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Wants vs. Needs; Simplifying your Financial Plan for a Happier You

We hear from prospects all the time “ I manage a complex budget for my firm, yet I just can’t seem to sift through my personal finances.” Welcome the financial planner to your life. It may sound like a foreign concept to some, but for many simply having their own emotions attached to their personal finances, make it too close for comfort. They say anytime emotions are involved logic can go out the window. Let us help remind you of the logic of needs vs. wants.

What is a need? Human basic needs are as simple as food, water, and shelter, therefore, your monthly mortgage or rent payment, monthly food and beverage expenses, and we can also add transportation i.e. car payment, insurance, and gas all go into this category. What may seem shocking to some is that everything else is a want. In the complicated consumer driven world we live in it may be hard to fathom, but if it isn’t necessary for your survival it is a desire, not a necessity. And furthermore, if it’s a materialistic good rather than an intangible experience, experts say you probably won’t even miss it.

Ok now that we’ve defined a want and a need, lets practice an exercise. According to David Bach, author of “The Automatic Millionaire” “Becoming rich requires nothing more than committing and sticking to a systematic savings and investment plan” Ready to get started now? Take out a piece of paper and pen. Create two categories; wants and needs. Start listing everything you spend money on in a month. Determine whether it is a want or need. Create another list. Write your future goals. Picture yourself taking the vacation you’ve dreamed of for years, or retiring early. Whatever your goals are, visualize yourself completing them. Now return to your list of wants and needs. How can you “trim the fat” on your daily spending habits so you really can save more for the things that will fulfill you later. For example: One easy fat trimmer is to shop around for things you already are paying for. Items such as your cell phone, cable, internet, and insurance can easily be shopped around for a lower price. Visualizing yourself completing your long term goals can help motivate you to sacrifice temporary gratification for something that may lead to a happier you in the long run. Now you can put more towards your retirement, so you can vacation permanently, sooner!

Finally, what tools will you need to implement to achieve your goals? Personally, my wife and I are big fans of technology that track our spending, keep us honest and transparent by categorizing each purchase through linking our credit card spending and automatically deducting the budget category the purchase must be subtracted from. There is nothing to hide when you make a budget, add all of your credit cards, and promise to stick to it. We’ve also found that being realistic and making achievable goals ensures we are more successful, but you know what makes us the most successful? Having a financial plan! Sherman Wealth Management uses tools that will link users accounts so we have access to your budget and balances and can help you come up with a financial plan right for you. Also by hiring a fee only fiduciary financial advisor whose emotions aren’t involved in our spending habits we’ve no longer clouded our logic.

Still have your reservations? A study at Princeton found that every 10% rise in annual income moves people up the life satisfaction ladder the same amount, whether they’re making $25,000. Or $100,000. “High incomes don’t bring you happiness, but they do bring you a life you think is better.” That being said; What if we all gave ourselves a 10% rise in income by trimming the fat in our expenses and adding the profit to our bottom line further assisting us in accomplishing our goals.  What if we found that we possess the power and control to increase our actual happiness by simply living with less, saving more, and reaching our goals by following through with them? And what if by living with less we are more fulfilled.  Studies have proven that having less and living more simply does lead to greater overall life satisfaction.

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Sherman Wealth Management LLC (“Sherman Wealth”) is a Registered Investment Advisor (“RIA”), located in the State of Maryland. Sherman Wealth provides asset management and related services for clients nationally. Sherman Wealth will maintain all applicable registration and licenses as required by the various states in which Sherman Wealth conducts business, as applicable. Sherman Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.

This web post is intended to provide general information about Sherman Wealth. It is not intended to offer investment advice. Information regarding investment products and services are provided solely to read about our investment philosophy, our strategies and to be able to contact us for further information.

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Brad Sherman

About Brad Sherman

Brad Sherman has over a decade of experience in the financial services industry. He founded Sherman Wealth Management because he believes that every client deserves the highest level of individualized attention, regardless of their age or the size of their financial profile. He prides himself on being an advocate for his clients, providing a Fiduciary, fee-only service, designed to make clients feel comfortable with their investment choices and strategies. Brad lives in Rockville, Maryland, and enjoys football – both fantasy and real, baseball – especially his beloved Nats, and Nerf Ball with his young son.


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