Dreams Money Can Buy

For most of us, dreams money can buy is symbolic of something much more significant than money itself. When we talk about money, most of the conversation is rooted in how to make or keep more of it. We create budgets to keep track of and reduce our expenses so we can save more. We often talk about how to negotiate for more equity or higher pay to earn more. Once we’ve amassed that cash, we look at how to wisely invest so we can enjoy it today while growing a reserve for the future.

What we don’t often talk about is how to spend that money to create the life we want. But knowing how to spend our money — or more precisely, use money as a tool — is a critical part of financial planning that’s often discounted.

The truth about money

Money is a tool. On its own, it is neither good nor bad; it is a means to an end. If anything, money is merely a means of exchanging value for value. In many circumstances, the truth is the problem isn’t money alone. It is in the lens through which we view money, how we approach money, and how we handle money.

While we should explore our feelings towards money and strive to manage it better, we should not allow our desire for more to consume us. Don’t get me wrong. There isn’t anything wrong with wanting more money, per se. Many affluent people have worked earnestly to attain the success necessary to accumulate wealth. It is the prioritization of accumulating money at all costs, that’s the problem. It is in this relentless pursuit that many of us realize that money is not, and never will be, the answer to what makes us happy. 

Indeed, while money can help us find happiness, we shouldn’t just expect it because it only represents half of the equation. The key is using money to afford experiences and memories, not just material things. In the grand scheme of things, money should enhance our lives, not control it. 

Think of money as a tool, not as a goal. 

Money is important because it enables us to have more control over our lives. In essence, it is a tool that affords us the freedom to carve out our own path and have fewer constraints on our choices. When we shift our perspective to view money as a tool that permits us to grow our wealth and do the things we want for as long as we want, we’ve come one step closer to enjoying a mindset of fulfillment. Let me give you an example.

Let’s say you inherited a million dollars and decided you wanted to purchase your dream car. Let’s go with a Porsche and estimate the car payments to be about $800 per month.

Most people would likely finance and start making monthly payments or buy the car outright. After all, you have a million-dollar stash.

But, those who view money as a tool, might do something as simple as this: Place the million dollars in an interest-bearing account that produces a 1% return and then use the $833 per month of accumulated interest to pay for the car.

Rather than spending money on the car and taking away from the newfound million, you’d get to have your cake and eat it too.

While this example may be somewhat one-dimensional, it inevitably demonstrates the idea of using money as a tool to kindle fulfillment.

Live with money, not for money. 

Money only has value when you use it to live your life. Not only this, but how you manage your money should be determined entirely by your personal goals and values. The way I see it, money is a tool that empowers us to protect ourselves, build a legacy for ourselves and our family, and give back to our community. For me, that’s the reasoning behind its significance. If you can master this money mindset, you’ll be further along than most.

If I Were A Millennial In Tech

When I first launched Deane Financial, I was fortunate to leverage my fiancée’s design insight to build a wealth management firm exclusively for Millennials in tech. From the holistic lens of my business, service design plays a vital role in encouraging varying levels of innovation within the firm — whether it be incremental, adjacent, or disruptive. As you can imagine, my method of doing things is a bit different. I spend a good deal of time thinking like my niche to build the ideal firm that serves them. I’ll admit, sometimes I get so entrenched in the tech world, I feel like I’m in the industry myself. So, I thought, why not put myself in your shoes for this week’s blog post on personal finance?

So, here it is.

If I were a Millennial in tech, here’s what I would be doing right now when it comes to my financial life. 

Develop multiple streams of income

If we’re similar and your goal is financial independence, the roadmap is simple. Multiple streams of income. Once Kem became a designer, it didn’t take long for me to notice the potential Millennials in tech possessed when it came to their earning power. Like some Millennials, I like to reward myself with expensive nice things, but only when it’s earned. And I hate feeling like I need to cut back on expenses if I want to meet my financial goals. So, if I were a Millennial in tech, I would focus on the alternative. Things I can do to earn more income. 

