Goldman-Sachs Projects end of Bull Market

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David Kostin, Goldman’s top U.S. equity strategist, warned that the post 2008 financial crisis S&P 500 Bull Market will end soon.

“After eleven years, 13% annualized earnings growth and sixteen percent (16%) annualized through-to-peak appreciation, we believe the S&P 500 bull market will end soon.” Goldman-Sachs

Furthermore, Kostin expects that the S&P 500 index goes down 15% by mid-year and recovers by year end. He believes what prompts the market decline is corporate earnings recession and a wave of negative earnings revisions that are likely over the next three to six months. He projected that the S&P 500 target will be at 2,450 by mid-year.

Sources:

  1. https://www.cnbc.com/2020/03/11/goldman-sachs-the-bull-market-will-end-with-stocks-down-another-15percent.html

Retirement Prospects are Improving

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One key way to improve your retirement prospects: Make it a point to save, invest and accumulate wealth as much as possible and to start early.

Although financial security in retirement for women have improved, new research from the Aegon Center for Longevity and Retirement report that women around the world share the same three career and financial challenges: a gender pay gap, time away from their careers, often due to caregiving responsibilities, and a lack of compensation for those responsibilities.

Despite the fact that women today are better educated and enjoy more career opportunities than any other time in history, even now, many struggle to achieve a financially secure retirement. As a result, it is imperative that women (and men) take greater control over their financial situation, retirement planning and long-term financial security. Women need to further engage in saving, investing, and preparing for long and healthy lives and secure retirements.

Aegon Center for Longevity and Retirement developed what they view as the “five fundamentals” for retirement readiness. The five fundamentals comprise: saving (starting early and saving habitually); planning (developing a retirement strategy); creating a backup plan for unforeseen events; upholding a healthy lifestyle; and embracing lifelong learning.

Overriding purpose of the key findings is to help men and women achieve a lifetime of financial security, both during their working years and through retirement. Important steps to take, according to Aegon’s report, include:

  • Start saving, investing and accumulating wealth early and habitually. If offered a retirement plan at work, enroll in the plan. Admittedly, there are times in our lives when we can put away more money, and other times when it’s less. Yet, just the process of developing the habit of saving, investing and accumulating wealth can make a big difference.
  • Develop a written financial strategy and plan. Create a plan that includes everything from goals you want to achieve to how you will reach those gaols. The plan should also factor in future healthcare expenses. It’s impossible to chart a course if you don’t have a destination in mind.
  • Create a backup financial plan for unforeseen events. Consider emergency savings and insurance products such as disability insurance. Life will probably throw you some curve balls, so be ready to adjust your plans. Especially, if you plan to work longer and retire at an older age.
  • Maintain a healthy habits and lifestyle. Make eating healthily, exercising regularly, avoiding stress and getting enough sleep part of their routine. Your health is key to enjoying your time in retirement. And yet, not enough people are paying attention now to their diet, exercise and sleep. By focusing on healthy habits now, you can keep health issues at bay later.
  • Embrace lifelong learning and emotional wellness. Keeping your job skills up to date will help protect your income by keeping you employable. Keeping your social life active and engaged with friends and others will help create a more fulfilling life. And it’s also important not to neglect the basics of financial education and planning, and your social connections. You can make smart decisions with your money and smart choices with your emotional health.

Amid widespread concerns about the financial sustainability of social security and retirement systems, it is imperative that women (and men) take greater control over their financial security and retirement planning.

People need to engage in saving, investing, accumulating wealth and preparing for long, healthy and emotionally engaging lives and secure retirements.

References:

  1. https://www.cnbc.com/2020/02/21/womens-retirement-prospects-are-improving-but-not-enough.html
  2. https://www.aegon.com/research/

Maintain a strong immune system to fight off the coronavirus

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According to the most recent information from the CDC, for most people, the immediate risk of being exposed to the coronavirus (COVID-19) is thought to be low. Coronavirus (COVID-19) is an illness that has infected more than 100,000 worldwide — including more than 650 confirmed cases in the United States — and killed more than 3,000.

