Following a budget is essential to financial health, but it can challenging for many people to create one and stick to it. Learn how to prioritize your spending when creating a budget and how to adapt expert advice to your financial goals. WHY BUDGET? Whether you’re working towards business, fitness, or financial goals, what matters most is creating a well-designed plan to get you from where you are today to where you want to be in the future. When it comes to meeting financial goals, a budget is one of the first building blocks of a sound financial plan. A budget shows how much income you’re bringing in and how much you plan to spend on different expenses. While you might not have much control over the inflow—household income—you can control the cash flowing out. Create a budget by:
Action step: Make adjustments to spending based upon on the 3 steps above. Ultimately, this will help you make financial decisions today that will help you meet tomorrow’s financial goals. WHAT MATTERS MOST When prioritizing spending goals, many families work towards building savings and investing while paying off debt.
A good financial advisor can help you to prioritize these goals based on your current financial situation, age, and other factors to help allocate the right amount to what's most important to you. Wondering where to find the money to build savings and pay off debt? Begin by tracking your spending. FOLLOW THE MONEY Once you are ready to create a budget, begin by determining how much after-tax money flows in and out of your household. This gives you an overview of how well you are meeting your fixed and variable expenses, and how much money you could earmark for your goals (above). While recording your after-tax income from earnings, investments, or other income is simple, recording your cash outflows is many times more complicated. You might have the best intentions to stick to a budget, but where does your money ACTUALLY go? For at least month week, track your spending using either a spending tracker app or old-fashioned paper and pencil. Identify the spending categories for every dollar flowing out of your accounts. This will show you when and where your spending occurs. Are there any surprises? Where could you cut back on expenses? Identify areas where you overspent, as well as opportunities to cut costs. WHAT A WELL-DESIGNED PLAN CAN PROVIDE Building a personalized household budget, prioritizing your spending categories, and crafting an actionable financial plan to help you meet your goals can:
Here's to getting ready for the New Year and a new way of thinking about your budget. It's much more than just numbers. -Paul R. Rossi, CFA
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Sometimes I feel the fear of uncertainty stinging clear And I, I can't help but ask myself How much I let the fear take the wheel and steer It's driven me before And it seems to have a vague, haunting mass appeal But lately I'm Beginning to find that I should be the one behind the wheel Whatever tomorrow brings I'll be there With open arms and open eyes, yeah Whatever tomorrow brings I'll be there I'll be there So if I decide to waiver my chance To be one of the hive Will I choose water over wine And hold my own and drive? Oh It's driven me before And it seems to be the way, that everyone else gets around But lately I'm Beginning to find that when I drive myself, my light is found Whatever tomorrow brings I'll be there With open arms and open eyes, yeah Whatever tomorrow brings I'll be there I'll be there Would you choose water over wine? Hold the wheel and drive Whatever tomorrow brings I'll be there With open arms and open eyes, yeah Whatever tomorrow brings I'll be there I'll be there Lyrics and song by: Incubus Lead singer: Brandon Boyd explains, “The lyric is basically about FEAR, about being driven all your life by it and making decisions from fear. It’s about imagining what life would be like if you didn’t live it that way.” Not being ruled by Fear. I get it. It can be easier said than done. Because we are constantly being bombarded. Market up 68% and GDP up over 3 trillion from when this magazine was issued in 2018 Market up over 265%, GDP up over 8 trillion from 2011. The fear mongering isn't isolated to just the U.S. Just to make sure they don't miss any region or country; they'll just name the whole world. We should all be living in a state of constant fear. Brandon Boyd of the band Incubus incapsulated it so well when he said, "It’s about imagining what life would be like if you didn’t live it that way.” Let's not only imagine it, let's live it. -Paul R. Rossi, CFA Click below to listen to the song bit.ly/IncubusDrive My martial arts instructor, Ken, recently passed away at the age of 60, less than 4 months after he was diagnosed with cancer. In his honor, I’d like to highlight some of what I learned from him over the 20+ years I received lessons from him. I received amazing martial arts lessons from Ken over all those years, ironically a lot of what I learned from Ken is applicable to living a more fulfilling life, and it is this aspect that I will primarily shine a light on. First a little background. Back