My clients often come to me wondering if they’re saving enough (usually for retirement). I run all kinds of software applications to determine if, indeed, they are…based on what they believe they need per month or year to maintain their standard of living.
Occasionally, I have to deliver disappointing news to a client that he/she/they may not be able to attain the lifestyle in retirement that is desired. The client has several choices: save more (which may or may not be possible, based on current expenditures and income), increase their rate of return (something over which no one has control, although certain strategies can improve the odds that you’ll earn more on your investments), delay retiring (also may not be an option, given buy-outs, lay-offs and the like) or reduce the need. Typically some combination of all of these strategies is the best approach.
Suggesting that someone reduce their spending in some areas to save towards stated goals seems like a perfectly rational action, doesn’t it? But it hits a nerve, and most people will become defensive at the suggestion, because no one wants anyone to question why they spend however much on whatever.
Just imagine my quandary when a couple is sitting in my office and one spouse (typically, the husband) reprimands the other spouse (typically the wife) that, because of such spending, they may not be able to achieve their goals. Our spending represents what we value – what we do with our money – and when our judgment is questioned, we can come unglued. This is not the time for a financial planner, it’s time for a marriage counselor.
We all need support, guidance and encouragement, but we also need discipline. I provide my clients with all of these things. I prompt them to consider their values along with their finances, and whether or not they are acting in their best interest and that of their spouse/partner/family. It is important to understand where and how you are spending your money and more importantly, why. Without such awareness, you risk squandering your resources.
Taking stock of what you have and what you need is healthy from time to time, provided it’s done without judgment. “Beyond a wholesome discpline, be gentle with yourselves.”-Desiderata.