Thankfully, we live in the age of the internet, where information spreads at zero marginal cost. If you have a personal brand, and you’re willing to put in the work, there are plenty of ways to develop multiple streams of income. For instance, if you have a technical skillset like design or engineering, you can do freelance projects making apps and SaaS products. If the educational route is more fitting, you can create online courses or ebooks. You can even do live trainings. Because I’ve been to a few and had great experiences, I would look to partner with specific organizations and host events like design sprints and hackathons. And because I’m all about passive income, I would be a Shopify Developer Partner. Without a doubt. 

Automate my financial life

Financial success is a lot like designing and engineering. It requires seamless systems and processes that promote end-user satisfaction. Considering my day-to-day responsibilities, keeping long-term goals in mind at all times requires entirely too much willpower and effort. Thankfully, having a process in place that replaces willpower makes it easier for me to remain disciplined. On a high-level, there are three personal finance rules that I live by:

  1. Spend less than I earn
  2. Spend money on the things that align with my values
  3. Prioritize saving and investing

While these standards aren’t always easy to follow, I’ve found that automating my finances gives me an enormous advantage. For me, it’s the best strategy to lock in future behavior as opposed to relying on willpower in the moment. Be that as it may, when saving and investing, it’s more than a goal that I’m hoping for. It’s an outcome that is virtually guaranteed. 

Here’s what it looks like in 5 simple steps:

  1. Compartmentalize my accounts. For example, I have three checking accounts — a joint account with Kem for our monthly bills, a personal account, and a business account. I also have a Roth IRA for retirement, and online saving accounts for my goals (buy a home, wedding, vacations, etc.)
  2. Set up my entire direct deposit to go to my primary checking account for fixed expenses. 
  3. Set up automatic transfers from my primary checking account to my secondary checking account for my personal allowance. This will be for day-to-day spending, variable expenses, shopping, etc. 
  4. Set up automatic transfers from my primary checking to my various savings and investment accounts for future goals.
  5. Because I’m all about simplicity, I would use a budgeting app like Tiller Money or TrueBill to track and review my expenses regularly.

Use company stock to fund my goals

This should be no surprise to you. If I were a Millennial in tech, I would make it a priority to know the ins and outs of my stock compensation plan.  Since company stock awards can vary widely, my first step to understanding its true value is identifying the specific plan type. Next, I would get familiar with key terms, important dates, tax consequences, trading restrictions, and the inner workings of my stock plan. 

Equity indeed has the potential to be a useful wealth-building tool due to the growth of the underlying company stock. But because uncertainty is inherent, I view it separately from salary and would resist the urge to perceive it as a “lottery ticket.” Instead, I would utilize a holistic approach to manage my stock compensation — amassing equity to meet my short and long-term goals. 

By clearly defining in advance events, dates, and price ranges that will trigger specific actions with company stock — I will be making investment decisions more straightforward and seamless. In fact, I have more of a rules-based personality, so I would likely create a decision flowchart to implement this aspect of my financial plan. Most importantly, if I were a Millennial in tech, I would review my financial plan periodically and adjust for any changes in my goals and circumstances.

Build an opportunity fund

We all know about the importance of saving to build an emergency fund. But what if I’ve been diligent with building financial stability and I already have that covered? What’s next? The way I see it, if I’ve saved for inevitable but unpredictable adverse events, I should also save for inevitable but unpredictable good events. This is the moment when my bonuses and an opportunity fund makes its way into the picture. I like to think of opportunity funds as a competitive advantage, particularly in economic downturns. In moments of fear and uncertainty, the best investment opportunities will go to those with lots of cash. 

For instance, as my personal and professional network expands, I am molding relationships with more people who might be starting a business or getting involved with an investment. I’m a calculated risk-taker, so I like to have money set aside to take advantage of opportunities. Under those circumstances, the two things I refrain from doing is pulling money from my retirement nest egg and dipping into my emergency savings. Given these points, this opportunity fund is strictly for “risky” investments that align with my tolerance and capacity for risk. 

As for where I would keep it? It would likely be in a money market mutual fund that invests in high-quality, short-term debt. They are considered a favorable place to park cash because they’re much less volatile than the stock markets, and is one of the safer investments you can make. Because you can earn interest of 1%-3% a year, these funds are useful for investors who want to protect their assets, but still earn interest. There may also be tax benefits since some money market funds hold municipal securities that are not included in federal and state taxes. Win, win if you ask me. 