in January 1994 I started training in a Chinese street fighting system, and from the time I signed up, I dove deep into training, consistently working out 3 to 4 hours a day, 4 to 5 days week. Time was spent learning the hundreds of techniques, hand weapons, blocks, kicks, and sparring drills that were required to be mastered. This time included both group and private lessons from various instructors. In 1997, my head instructor at the time, began getting lessons from a higher-ranking black belt named Ken, and my instructor would come back and talk about these amazing lessons he would get from this incredible martial artist. Being that I wasn’t a black belt yet, I wasn’t in a position to ask about getting private lessons from Ken. However, over the course of the next couple of years, Ken would periodically come into our school and give group lessons. Ken was a high-ranking black belt within our system of schools which were located throughout California. However, he ran his own school within the system about an hour and a half away, so it was very infrequent that he taught at our school as he had his own school to run. Although, anytime we heard that Ken might be coming into our school, students would make every effort to attend his class, as we all knew we would experience something special. We were never disappointed. After 6 years and 4 months of intense training, I earned my black belt on April 17th of 1999. It’s a date I’ll never forget. Shortly after I earned my blackbelt, the martial arts school that I was a part of was going through a transition and going in a direction I didn’t particularly agree with. With how I was feeling, and now that I was a blackbelt, I felt somewhat confident that I could reach out to Ken directly and ask him if I might get a lesson or two from him. Interestingly enough, I found out he felt the same way about the system and was leaving the martial system that he had been a part of since the early 1980’s. At the time, he was the second highest ranking black belt in the entire system and by far the most accomplished. He thought differently, he trained differently, he moved differently, and taught differently. What I did know, was that I would do whatever it took to get lessons from him. What I found surprising is that other people could have approached him as well, but never did. I don't know what stopped others from reaching out to Ken, but I knew I would figure out a way to learn from him. When I approached Ken about getting lesson, I didn’t really know him. Yes, he had given group lessons that I was a part of over the years, but outside of that, I wasn’t sure if he even knew who I was. However, I did know that I wanted to move like him and that no one else had his level of mastery. An analogy that might make this clearer between Ken and all the other instructors would be like seeing a painting by Michelangelo or another world-class artist, and then seeing a drawing done by a young child. There simply was no comparison. I recognized this vast difference rather quickly and if there was any possible way, I only wanted to learn from the best. How could any aspiring artist not want to learn from Michelangelo if he there was any possible way? What I found interesting was that very few people reached out to Ken, it seemed they would rather stay in their comfort zone. What I came to realize from Ken, is that a lot of people would rather feel good about themselves than to confront their inadequacies. Ken liked placing a figurative and literal mirror in front of his students to expose their deficiencies. He would say, it’s only then that a person can learn and truly grow. They need to know what they are doing wrong, before they can begin to change, and eventually do it right. Ken was incredibly critical. He strove for perfection in himself and his students. Most students couldn’t handle this level of scrutiny, they wanted the easier road. Most just wanted to earn their next belt. I wanted to get better, I wanted to learn, and I wanted to master the real-world applications. Rank wasn’t important to me and still isn't. For example, one particular private lesson he was teaching me from a wheelchair, as he had broken both of his feet training (again, another story for another time). He spent almost two hours trying to get me to step the correct way. Without getting into too much detail, I had to step forward with my left foot and then step forward my right foot. Seems straight forward enough. Step with my left foot, then step with my right foot. Well, it wasn’t, and it still rather difficult to execute this particular technique. Two hours of him stopping me, correcting me, and having me repeat my stepping motion. Imagine for a minute, stepping for two hours and getting stopped just after you’ve started stepping, hearing that you’re not doing it right. He would say, do more of this, or do less of that, do it quicker, do it with less gap between the steps, push off the ground more, etc. No detail was too small. What I learned, besides how to step properly, was this is exactly how he got so good, he worked at something until it was perfect, not almost perfect. Perfect. Then he