Jeff Moss, Senior Planner

Jeff Moss, Senior Planner

Now that the holiday season has begun, the typical refrains of prudent gift spending and year-end IRA planning are in the air.  Deeper and more meaningful lessons can sometimes be learned by looking outside the conventional financial planner’s holiday playbook.  Consider the financial message offered by a hallowed favorite, Dickens' "A Christmas Carol."

Look past the obvious – if you save every dollar possible, you can amass the wealth of Ebenezer Scrooge, the quintessential miser and central character of the story.  While his retirement assets would certainly outlast his life, few would agree that Scrooge had a successful financial plan.  He had no particular financial goals, other than to accumulate more and more, and he had no useful purpose for his wealth.  Scrooge received no enjoyment or utility from his savings and, as the story goes, had no one to share it with or with whom to leave it upon his passing.

A true financial plan not only focuses on the financial resources and accumulation of wealth, but also considers more qualitative factors like contentment, sharing and purpose.  Several studies involving retirees have shown that simply accumulating assets into retirement does not provide for a happy retirement.  Ebenezer failed to take action from an early age that might have led to a more productive and content life.  It took visits from the ghosts of Marley and Christmases Past, Present, and Future for him to see the error of his ways.  Important lessons can be learned that might avoid similar ghostly visits for you!

The Ghost of Christmas Past showed Ebenezer the person he once was.  He saw his past successes and remembered the failures in certain decisions he made.  Dwelling on the failures, however, can be detrimental to a financial plan.  Granted, the avoidance of repeated mistakes is always sound advice.  Too often, though, people allow past failures to paralyze them from future positive action.

Past financial decisions should be treated no differently than sunk costs.  If you once lost money with poor investing, that doesn’t mean you should eliminate investing from your plan.  If you once had too much debt, it shouldn’t prevent you from taking a loan to build a business.  Focus on the mindset you once had when you were hungry and motivated.  Combine that with the experience and knowledge you’ve gained since then and implement smart planning recommendations, regardless of past history.

The Ghost of Christmas Present reminds us to take stock of our current situation.  In the story, the ghost pulls back his robe to reveal two street urchins that he introduces as Ignorance and Want.  So many choose to be ignorant of their own financial conditions, just as Scrooge chose to be ignorant of the impact his actions had on others.  By failing to calculate an appropriate savings rate or learn reasonable budgeting techniques, people remain ignorant to the possibility that they will not have what is needed to live comfortably in retirement.  In other words, ignorance now will lead to want later.

The present is the time to evaluate whether your plan will not only lead to a positive financial result, but also long-term personal satisfaction.  Get an updated analysis of your current financial strategies to determine the likelihood for success.  If you aren’t on the right track, choose to make change now.  Likewise, contemplate what success really means in your plan.  Are you simply looking to achieve a certain amount of assets by a deadline?  Ask yourself what you want to do in retirement and why.  Will you need to assist others or have charitable desires?  Will you feel comfortable spending/giving knowing that those resources may be limited?  These questions should be answered today so that you can accurately create trackable goals to better define success in your own plan.

Lastly, the Ghost of Christmas Future revealed to Ebenezer how a life of searching only for financial reward left him alone, without purpose and meaning.  He is presented with what is in store if you fail to plan.  Two lessons can be learned from this last ghost.

A brief look into the future will confirm that if you wait to implement needed steps in your plan, by the time you realize it, it may be too late to have the necessary impact.  In real life, no ghost of the future will provide you this free glance.  If the ghost in the story teaches anything, it is that you have no greater ally than time - or greater enemy.  There is no day like today (or time like the holidays) to begin anew with your plan and commit to taking action before it is too late.

The other lesson to be learned involves your legacy.  At the heart of Ebenezer’s story is that no one will care once he’s gone.  He lived his life unhappily and would leave no positive impact.  Creation of an estate/wealth transition plan can help ensure that others you specifically choose receive benefit from your accumulated wealth.  Similarly, finding a balance between commitment to work and other endeavors you enjoy, as well as a balance between providing for yourself and others, will likely lead to a truly successful financial plan.  The key is to set goals that would provide enough resources to do all these things.

The information contained within this article is intended to provide general information and is for informational purposes only.  It is not intended to offer investment advice or substitute for obtaining accounting, tax or financial advice from a professional accountant or financial advisor.  Presentation of the information via the Internet is not intended to create, and receipt does not constitute, an accountant-client or advisor-client relationship.  Online readers are advised not to act upon this information without seeking the service of a professional accountant and/or financial advisor.