UX Design Your Financial Life

Everything is designed, whether we make time for it or not. As life gets busy, it’s easy for us to become reactive rather than being intentional with our own lives. Or, in the words of UX designers: We stop doing user research, we stop iterating, and we hinder meeting our own needs. Sometimes, we even design our lives based on other people’s expectations of us. Be the designer of your own destiny. If UX designers can mold the experience that we have with digital interfaces, then why can’t we shape the lives we want to live? Through thoughtful financial planning, which gets to the core of your goals and values, you can UX design your financial life.

The User-Centered Design Process

Designers play an influential role in the outcome of a product. The essence of UX design is its focus on user research and on an iterative, human-centered approach to creating solutions. The process is most just: research, design, testing, repeat. Design thinking, and it’s empathetic process provides the perfect blueprint for performing user research on yourself, creating the life you need, and going back to the drawing board when life changes. This human-centered design process is nothing new. What if we could also apply these principles to UX design your financial life? All of the research, design, and testing tools we need to design our lives intentionally is inherent in the financial planning process.

Auditing Your Past

While we all have ambitious goals, the key to accomplishing them is by building a collection of small, consistent habits. Think of your past and take note of things you’ve noticed about money. What is your relationship like with money? How has that changed over time? What aspects of your financial life are you pleased with? Do you generally operate from a scarcity mindset or one of abundance? 

It might help to create a journey map of your life. The best way to get started is to take a look back at how you’ve your life so far. Record events, thoughts, experiences, feelings, and people that influence who you are today. Spend some time thoroughly thinking about your journey, and this could be the most significant, eye-opening act of introspection you will do. It’s the ultimate content auditing exercise.

Usability Testing The Present

Once you’ve assessed your past, it’s time to look at how you’re spending time and resources in the present. Create a persona that’s consistent with your current self. Start by listing everything you do and how money plays a role. Personal values drive behavior and help guide the decisions that we make. What are your values and goals? What do you want from life? 

The truth of the matter is, no one else is going to prioritize what’s important to you. Figure out what truly matters and prioritize it. Similar to a feature prioritization exercise when building new software, differentiate the must-haves and should-haves from the could-haves and would-haves. Consequentially, this makes you conscious of how you spend your time and money – and can have a tremendous impact on your overall happiness and fulfillment.  

Affinity Mapping Your Future

This step is all about laying the foundation toward completing your life goals. Affinity maps are used to find patterns and trends in qualitative data. They’re often used by UX designers to make sense of user/stakeholder interviews. In regards to designing your financial life, an affinity map is a powerful technique for Millennials in tech to determine what you want and need out of your lives and to create a vision of what your life might look like in the future through actionable and measurable goals.

Before doing this exercise, it’s a possibility your goals and actions might have been misaligned. By visually mapping out your aspirations and aligning your current self toward a trajectory to achieving those goals, you have convergence. My fiancée and I do this activity as we are planning our future together and we look back at it, regularly, to measure if we’re staying on track.

If we think of our individual lives as design projects, we can sketch, deconstruct, reconstruct, and act upon the things we do. You don’t need a fancy template to get started with affinity mapping — just a lot of post-it notes and a beautiful big wall, window, or table. I’m sure there’s a plethora in your savvy tech offices. 

How To Affinity Map Your Life

  • On its own post-it note, write down essential values or activities you want to prioritize.
  • Write down any vital goals and experiences you want to achieve. 
  • Categorize the insights under “I” statements.
  • Organize the data by the insights they suggest. For instance, post-it notes reading “I want to create an impact” and “I want more control and flexibility of my life” may fall under “I want to start a business.” Soon these will become your success metrics, or Key Performance Indicators, of a fulfilling life. 

Wireframing: Design Your Solution

Now that you’ve audited, validated, and crafted a vision for the lifestyle you want to have, what do you do with this information?

Design a financial plan!

Financial planning is a collaborative process that helps maximize your potential for meeting life goals through financial advice that integrates relevant elements of your personal and financial circumstances. In a sense, it aligns the life you want with the life you are living and adjusts to the frequent changes.

