I was asked a question recently that got me thinking: “What are the secrets to investing?” In reality, financial planning can be anything but simple. There are many things to consider because wealth management is complex. But if I had to simplify all the knowledge and experience I’ve gained into a few straightforward ideas, what would they be? Could I come up with three foundational rules for financial success?
In my career in wealth management, I have developed three simple rules for financial planning that I believe will help most people stay on track as they work towards their financial goals.
Rule #1: Spend Less Than You Make
It may seem obvious, but many people don’t manage to follow this core rule. The Pew Charitable Trusts published poll results last year in which 55% of people said they break even or spend more than they make each month. This rule is important, even for the wealthy, who often have financial responsibilities to others that they put first, before saving.
Do you overspend on children, friends, or parents? Inform them that you’re setting your own financial goals as a top priority. Even if you have a high income, it’s important to set a good saving example for your children to help them get on the right financial track.
Rule # 2: Save As Much As Possible
This rule is only achievable once you are following Rule #1 successfully. It’s essential to put money away in investment accounts so you can maintain your standard of living into retirement. While most of us understand the importance of saving, many of us are not saving enough for the future.
By working with an experienced financial professional, you can decide how much you should plan to save, then automate the process so your money is deposited into your investment accounts each month. Be sure your investments match your risk tolerance and time horizon and don’t forget to consider the impact of taxes.
Rule # 3: Don’t Do Anything Careless
While saving can be a lot easier for someone making $200,000 than it is for someone earning $20,000, the propensity to make mistakes with money seems to be the same for both. We are all at risk of breaking this rule and must be aware of our tendencies to make costly financial mistakes that set us back in our financial plans.
There are two things that can help you follow this rule most effectively: knowledge and accountability. A trusted accountability partner will keep you from cashing out your nest egg and a concrete understanding of financial markets will help keep you from investing inappropriately for your situation.
Investing isn’t always easy or simple, but sticking to a set of core guidelines can help us make better decisions. At Nobile Hinchey Private Wealth Management we can help you understand investments and assist you in holding to these core principles. Give us a call today at (860) 659-5977 or email me at [email protected] to schedule an appointment to sit down and discuss your unique needs.
About Michael Nobile
Michael Nobile is the CEO of Nobile Hinchey Private Wealth Management, an independent financial services firm serving high-net-worth families and business owners near Glastonbury, Connecticut. Michael brings 35 plus years of experience in the wealth management industry and is extremely knowledgeable in retirement income and tax advantaged strategies. Outside the office, Michael enjoys time with his wife, two children, and two grandchildren. Longtime Glastonbury residents, they now reside in East Hampton. It’s Michael’s dream to introduce his grandchildren to his business and work together someday.