifice or Joy?

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The ability to delay gratification is supposed by some to be the key to reaching our goals. And it seems to make sense.

If one can spend less and save more day by day, greater wealth results over time. Skipping dessert and taking the stairs instead of the elevator over the weeks and months may improve our health over the years and decades.

This framework casts our future welfare as something that contends with current enjoyment of life. “Sacrifice today for a brighter tomorrow,” and all that. It takes willpower to struggle against today’s desires for distant benefits, somewhere down the road.

We believe there is a more productive way to think about this.

The key is to find the immediate gratification hiding inside deferred gratification. If you are broke but begin saving a little bit of money every payday in a systematic way, you have the immediate gratification of changing your trajectory, of moving in the right direction.

Imagine the gratification of getting your act together in the way that most needs it. You have known it needs attention, and its neglect nags at you. Embarking on a plan gives you the immediate gratification of taking action to improve your life.

In short, you can struggle and sacrifice today for benefits in the misty future, or reframe it so that reaching for your goals brings you immediate joy. It’s a matter of the narrative you choose to tell yourself, the framing in your mind.

Clients, if you would like to talk about your goals or anything else, please email us or call.

Financial Wellness

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We put a lot of time and energy into researching investments and managing portfolios. But there is more to financial wellness than being effective investors.

It is handy to understand where you are financially. Putting together a summary of what you have, and what you owe, is a great first step. What you own (your assets) less what you owe (your liabilities) is your net worth. This is a key indicator.

Not everyone is going to be great at creating and following a detailed budget. But it behooves each of us to think about where and how we spend money. At 228 Main, we don’t really have a lot of time to hector you or lecture you about spending money—you are the boss of balancing life in the present moment and preparing for the future.

When you know where you are, and understand the spending that needs to happen in your household, you can go to work on two ways to grow your net worth:

1. Reduce liabilities by paying debts off. One proven method is to pay some extra on the smallest one. When that is paid off, the amount of its payment plus the extra can be put on the next one until it is paid off, and so forth.

2. Increase assets by increasing your regular contributions to retirement or savings plans, or starting new accounts.

Once your plans are on track, there are some other niceties you might attend to, such as an emergency fund, managing your credit score, and beginning to think about your long-range goals.

What good is your money if it doesn’t connect at some point with your real life? That’s why we work to understand where you are, where you are trying to go, and the strategy and tactics you might use to get there.

Clients, if you would like to talk about this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Simple or Complicated? You Choose

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The object of a household budget is to end up with control of your finances.

If you Google “steps in budgeting” you will find results ranging from three steps to ten steps. Each one involves accounting for all of your outlays to the penny. The process must be repeated every month, and requires ongoing work to maintain.

Budgeting works well for some people, particularly when money is tight. If you might not be able to afford food unless you pay careful attention, you probably better pay careful attention.

But another, far simpler method works for many others. You pay yourself first, and spend or save what is left over. Paying yourself first can take many forms, but the most fool-proof methods are automatic.

• 401(k) plan contributions at work, by payroll deduction.
• IRA or Roth contributions, by automatic monthly bank account transfers.
• Investment account deposits by automatic bank debits.

You may need to do some arithmetic to see if your monthly investment amounts are likely to get you where you want to go. (We can help with this.) After that is done, all you need to do is pay yourself first!

Some of you enjoy keeping careful records of spending, and we would not discourage that. At a minimum, being mindful about our outlays makes sense. But for others, the simpler method may fit in better to your real life. It is a personal choice.

Simple or complicated? You choose. Clients, if you would like to talk about this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

No strategy assures success or protects against loss.

Investment Success and EQ

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We write about productive investment attitudes and habits because we have seen first-hand their power to improve one’s position. Knowledge improves behavior, effective behavior increases account balances, growing balances raise our revenues. Everybody wins.

Behavioral economists have identified ways in which humans seem wired to make poor financial decisions based on emotions. We know from our work with you that this neither dooms our investment performance nor requires us to settle for mediocre results.

Communicating ideas and perspectives is therefore at the very heart of our enterprise. So we were excited to find the work of author Justin Bariso. He wrote the following concise wisdom about his field of expertise:

“Emotional intelligence is the ability to make emotions work for you, instead of against you.”

Some propose that emotional intelligence and its measurement, EQ, is more vital to success in business and life than one’s intelligence quotient, or IQ. This makes a great deal of sense to us, generally, although brains are wonderfully useful in our work, too.

We think Bariso’s statement has special meaning in the world of investing. Many people let emotions work against them; behavioral economics demonstrates this. Our approach, which explicitly seeks to avoid stampedes and embraces unpopular viewpoints, absolutely seeks to let emotions work for us. Emotions create anomalies in market prices, and that is where our opportunities live.

Legendary investor Warren Buffett once said, “Be greedy when others are fearful, and fearful when others are greedy.” Isn’t this just another way to say ‘make emotions work for you instead of against you?’

Clients, if you would like to talk about this or any other pertinent topic, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risk, including possible loss of principal.

Persistence Pays in Many Ways

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We have noticed something so prevalent it borders on being a universal truth. In so many of life’s endeavors, persistence is the difference between success and failure.

Tenure in a career builds experience and skills and value to employers…and earning power. Building a reputation in business takes years but can pay off for decades. A friend tells us, a college degree tells potential employers one thing: a willingness to stick with something for at least four years. In a world where instant gratification is so dominant, persistence—or grit—is an asset.

Persistence usually implies effort, willpower, or self-control. But there are ways you can be financially persistent without much thought or effort.

A saver who commits to put $100 monthly into an investment or savings account will run into reasons why it would be OK to skip a month, perhaps intending to make it up later. Maybe they feel it’s not a good time to invest, the refrigerator will need replacing, or an auto repair popped up. So the commitment turns into 12 decisions each year, 120 decisions per decade, 480 decisions over a working career.

By simply setting up an automatic deposit from one’s checking account, one decision is made and it lasts for all time. It is much easier to get one decision right instead of twelve or hundreds.

Many people have 401(k)s, IRAs, or other voluntary retirement plans available to them. Here, too, inertia can help you build wealth. You sign up, and so many dollars go into the plan every payday without any sweat or effort on your part. Sometimes people nearing retirement find out they are in pretty good shape because a young person long ago put wealth-building on auto-pilot.

When you combine these automatic, systematic ways to invest with the power of compounding wealth, amazing things can happen. Call or write if you would like to discuss your situation in more detail.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including the loss of principal.