10 Questions Sales Executives and Top Performers Should Ask Themselves When It Comes To Their Finances

As a former sales executive/top performer, I understand how difficult it can be to manage both your sales goals and personal finances. It’s a daunting task to be fiscally responsible when you are in the thick of closing deals, prospecting, managing cross-functional teams, traveling, fine-tuning your sales skills, and corporate meetings. 

When I was in sales myself, I seldomly thought about my financial plan. I was so exhausted from the sales cycle, that I didn’t have the bandwidth to learn or even think about investments, deferred compensation, tax planning, cash-flow management, college funding, etc. I figured I’d keep making a lot of cash and as long as I didn’t overspend, I would be alright. I’m not sure how long this (non)plan would have lasted, but luckily, I was soon introduced to the idea of financial planning and hiring a CERTIFIED FINANCIAL PLANNER™ (CFP®). 

Looking back, it wasn’t a lack of time, but my ego that didn’t allow me to ask for help in this area. I was closing multi-million dollar deals, was at the top of my game and certainly didn’t feel the need to hire anyone. I read books and was relatively informed when it came to finance, but I was struggling. I think many sales people struggle with delegation of any sort, because they are so used to controlling the sales cycle, and with their paycheck on the line it’s understandable.

One of my past employers, LearnVest, provided their employees with financial plans by a fiduciary fee-only financial advisor, which forced me to sit down with a CFP® and, well, get my shit together. It wasn’t until I met with my financial planner that I realized there were some tough questions I needed to ask myself in order to get started. This was life changing! 

Here are some examples of the questions and considerations that came up as we started to strategize. 

  1. What if I had a down year, could I sustain my current lifestyle? 
  2. Am I overspending? 
  3. Could I be saving more, if so how much?
  4. What if I didn’t hit my quota, did I have enough saved for emergencies?
  5. What if I hit quota, but didn’t earn the accelerators, could I afford my car and house? 
  6. What should I do with extra cash and commissions? 
  7. Should I buy real estate, fund college (for parents), contribute more to retirement, pay off debt?
  8. What can I do to protect and grow my new found wealth?
  9. What if I lose my job or my compensation plan changes, how will this impact our situation?
  10. What if something happens to me, will my family be taken care of?

Ask yourself these questions and be honest with yourself. Are you in a good place, or could you use some help? If any of this resonates with you or you’re interested in learning more about how to get your plan together, please feel free to reach out to me. 

Eric Rodriguez, CFP®

 

What is a CFP®?

CERTIFIED FINANCIAL PLANNER™ practitioners are trained to be experts in all areas of personal finance. This can include cash-flow, insurance, tax, investments, retirement, estate, college funding, and much more. CFP®’s study for 6+ years, have 4,000+ hours of experience, and pass a rigorous 6+ hour exam to be approved. 

Manage Your Cash Flow With Ease and Purpose

I grew up in a household where the word “budget” had a negative connotation. My mom in particular hated the idea of budgeting because to her it meant less freedom and no fun (for her this was, and still is shopping). The reality is, budgeting is just about being aware of and honest with yourself about your money situation. It’s about having control, and learning how to balance  savings, expenses and lifestyle. And just because you need to save for priorities like retirement and emergencies, doesn’t mean you can’t enjoy your hard earned money on the things you value the most (travel, shopping, wine, giving, etc.). In fact, it’s important to make a place for these things in your budget.

When it comes to budgeting, I recommend the 50/20/30 rule. Here’s how it works:

Take Home Paycheck (after taxes, 401k savings, insurance, etc):

 

1. Basic Living Needs: 50%

50% of your net paycheck should cover your living expenses, e.g. rent, mortgage, insurance, utilities, transportation, and groceries. These are the basics that you need to get by. You should include debt payments in this bucket.

2. Financial Goals: 20%

This is the most important bucket – your short-term, mid-term, and long-term goals. These contributions will help secure your financial future. Goals could include emergency fund, paying down debt, additional retirement savings, new house, travel, college funds, etc. It’s best to have separate accounts that are earmarked for your goals. A financial advisor can help you set up accounts and/or give you advice on how much should go in each account monthly.

Reverse budgeting (saving first and living off the rest of your income) will help you save consistently and build wealth over time. Set up your paychecks to automatically transfer money to your goal accounts. Consider trying this strategy for a month or so, and then see how close you can get to the 50/20/30 framework. If your numbers don’t perfectly align with the percentages, that’s okay. The point is to prioritize, take control, build awareness as well as good habits.

3. Freedom Money: 30%

This is my favorite bucket – your FUN money! Want to get your hair done, buy some new shoes, go out to eat with friends, sign up for a spin class? Go for it! Use the 30% that is left over to live your best life. You can either break out your 30% number weekly or monthly. You can use money management apps or a spreadsheet to help track your weekly spending. Schedule a weekly time to review your spending to see how you’ve done.

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Cash-flow management is a key component to any financial plan. If you are interested in learning more about how to better manage your cash-flow or if you would like more information on how you can implement a Wealth Plan, contact us at or book an appointment directly at www.wealthbllc.com.

How to Financially Plan Through a Divorce

Divorce is not something most people plan for as they say “I do,” but nevertheless, it’s something 50% of married people go through. Naturally, it can come with heartache, anxiety, and fear, and the financial damage can also be devastating.

I know that every situation has its unique challenges, but I’ve also learned from friends, family and clients about ways to reduce stress through the process. Below are some key learnings and a few ideas that can help financially prepare someone for divorce, and ultimately this new chapter in life.