Many of those affected by coronavirus develop only a mild illness, while some develop no illness at all. That may be an indication of what happens when the virus meets a well-functioning immune system.

When it comes to keeping our immune systems healthy, a lot of it comes down to healthy habits. So no, you are not doomed if infected by the coronavirus; Most are sailing through the epidemic just fine.

It is nothing you haven’t heard before, but it certainly bears repeating during this cold and flu season: If you want to meet the coronavirus or any infectious agent fully armed eat well, sleep well and de-stress.

Resource:

https://www.wsbtv.com/news/trending/how-keep-up-strong-immune-system-fight-off-coronavirus/RYAMQYGFT5FZLKT7V65I4QALZ4/?outputType=amp&amp_js_v=0.1&usqp=mq331AQCKAE=&utm_source=taboola&utm_medium=feed-trending

Elevated Global Economic Uncertainty

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  • Updated: 3/10/2020
  • Uncertainty has had a great impact on global economies and equity markets. It is a big factor that causes fear and that causes investors to panic sell their positions and seek safety. Over the past few weeks, the shocks to the global economy have been:
    • Crude prices falling
    • Coronavirus fears and near hysteria
    • Bond market turmoil

    Saudi Arabia’s decision over the weekend to instigate a crude oil price war as it escalates a clash with Russia sent oil prices down by the most since the Gulf War in January 1991 and caused the U.S. stock market to experience it single worst day sell off in nearly decade. Crude prices, along with U.S. government bond yields, are typically viewed as key barometers of economic health and confidence. Today, we may be witnessing the end of the longest running bull market in history.

    The price war between major oil producers–Saudi Arabia and Russia–is riling global markets and economies at a time when economists and investors are struggling to understand how deeply the coronavirus outbreak will impact global supply chains and consumer spending. Coronavirus is an illness that has infected more than 100,000 worldwide — including more than 650 confirmed cases in the United States — and killed more than 3,000.

    There is an assumption that when oil prices collapse, whether the collapse is driven by the demand side or supply side, the global economy is going to suffer. The latest tensions put the oil market in somewhat uncharted territory with pressure in terms of both supply and demand as the coronavirus epidemic threatens to sap businesses’ appetite for energy.

    The plunge in crude added turmoil in equity and credit markets as investors have grown increasingly concerned about economic growth stalling. It also raised fresh concerns about the risks tied to heavily indebted energy companies in the high-yield market, and the fallout for other companies if broader credit markets tighten.

    The service industry is getting hit the hardest and driving the economy into a recession as a result of the coronavirus. There is a destruction of demand in area of travel especially with the airlines and cruise lines, with entertainment such as restaurants and with sporting events.

    Essentially, time like these of panic selling by the herd are not the time to sell stocks. Things are so uncertain regarding the coronavirus and even the experts appear uncertain on what will happen with the the virus. One day, uncertainty will wane and the markets will recover. You do not want to be the investor who locked in their losses at these levels.

    https://www.bloomberg.com/news/articles/2020-03-08/yen-slides-as-oil-price-war-adds-to-global-worries-markets-wrap

    The Case for Staying Invested Through Volatile Markets

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    Shifting investment strategies during or in anticipation of market movements is often counterproductive.

    March 3, 2020

    Featured, Roger Young, CFP®, Senior Financial Planner

    Subscribe to T. Rowe Price Insights: Receive monthly retirement guidance, financial planning tips, and market updates straight to your inbox.

    Highlights

    • Reacting to where you think the market is headed may compromise long-term returns.
    • Stocks respond to numerous forces, making timing the market a complicated and risky proposition.
    • Keeping a long-term perspective can help you meet your investment goals.
  • Market losses can be disconcerting, but investors also can find themselves thrown off by a prolonged period of rising stock prices. In fact, a bout of nerves now and then can seem inevitable—and even reasonable. When stocks have gone up so much, isn’t the wisest strategy to take a lot of money off the table and lock in gains? Or is getting out of the market at the first sign of trouble the best move?

