About Mike McCann

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So far Mike McCann has created 56 blog entries.

Shifting Priorities and Changing Plans

Shifting priorities and changing plansPivot. Fans of the television show Friends may always get a chuckle from that word. For many, however, it now represents a strategy for dealing with life in a post-Covid world. Shifting priorities and changing plans have been dubbed the “new normal” and it can be pretty stressful.

Yet, change doesn’t have to be random and scary. With the right preparation and planning, unexpected change can be manageable and intentional shifts in direction can be exciting.

The Covid lockdown became a time of self-reflection, evaluating priorities, and taking stock in careers. Some people found themselves out of work, while others gained a new sense of pride in their jobs when they were deemed “essential” for the first time.

Many of us adapted to working from home. We attended online meetings with kids clambering on the sidelines, conducted business while the dog barked at the Amazon delivery person, or focused on tasks with a quiet home as the backdrop. Some learned to enjoy it, others found it maddening. The idea of work-life balance took on new meaning.

Roughly 20 months into this radical shake-up of our lives, many people are seeing new opportunity, a chance to pivot with purpose – to reboot our lives, go back to school, start a family, change careers, retire early. The highest pay or the fastest path to promotion may be lower on the list of priorities. Flexibility, family-friendly policies and mental health care benefits are in higher demand.

If you’re experiencing a major life change or shift in priorities, talk with your financial planner. Any adjustment in your short-term and long-term personal plans and goals will impact your short-term and long-term financial situation. Areas to consider include:

  • Changes to current income and expenses;
  • Adjustments to savings and investments;
  • Emergency-fund needs;
  • Retirement and education account funding; and
  • Compatibility of your risk tolerance with your overall goals and needs.

A pivot in life, whether voluntary or forced, can be an opportunity. Make the most of it. We’re here to help.

By |2021-12-02T13:49:36-07:00December 20th, 2021|Current Affairs, Financial Planning|

Begin a Money Conversation

McCann-WEBTeaching children about money management will help set them on the right path to financial independence and success. Of course, it’s not as easy as it sounds to begin a money conversation. As a parent, I understand how challenging it can be to impart ideas and wisdom on your own kids. Let’s face it, most young people are inclined to take advice from anyone but their parents. Factor in that many people don’t feel qualified to teach financial topics, and the task becomes even more daunting.

The good news is there are many resources and people to assist in you.

As a long-time and active volunteer for Scouts BSA, one of my regular roles has been as a Personal Management Merit Badge counselor. This badge addresses elements like creating a budget, knowing the difference between saving and investing, and exploring and evaluating careers. The curriculum was developed by Brent Neiser, CFP® and Eagle Scout. It’s a challenging merit badge that takes several months to complete.

I’ve learned a couple of interesting things by teaching the course. First, young people are often eager to talk about money if you approach it in a way that is relatable. Second, they tend to pick up on key concepts more quickly than you might expect.

Here are a few tips to begin a money conversation with a child or young adult in your life.

  • Start with the basics. That means introducing the importance of living within your means. Earning a weekly or monthly allowance for completing chores is a great start. When a child manages an allowance, he or she begins to understand how to balance wants with cash flow.
  • Make budgeting real and personal, not theoretical. Help your child create a budget. Older children can use a simple spread sheet to track spending, saving, investing and charitable giving. Young ones can use labeled envelopes or jars for each category.
  • Show that money can grow over time. Use this simple chart to show how a person who invests $5,000 a year starting at age 25 can end up with nearly $825,000 by age 65, while one who waits until age 50 to invest $5,000 a year would have just $128,000. Then show them a picture of what they could buy with the $697,000 difference. (e.g, a new Tesla Roadster costs about $200,000; they could buy several.)

Our advisors often facilitate family discussions about money. It’s one of our Core Client Services. That’s the value of Perspective.

By |2021-07-15T10:32:04-07:00July 26th, 2021|Financial Planning|

Psychology of Money

McCann-WEBOne of the most important lessons I’ve learned in my career is that financial outcomes are governed by behavior, not knowledge. It has to do with the psychology of money. Our financial success is most influenced by our emotions and feelings, rather than the facts and formulas.

Isn’t that the case with so much in life?

Our emotions are uniquely our own, given our diverse backgrounds, ages, and experiences. So, it’s important to be aware of our emotions and their impact on the decisions we make. At the same time, it’s unrealistic to think we can shut them out of our decision-making process.

Even reasonable people can react poorly to financial circumstances. In The Psychology of Money, the author highlights this reality and explores proactive steps anyone can take to work in tandem with their emotions. Here are two interesting examples.

You’ll Change

I’ve seen this in myself and my clients countless times. Your goals will change. Your work plans will change. Your kids’ plans will change. Thus, it’s important to avoid the extreme ends of planning; don’t make narrow plans that take you down only one path. When life changes happen, be ready to change your plan. Just because you made a decision that worked well under prior circumstances doesn’t mean you must stick with that decision forever.