continued to work at it, so he never lost “it.” Once he knew it was right, he made sure he never lost how to execute it ever again. Every lesson I ever received from Ken was similar, his extreme attention to detail and willingness to spend any amount of time to make sure I did it right before we moved on. We’ve all heard the adage, “Practice makes perfect.” He said that statement and thinking is absolutely incorrect. He would say, “Perfect practice makes perfect.” And it’s obvious once you hear it. If you practice anything incorrectly, you are not going to achieve a high level of competence. In fact, you are drilling in bad habits which then takes even longer to override the wrong habits and motion. To gain perfection, it requires constant diligence and practicing to perfection. I learned good marital artists practice until they get it right, great martial artists practice until they never get it wrong. Perfect motion with lightning-fast reaction is what he taught and what he expected every time. He expected this level of perfection in everything he did and everything his students did. He believed to a large degree that his students were a reflection of him. So you better not disappoint. And I never wanted to disappoint. Over the hundreds of private lessons I received from Ken over the 20+ years I always walked away amazed and in awe of what he knew, how he could execute a kick, a block, or technique, and his ability to teach at the highest level. Very few people reach the top of their field, very few can teach at the highest level, even fewer can do both. He did both. What was a typical lesson like? We lived about an hour and a half from each other, so I would drive down to his place, and on most days I would find him dripping of sweat already. He was always prepared and expected the same of me. Sometimes he would ask if I had any questions from my previous lesson or anything else I had a question about. If I did have a question, he would explain and show me how to do it. He would explain why he was doing this or doing that and what details were important to remember. He made sure I understood, and then he’d have me do it, to make sure I understood and to impart the proper “feeling” I should have when moving in a particular way. One question typically led to us working on a particular motion or theme for quite some time, many times it took 2-3 hours to make sure I had the proper “feeling” and ensure my question was answered. Other days, he had something he wanted to “show me.” Something he felt I needed to learn, or I might be missing in my proverbial toolbelt. He never held anything back with me, he taught at the highest level, expecting I should be able to do it just as good as he could. He was a proponent of copying or what he called "mimicking." When he would execute a particular move, he would do it slowly so I could follow along and copy his movements and motion. He wanted me to copy him exactly, from the positioning of my feet, hips, shoulders, elbow, hand placement, etc. It might feel awkward or foreign at first, but then over time by mimicking him precisely, his motion would become my motion. Eventually, that is exactly what happened, his motion that I copied, would become mine, and I didn't know how to move any way but the correct way. It was the best way to transfer information. If I copied him (which I did), then any other way to do it was wrong and was very obvious. Over time, this led me to be able to teach myself, because his motion became my motion, and incorrect motion became easy to determine. He would tell me every time he is giving me a lesson, he is also giving himself a lesson. He was constantly in a feedback loop with himself, always striving for improvement, seeking out slight imperfections that he could correct in himself. It made him better; it made me better. My lessons from Ken were mentally and physically exhausting, as I was always trying to take in a firehose amount of information that came flooding out of him. Then after our workout, we would go to a local restaurant he liked. While the physical part of the lesson might be over, he continued to teach. Our lunches always lasted several hours. In fact, I can remember on more than one occasion we ate our lunch and talked so long that we ended up ordering dinner at the same restaurant. It wasn’t uncommon when walking out to the parking lot to leave, he would end up showing me something else we were discussing inside the restaurant. More than once after we had left the restaurant parking lot, I would get a phone call from Ken on my way home so he could continue his thoughts on what we were discussing. It wasn’t unusual for me to show up at his place in the morning and get home almost 12 hours later. Below is just some of what I learned from Ken.
My instructor Ken was far and away the best martial artist I’ve ever seen and feel extremely fortunate to have gotten private lessons from him for over 20 years. Initially I thought he was head and shoulders above the rest, what I came to realize, he was even better than that. He didn’t teach many people privately…I was one of the lucky ones. Thank you Ken. -Paul R. Rossi, CFA |