Life is not static. Whether you’re deciding on an offer at a startup or preparing for a new addition to the family, circumstances will change, as will your goals and aspirations. Revisit your journey map and iterate your future story based on a new understanding of values, goals, and priorities. The aptitude to understand, ideate, hypothesize, and execute diligently and iteratively is invaluable. This repeated behavior are tenants of the design thinking process, and by the same token are used to UX design your financial life. There is no real endpoint. For that reason, it’s much less about the outcome than it is about the way you go about achieving it. Therein lies the beauty in financial planning. 

The ROI: A Fulfilling Life

The return on investment for designing your ideal life is about as straightforward as UX design solutions get. An intentional and well-designed lifestyle is consistently creative, productive, evolving, and there’s sometimes an element of surprise. Naturally, mindfully designing your life can allow you to pursue your passions, and perhaps help you find your purpose. 

Tips on Shopping For a Financial Advisor

You can certainly go it alone when it comes to managing your money. But you could also try to do it yourself when it comes to auto repair. In both areas, doing it yourself is a brilliant idea for some, and a flawed plan for many, many others. Mastering personal finance requires many hours of research and learning. For most, it’s not worth the time and ongoing effort. As you get older, busier and more wealthy, your financial goals – and options – get more complicated. A financial professional help can save you time.

And we get it, the expanse of the financial expert ecosystem can be so complex and convoluted – with fancy titles like wealth manager, financial planner, broker, financial adviser, financial coach and the list goes on – it may be difficult when deciding when you should take the leap.

Here’s a few things to look for when deciding to hire a financial adviser:

Standard of Care

There’s a buzz word in the industry called ‘Fiduciary Standard‘. We get it, it’s a weird word but what it means is that an advisor with fiduciary responsibility must act in the best interest of their client, putting their client’s interest ahead of their own at all times. You would think that anyone managing someone’s hard earned money would have to abide by these standards, right? FALSE! The majority of financial professionals out there do not have to follow this principle.

Location Matters

At independent registered investment advisory firms (RIA’s), advisers fall under the Fiduciary Standard. These stand-alone advisories aren’t connected to a brokerage or bank and typically has access to the universe of investment products, including some of the cheapest index funds. There are numerous RIA’s out there and each might focus on a different type of clients, some serving high net worth individuals, some serving doctors, others working only with female entrepreneurs etc.

FYI: We work with Millennials in tech!

A lot of the stockbrokers and advisors connected to large banks do not have a fiduciary duty to their clients. Instead, they fall under what’s known as the ‘Suitability Standard‘. This means that as long as they can justify that a particular product is suitable for their client’s situation, they can sell it to them – even if it’s more expensive and pays them a fatter commission. Yikes!

Fees and Conflicts of Interest

Identify how an advisor is compensated to gain a better understanding of their potential incentives and conflicts of interest. Typically, advisors are paid through:

1) only client fees (“fee-only”)

2) commissions, or

3) a combination of both (“fee-based”)

More conflicts of interest arise when commissions are involved. As you can imagine, it becomes harder for the adviser to stay independent and put your interests ahead of their own.

Know What You’re Paying For

This one goes without saying, but it’s important to know what options are out there. Before you sign on, be sure to understand how often and with whom, and how you will be interacting. Some advisors have an initial upfront meeting and then check-in with clients once a year, while other advisors provide ongoing support throughout the year to help with the implementation of a plan and coordination with other service providers, such as insurance agents, mortgage brokers, and accountants.

Beyond meeting cadence and service level, transparency and relatability matter as well. So yeah, you should actually like your adviser and be able to envision a good working relationship with them. There’s nothing better than working with someone whom you have plenty of things in common with or whom truly understands you and your goals.

The Finale: Good News and Bad News

Now that the Fiduciary Rule is dead (federally at least), brokers don’t have to disclose conflicts of interest the way they did under the rule. Lucky for you, regardless of the rule, Registered Investment Advisers (RIA’s) are required to be fiduciary. The best way to know whether your adviser is a RIA, broker, or both is to search BrokerCheck, a database maintained by FINRA. Investors can even take the extra step and ask their financial professional to put in writing whether he or she is a fiduciary in their particular relationship.