Getting Wealthy vs. Staying Wealthy

This is a fun one to observe. As people move from wealth accumulation toward financial independence and retirement, their attitudes about money often change in surprising ways. It’s like any other life change – graduating school, getting married, having kids, becoming a homeowner, starting a new job. It’s never quite what you thought it would be. Often, it’s better than what you imagined, yet there are always new fears you didn’t anticipate. You begin to view risk through an entirely different lens. Focusing on stability and dependable income often becomes more important than hitting the great opportunities.

As a financial planning professional, I see it as my role to help each client develop strategies that will enable them to succeed through their unique psychology. Not despite it.

 

For Further Reading – The Psychology of Money

psychology of money

*A portion of proceeds from your purchase at Bookshop.org helps support independent authors and bookstores.
By |2021-01-12T14:54:53-07:00February 1st, 2021|Books, Financial Planning|

Estate Planning is Not Perfect

There are a number of reasons why you may want to consider creating or updating your estate plan this year (i.e. marriage, divorce, birth, COVID-19, retirement). And there are an equal numbers of reasons why you might be inclined to put it off. What holds most people back? The “popular” answer is we’re all afraid to face our own mortality. That hasn’t been my observation. The biggest challenge that holds many people back is failing to understand estate planning is not perfect.

Here is a breakdown of the common obstacles I see:

Becoming frozen in procrastination.

Getting started on what feels like a big, complicated task is the number one killer of success in any venture. “I don’t have time.” “I need to finish (fill in the blank) first.”  “I’ll have to give these questions some thought.”

Solution: Start with one simple task. Schedule a meeting with your advisor.

Choosing people and assigning priorities is tough.

This was huge for me when our kids were born and we had to name a guardian in our will. “I want the best for my kids. Nobody will do as good of a job raising them as I would.” We face the same challenge when selecting trustees or executors. “What if they don’t do things the way I would do them?”

Solution: Find comfort in knowing the guardians, trustees and executors you choose will do their best. That’s all you can expect of them, or of yourself.

Thinking decades down the line.

We often get stuck trying to predict future circumstances based on what we know today. “My kids aren’t ready to inherit money now. What if they’re still not ready in 15 or 20 years?” “What about my grandchildren? Will they be ready?”

Solution: Focus instead on the next five years.

Estate planning isn’t perfect. Perfect is the enemy of good. Remember, these documents are written on paper, not on stone. They don’t need to last 10, 20 or 30 years. Make the best decisions with the information you have today, and know that you’ll be updating your documents (making them better again, not perfect) in three to seven years. It takes the pressure right off the table.

For successful estate planning, your new plan just needs to be better than the current plan. Hire the right professionals, and let’s work to get it as good as we can.

By |2020-08-14T10:54:00-07:00August 17th, 2020|Estate Planning|

Pandemics and Economic Cycles

It’s reasonable to worry about the outbreak of a previously unknown virus, and taking safety precautions is prudent. Yet, fear of the unknown should not drive our decision-making or cause us to shut down our lives. We may not be able to control travel bans, event cancellations and school closures. We can control our emotions and how we respond to challenges. The past is not predictive of the future, but it does offer valuable perspective. Consider the following information about previous pandemics and economic cycles.

  • When most travel was by boat, infectious diseases typically spread around the world in six to nine months. Everything seems to happen faster today. With global air travel, a virus can become a pandemic within three months. That has been the case with Coronavirus, which first emerged in China in November 2019. The typical duration of a pandemic is 12 to 18 months; it can come in waves of about three to 12 months apart, according to the CDC.
  • Schwab recently conducted an analysis of 13 global pandemics in the past 50 years. The data shows that once the number of newly identified cases starts to decline, economic activity and the stock market tend to quickly rebound.
  • Data compiled by Capital Group shows that past market corrections and bear markets haven’t lasted forever. The Standard & Poor’s 500 Composite Index has typically dipped at least 10 percent about once a year, and 20 percent or more about every six years, according to data from 1950 to 2019. Each circumstance has been followed by a recovery and a new market high.

Recessions are part of the natural economy. Similar to the ebb and flow of the tide, expansions and contractions in the financial system are expected. At Perspective, we factor that into the long-term investment plans of our clients. While stocks rise and fall in the short term, they tend to reward investors over longer periods of time. Keeping your view on the long-term horizon will help you maintain a positive outlook.

Keeping all this in mind, we do recognize that each person’s situation is unique. There is not one right or wrong course of action. If you’re feeling anxious about your financial situation or simply want to know your options, please talk with your Perspective advisor. Being informed and talking about your concerns can go a long way in relieving stress. We are always available to help.

As we all ride out this latest challenge, focus your time and energy on things you can control. Do your best to continue the activities you enjoy. Spend time outdoors, visit with a friend, whatever makes you feel happy.

By |2020-03-18T10:35:13-07:00March 18th, 2020|Current Affairs, Investing|