Metanoia Financial

According to a study done by the Wall Street Journal, this is the lowest % of US households covered by life insurance in more than 4 decades.  Perhaps these families are prodigious savers and simply don’t need the coverage, but I believe this is highly unlikely.

My perceptions about life insurance were initially shaped by my mother…a financially savvy woman who knows her stuff inside-and-out when it comes to money.  She was never a believer in life insurance and thought it was a rip off designed to make a bunch of money for insurance companies and their salesmen.  For many years, I just accepted this viewpoint as truth.

However, this viewpoint changed in 2005 when a friend of mine died.  He was 28, making good money, married and had just had a beautiful baby girl.  I heard through the grapevine that he didn’t have any life insurance.  I can’t even imagine the pain his wife was feeling from this loss and having all of her dreams of sharing life with her future husband shattered.  But, on top of that, she now had to figure out how to pay a mortgage and feed and clothe her baby daughter.

I relay this story because it was the first time life insurance became REAL to me.  It was the first time it wasn’t a product, an overzealous salesman, or a rich company, but it was the future of a family forever altered.  There is no bringing my friend back, but he could have made better financial decisions to protect the security of his family.  At his age he probably could’ve provided his family with all of the money they would ever need by acquiring a simple life insurance policy for $50/month.  I want to help my present and future clients avoid this potential catastrophe.  That is why I talk to all of my married clients about life insurance!

Many people “fly by the seat of their pants” when it comes to a budget. We may have a pretty good feel for our monthly income and the larger, fixed expenses but we typically neglect our “discretionary” expenses such as eating out, clothing and travel. Our failure to plan for these days to day expenses can have a significant impact on our long term goals. That daily Starbucks can literally be the difference in a paid-for college education for our children vs. student loans.

I believe the best way to budget is using a cash-based envelope system. I’ll probably write a more extensive blog on this subject in the future, but basically it’s just a matter of deciding how much you want to spend on a given category, putting that amount of cash in an envelope at the beginning of the month and then limiting yourself to spending only that amount. You can have as many envelopes/categories as you need and it works best for categories where you tend to over-spend.

This is the best way I know of to put a “cap” on your spending. You can literally see the money dwindle as the month goes on and you are forced to budget and make short term, day to day decisions that allow you to still meet your long term savings goals.

Spending cash in this way allows us to 1)see how much we are really spending on a particular area of our life and 2)feel some pain as we spend and see our cash disappear.  We all love the convenience and ease of swiping a card but unfortunately it just doesn’t register to our brains as spending money.  I promise if you have to pull hard earned cash out of your finite envelope, you will think twice about a lot of “unnecessary” expenses.  Give it a try for a while and let me know what you think.