    • Instead of staying focused on the fundamentals of a long-term strategy—including portfolio rebalancing and modest tactical adjustments—some investors let emotions drive their decisions. Doing so makes no more sense when times are good than when times are bad. “Attempting to time the market and avoid a downturn by making dramatic changes in your asset allocation can cause harm to your long-term investment results,” says Roger Young, CFP®, a senior financial planner with T. Rowe Price. “This is because you have to accurately make two decisions that are likely to trip you up: when to get out of stocks and when to get back in.”

    Read more: https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/retirement-and-planning/personal-finance/case-for-staying-invested-through-volatile-markets.html.html

    Retire On Your Terms | Financial Literacy

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    Updated:  March 8, 2020

     “If you have $1 in your bank account on the day you die, you had more money than you needed in your lifetime to live.”

    This quip brings perspective and can reinforced one extremely important aspect of retirement: ‘putting together a plan and sticking to it’ is vitally important.

    Life is unpredictable, so any plan you make for retirement has to be flexible and you must accept the undeniable fact that you can’t control everything life delivers can afford personal freedom and peace of mind in retirement.

    Retirement is a great time to discover new passions and interest by taking classes, finding one-on-one instruction, or joining groups and organizations. The key to a happy retirement isn’t how much free time you have, it comes down to how well you’ve planned for retirement and how you manage whatever free time you have.

    There is adage in business management…‘you can’t manage what you don’t measure’. This adage is true for business management, and is also true for personal finance and retirement. You cannot manage your personal finances or your financial readiness for retirement unless your measuring your current financial status and progress.

    It is important to measure those financial activities or results that are important to successfully achieving your personal financial goals. The time to plan for retirement is now. Planning for retirement starts with having a ballpark idea of longevity and how much money you will need in retirement. Yet, many Americans are not financially prepared or have planned for their post-working years. Only 54 percent of non-retired respondents to the FINRA Investor Education Foundation’s National Financial Capability Study (NFCS) said they have some kind of retirement account.

    42% of Americans have saved $10,000 or less for retirement

    This statistic suggests a significant number of Americans aren’t on track to meet their retirement goals. That shouldn’t be surprising given the plethora of potential obstacles: Pensions are less common and health care costs continue to skyrocket higher. Additionally, you may need to figure out how to put your kids through college, but you might be paying off your own student loans or credit card debt at the same time.

    If you’re off track, you can take a few simple steps to get right back on the road.

    • Save as much as you can, as often as you can. If you’re years away from retirement, you’ll likely benefit from the compounding effect.
    • Stay in the workforce longer (more on that in a moment) or decrease your living expenses. This may be an especially viable option if you’re close to retirement.
    • Plan and focus on what you can control and what’s important to you—planning provides perspective on what you can do to meet your goals
    • Financial experts advise that equities need to be a larger portion of retirees’ portfolios during retirement for several reasons including longer life expectancy and lower interest rates.

    Retirement readiness is achievable by most Americans. But, it requires that Planning and being financially prepared for retirement become a key priority for American families. Yet, research reveals that a majority of Americans are not confident they are financially or emotionally prepared for retirement. Additionally, only about one third have an actual plan in place. Nearly a third worry they will outlive their retirement savings and many already plan to work part time during retirement.

    Longevity

    Use the Social Security Administration’s Life Expectancy Calculator to help determine how many years of retirement you might need to plan and save for. As a rule of thumb, a retiree should expect to live thirty (30) to thirty-five (35) years in retirement.

    How Much Money

    Many retirement experts estimate you’ll need between 70 and 85 percent of your pre-retirement income to maintain your standard of living after you stop working. But that formula might be too simple, and possibly too low, to account for what you’ll actually spend. For instance, you may require more if you have expensive hobbies or plan to travel a lot. You may also need more if you or your spouse are in poor health and have substantial medical expenses.