1. Get organized

Make copies of all of the financial account statements (checking, savings, brokerage, retirement, mortgage, credit cards, etc.). Keep these copies in a safe place such as a safe deposit box that only you can access.

2. Budget for the break-up

If you are planning to get divorced, you’ll need to budget for attorney expenses like you would groceries, education, retirement, etc. If budgeting is not your strength, look to a financial advisor to crunch the numbers for you. I’ve heard from people who said they’ve stayed in bad marriages because they feel they don’t have the financial resources to break away, but having a plan, support and patience can and will get you there.

3. Prepare to divide the assets and debt 50/50

“We lost $250k fighting the good fight and lost our shirts” — Family friend

California is a community property state. This means everything you two have acquired since you were first married is subject to 50/50 division. Unfortunately, this also includes any debt incurred by your spouse. Consider skipping the courthouse to save both yourself and your spouse money. I know for some this is easier said than done, as you’ll need to come to an agreement on going this route.

4. Review your debts, credit and notify all parties

Once the divorce is final make sure all debtors that are in both your names are notified. In some cases, you can and should relinquish mutual responsibility of debt. For example, one of my clients had her wages garnished by the DMV, because her ex didn’t pay the registration for a car that is still in both of their names. While they are both still liable for the payments, she could have signed a DMV release of liability form to exempt her from the registration responsibility.

Another best practice is to run your credit report semi-annually and look for anything out of the ordinary.

5. Open new accounts

It’s a good idea to open a new checking, savings, and credit card under your name only. Your attorney may instruct you to withdrawal half of your joint funds and deposit them in new accounts. As a single person, you need to also start building your own credit. A credit card in your name can help. Beware, some banks will make it difficult to qualify for a credit card without income if this is your situation. Speak to your advisor about different options available.

6. Open a post office box or mailbox at UPS

It makes sense to have your mail delivered to a secure box that only you can access. This new address should be used to receive correspondence from your lawyer, new accounts, etc.

7. Update your estate documents and beneficiaries

It’s very important to update your medical directive and living will. You can prevent your future ex-partner from making any medical decisions on your behalf or inheriting your assets should you pass away before the settlement is official. If you have any life insurance policies, retirement accounts, brokerage accounts, etc, update your beneficiaries ASAP.

8. Get help, plan for what you can and enjoy peace of mind

If possible, hire professionals (attorney, financial advisor, cpa) and start making plans for your finances and settlement. A financial advisor in particular can forecast the long-term effects of the settlement to see how you might fare financially in the short term and long term. Knowing that your finances are in order and having a clearer vision of your future will also help alleviate stress and bring you peace of mind.

Love and Money

5 Tips To Help Couples Achieve Financial Success

For anyone in a relationship, money is a topic that you’ll need to cover with your partner in depth, and frequently, to create a solid foundation for the future. The thing is, dealing with finances solo is hard enough, and sharing your financial situation with another person? For many of us, that’s just scary as hell. According to a survey by Sun Trust, couples say finances are the number one cause of stress in their relationships. Financial arguments are also the top predictor of divorce, according to a study by the Huffington post. So how do you get in financial shape AND get your partner on board?

Achieving financial success with your partner might seem overwhelming at first. But, with patience, a plan, and commitment, your fiscal future can be promising. And the cherry on top? A recent Money Magazine survey revealed that couples who trust their partner with finances felt more secure, argued less, and had more fulfilling sex lives. Well then, let’s get to it!

Here are five tips on how to work with your partner to avoid potential financial landmines, and set yourselves up for success:

1. Be transparent about your financial situation

If you’re in a serious, committed relationship that you want to work, it’s important to share everything (yes, everything) about your personal finances with your partner. This can be scary because many of us have made mistakes or poor decisions when it comes to finances, but transparency is the first step to understanding the reality of your situation as a unit. This exercise will take patience and understanding from both of you, and will become an important building block for a foundation of trust. Remember, it’s important not to hold back any information, as you’ll need a clear picture of where you are before you can get started with your goals and eventually, progress.

2. Commit to specific savings goals

Establish short-term, mid-term, and long term financial goals. This could include an emergency fund savings, paying off credit cards, a new house fund, and/or retirement. A goal setting exercise is a great opportunity to learn more about each other’s vision for the future. And after what may have been a tough conversation about where you are, it’ll be fun to pivot and talk about the possibilities of the future.

3. Agree on a sustainable monthly budget

Create a weekly or monthly budget that includes a specific amount of money that is automatically saved each paycheck, and also allows each of you to have spending “freedom.” Once you’ve figured out your savings goal and your overhead, you’ll land on what that “freedom” number is. This tactic will dramatically increase your savings, help you reach the goals you’ve set, while also allowing for some fun. A budget will also help keep you both accountable, and undoubtedly force the financial conversations to occur more regularly – which leads me to tip #4.

4. Set a weekly money appt with your partner

This is a best practice that my wife and I practice religiously. At least once per week, we sit down to review our weekly budget, spending and savings progress. At this time, we also talk about any adjustments that need to be made based on how we did with our budget. For example, we generally try to have our meetings on Fridays because this day works well for us, and it also gives us a good check before we head into the weekend. If we review our budget and it looks like we are close to our weekly allocations and “freedom” number, we will go into the weekend more mindful about how we spend our money.

5. Hold each other accountable

To achieve your financial goals you need to support each other. You’re a team! You need to help each other be fiscally responsible. Sometimes you may need to course correct your partner when they veer from the financial plan. In my experience it’s perfectly normal to occasionally drift from the plan, no one is perfect. If you can recognize abnormal spending behavior or see that you are getting off track, just review your plan together, and reset.