    Retirement Planning

    Only 1 out of 10 workers has prepared a formal financial plan

    Without a plan, you may be more prone to react to market events, and you might even make rash decisions. A plan provides perspective, brings clarity to your current situation, and shows you how to make changes to your spending and saving habits. It can give you knowledge to accept responsibility for your life and the confidence to address the unknown and market volatility.

    Retirement Planning Requires a Plan

     “The goal of retirement planning is to create a plan. It feels silly to come out and say that, but from what I’ve seen, most investors never actually take the step of creating a concrete plan. Instead, they read a few articles about various retirement planning topics and they leave it at that. (And many investors don’t even do that much.) The more specifically you’ve planned how you’ll manage your portfolio — and your finances in general — the less likely it is that you’ll have to go back to work or dramatically reduce your spending later on in retirement.” Mike Piper, Can I Retire? How Much Money You Need to Retire and How to Manage Your Retirement Savings, Explained in 100 Pages or Less

    Individuals have to take responsibility for their financial security after retirement. Unfortunately, the majority of Americans do not appear to have done much retirement planning. Forty-one percent of FINRA Foundation NFCS respondents have tried to figure out how much they need to save for retirement, while 54% have not. The act of planning for retirement has proven a strong positive indicator of retirement wealth.

    When putting together a retirement plan, goals “must-have” essential expenses should take precedence over “nice-to-haves” or discretionary expenses.

    Workers who were able to retire by choice were happier than ones whose retirement was thrust on them: 69 percent of the retirees who retired by choice were satisfied with their lifestyle but only 36 percent pushed into retirement said they were satisfied.

    The happiest retirees are engaged in some kind of meaningful activity or actively employed, are in good health and are more connected in the physical world. In short, activities and social engagement are good for a retirees health and wellness.

    The happiest retirees “eat well, sleep soundly, play often, exercise at least three times a week and maintain strong social connections. The happiest pre-retirees and retirees believe “good health” as the No. 1 key to happiness in retirement.

    Save smart in accounts earmarked for retirement.

    Whenever possible, use tax-advantaged savings accounts like 401(k)s to save money on taxes and boost retirement security. Contributions to a traditional 401(k) are not subject to income tax withholding and are not included in your taxable wages—and earnings on Roth 401(k) contributions are tax-free. In 2020, contribution limits increased, so you can contribute up to $19,500 to your 401(k)—and if you’re aged 50 or over, you can contribute an additional $6,500 for a total of $26,000.

    Any day is a good day to start, or increase, your retirement savings and investing, and step up your planning. Understand that saving and crafting a plan for retirement is a long-term process.

    References:

    1. *https://money.cnn.com/2018/03/16/retirement/average-retirement-savings/index.html
    2. http://fortune.com/2018/04/18/americans-save-less-than-10000-for-retirement/
    3. The National Financial Capability Study (NFCS) is a project of the FINRA Investor Education Foundation (FINRA Foundation).
    4. https://www.retireonyourterms.org/about-us
    5. https://vanguardblog.com/2018/11/08/financial-worries-start-planning/

    Set up an Emergency Fund

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    Key Takeaways

      A typical emergency fund target covers three to six months of expenses 
      Keep an emergency fund separate from long-term investments
      Include emergency savings as part of your budgeting process

    Save for emergencies.

    To keep from dipping into long-term investments or borrowing at unattractive rates when you need cash in a hurry, create an emergency savings fund that can cover at least three months of essential living expenses such as rent or mortgage, utilities, food, and transportation.

    An emergency fund isn’t just a repository of cash you can dip into when the tires wear out or the dishwasher breaks down. Those emergency dollars may actually be critical to your overall investing strategy. The general rule for emergency savings is three to six months’ worth of expenses.

    It depends on personal lifestyle, career, and income. If income is a little more stable, maybe they can stick to something shorter. But if the situation is unstable or if they’re in a profession where maybe there’s risk of attrition, then they may want to have a longer type of fund set up.

    the availability of emergency cash is the key short-term priority, because without it, longer-term goals could get dinged.

    Financial experts advise to put financial goals into short-term, intermediate-term, and long-term buckets. The short-term budget would include emergency savings. Intermediate goals may include buying a house and paying for college. But, the Long-term goal is retirement. But intermediate and longer-term buckets can spring a leak if emergencies aren’t covered by short-term funds.

    References:

    Developing Good Financial Habits

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    “It’s not the big things that add up in the end; it’s the hundreds, thousands, or millions of little things that separate the ordinary from the extraordinary.” Darren Hardy, author of The Compound Effect

    Financial planning in small steps doesn’t take large sums of money to start.  In fact, financial planning can have a profound impact on financial security for Americans, especially lower-income households, by helping people improve their saving and budgeting habits. A written plan helps savers prioritize their goals and provides a way to measure success.

    A disciplined, steady approach to saving, investing and ruthlessly managing spending wins out. Wealth-building habits don’t involve a get-rich-quick scheme —it is a slow, gradual process to accumulate wealth,” you must be persistent and consistent.

    Savings habits

    “The real cost of a four-dollar-a-day coffee habit over 20 years is $51,833.79. That’s the power of the Compound Effect.” Darren Hardy

    While investing may appear at times to be complicated and risky, saving is pretty straightforward. Two-pronged approach to increase the saving amount:

    • Generate more cash inflow.
    • Reduce cash outflow.

    Spending and saving often go hand in hand because whatever you don’t spend is potential savings. That’s why it is important to focus on buying things that will hold value or appreciate in value instead of allowing expenses to eat into savings through continuous consumption. To accumulate wealth, it is critical to manage expenses tightly. Instead of living just within your means, it is important to live below your means.

    One way to reduce outflow is to maximize tax savings through retirement plans such as the 401(k). Another is to pay off debt and prioritize by paying the debts with the highest interest rate first.

    Keep an eye on the prize

    “There is a one thing that 99 percent of “failures” and “successful” folks have in common — they all hate doing the same things. The difference is successful people do them anyway.” Darren Hardy

    Following the adage that it becomes easier to reach your destination or to achieve a successful outcome with an end goal in mind. Those who gain wealth believe that everything they do is ultimately done to fulfill their financial goals. For example, people should set a “retirement number” and a deadline for reaching that number. That number is the goal for how much cash and investments they need for a comfortable retirement and the deadline is the date to achieve the goal. Every time you put money toward saving, you’re a step closer to the prize.

    Set It, But Don’t Forget It

    Setting up an automated savings and payment system is one habit highly successful people practice to keep their financial house in order. They automate their savings, investing, bill payments and money transfers. But they don’t ‘set it and forget it’ once they set up the automated system. They know it’s important to maintain awareness and manage regularly, at least weekly, where their money’s going.

    Automatic saving and investing

    People have to be consistently reminded that to develop habits of saving and investing. The more you do develop the habit of saving and investing for the long term, the easier it will become. Consequently, it is recommended to set automatic savings protocols, if necessary, so a portion of your earnings goes directly from your paycheck into a separate savings account.

    Habitually and automatically save 10% to 20% of every paycheck.

    References:

    1. https://www.bankrate.com/finance/investing/financial-habits-of-wealthy.aspx
    2. https://jamesclear.com/book-summaries/the-compound-effect

    The Wealthy Next Door

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    To accumulate wealth, you should start by reading and studying the behaviors of people who have successfully accumulated wealth and achieved financial independence.

    In the groundbreaking financial book, “The Millionaire Next Door: Surprising Secrets of America’s Wealthy”, written in 1996 by William Danko and Thomas Stanley, found that people who appear wealthy may not actually be wealthy.

    Their findings reveal that people who appear wealthy tend to overspend or live paycheck to paycheck. They often overspend on symbols of wealth like luxury vehicles and large homes — but actually have modest or negative personal net worths. On the other hand, wealthy individuals tend to live modestly in middle-income communities, drive modest vehicles, and shop at Costco Warehouse.

    Lessons Learned from “The Millionaire Next Door” are enlightening on how the wealthy actually spend and save. Instead of appearing to be wealthy, they tend to:

    Understand that Income Does Not Equal Wealth

    It is a fact that higher-income households tend to have more wealth than lower- and middle-income households. But the size of a paycheck explains only approximately 30% of the variation of wealth among households. What really matters is how much of the income is not spent on discretionary things, but is saved and invested. On average, wealthy individuals invest nearly 20% of their income. And, it finds that those in the top quartile of wealth accumulation are prodigious accumulators of wealth (PAWs), according to Danko and Stanley

    Work with a Budget

    The majority of wealthy individuals have a budget. Of those who don’t, they have what the authors called “an artificial economic environment of scarcity,” more commonly known as “pay yourself first.” In other words, they invest a good chunk of their income before they can spend any of it. As the authors wrote, “It’s much easier to budget if you visualize the long-term benefits of this task.”

    Manage their Spend

    Nearly two-thirds of the wealthy can answer know how much their family spends each year for food, clothing, and shelter. In contrast, only 35% of high-income non-wealthy answered yes to this question. The wealthy manage and track their spending.

    Have Defined Financial Goals

    About two-thirds of wealthy have clearly defined short-, intermediate- and long-Term goals. Many of the wealthy are retired and have already reached their goal of financial independence.

    Dedicate Time To Financial Planning and Education

    Creating a budget, goal setting and financial planning all take time, but the wealthy were willing to spend it. Danko and Stanley found that people they labeled “prodigious accumulators of wealth” (PAW) spend many hours per month planning their investments. In fact, they found “a strong positive correlation” between investment planning and wealth accumulation. Each week, each month, each year, the wealthy plan their investments.

    Buy and Hold Smaller Homes

    Your purchase of a home — and how often you choose a new one — will determine your ability to accumulate wealth. According to The Millionaire Next Door, that wealthy family has been next door for quite a while. Half of the wealthy have lived in the same house for more than 20 years.

    Stay Married

    The majority of wealthy people are married and stay married to the same person. Several studies have shown that people who are married accumulate more wealth than those who are single or divorced. Conversely, it’s important to partner with someone who possesses similar healthy financial behavior and habits.

    Buy and Hold Pre-Owned Vehicle

    The majority of wealthy individuals own their cars, rather than lease. Approximately a quarter have a current-year model, but another quarter drive a car that is four years old or older. More than a third tend to buy used vehicles.

    Live Happier Lives

    Bottomline, living below your means is the one sure way to accumulate wealth and to live happier. Since, there exist a peace of mind living below your means and saving money. Danko and Stanley’s research indicates that, “financially independent people are happier than those in their same income/age cohort who are not financially secure.”

    Essentially, when it comes to financial security and retirement planning, adopting the lifestyle of the wealthy means you can save more toward your financial goals and destination. That’s a formula that can help anyone to accumulate wealth and achieve financial independence.

  • References:
    1. Thomas J. Stanley, and William D. Danko, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy Paperback, November 16, 2010
    2. https://www.getrichslowly.org/nine-lessons-in-wealth-building-from-the-millionaire-next-door/

    Positive Mindset: Key to Financial Success

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    “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” Sun Tsu

    In America, we have a spending problem. Inherently, we desire to drive the latest luxury vehicle, wear the most elegant fashions and go on the most extravagant vacations, whether or not we can afford them. On top of this, the entertainment media and lifestyle advertisers actively encourage the conspicuous spending and consumption which compounds the financial woes of American society.

    Schwab Wealth Survey

    According to a Charles Schwab 2019 Modern Wealth Survey, “more than a third of Americans admit their spending habits have been influenced by images and experiences shared by their friends on social media and confess they spend more than they can afford to avoid missing out on the fun.” The survey examined how a 1,000 Americans think about saving, spending, investing and wealth.

    Survey respondents tended to place the blame on social media platforms and not people, “ranking social media as the biggest “bad” influence when it comes to how they manage their money, while they put friends and family at the top of “good” influences.”

    According to the survey, “three in five Americans pay more attention to how their friends spend compared to how they save, with an equal number saying they’re at a loss to understand how their friends are able to afford the expensive vacations and trendy restaurant meals they portray on social media.”

    Furthermore, the survey finds that “the pressure to spend as a result of social media envy and the desire to not be left out of friends’ experiences is particularly acute among Generation Z and millennials.

    Financial Mindsets

    These financial mindsets are derailing the financial lives and future on millions of Americans wanting to keep up.

    “The keys to financial security and success are simple to achieve by every American.  The keys involve preparing a simple financial game plan, developing the correct financial mindset and implementing positive financial habits and behaviors…period.

    “A ship without a rudder can certainly make its way across the water, but it has no control of where the water will take it–so grab your rudder and take initiative of your financial destiny.” Nancy LaPointe

    Creating a game plan is a critical initial step in taking control of your financial future.  A simple financial plan allows you to get control of your financial future.

    Financial Planning

    “Everyday, you must believe and have faith in your ability to achieve financial security by following a few simple key financial concepts.”

    Money is rarely about money. Money is all about your habits, your thoughts and your behaviors. Your habits, thoughts and behaviors about money determine your current and future financial destiny…how you spend, save, invest and accumulate wealth.

    Financial mindset is a predetermined set of beliefs about money, spending, saving and investing. We all have them. Even if you can’t verbalize what your mindset, it’s still present both consciously and unconsciously. Some common money beliefs are ‘life’s all about what you own‘, ‘retirement is far away‘, and/or ‘my financial problems are _______’s fault‘.

    It’s important to take time to identify what your financial mindset is. Because your financial mindset will either help you succeed financially or it will hold you back. And it’s not enough to just label old financial mindsets as false, you have to replace them with a new positive mindset.

    Here are four common financial mindsets with the best replacement options:

    1. Your life is about what spend and own vs Your life is about purpose, goals and priorities

    Americans are consumers and driven by the “fear of missing out” and ‘keeping up with the Jones’. We’re easily caught up with what’s new, next, and just beyond our price range. But this cycle of constantly upgrading is hurting our financial life. Cutting your dependence on things is vital. Learning to live a life of purpose and setting financial goals and priorities that realizes it’s okay to own an older model vehicle and phone. Doing so will make your financial life a lot less complicated.

    2. Saving money is for people who have extra vs Understand the importance of an emergency fund

    Financial success boils down to spending less than you earn. It’s really simple. But people often spend every penny they make which doesn’t leave room for error in the future. Emergencies happen and this is how debt happens, so it’s important to tune your mindset to a saving mindset. Living below your means and saving a portion of your income not only lessens your dependence on your income but it also prevents you from going into debt in the future. Your first goal is $1,000. From there, work up to three months worth of expenses.

    3. I can afford the payment vs I don’t want to incur debt repayments

    Being able to afford the payment doesn’t mean you should afford the item. Making the phrase “I don’t want to incur debt repayments” an every day part of your life will prevent unplanned spending. It will also foster a mindset of spending less.

    4. Someone/Something is to blame vs Accepting responsibility for financial life

    You and only you are responsible for your financial life. All the decisions, big and little, you’ve made along the way are what have led you to your financial predicament. The less time you waste blaming others, the faster you’ll be able to move on to financial security.

    References:

    https://www.aboutschwab.com/modernwealth2019