The average U.S. household carries about $16,000 of credit card debt. (Source: NerdWallet) They typically also have a mortgage, auto loans, checking and/or savings accounts, and perhaps even student loans. Some also have some sort of retirement savings plan. Yet, less than half of American’s have a financial plan. (Source: Life & Health Advisor)
Those who don’t have a financial plan only have a vague idea of where they stand financially. Often, it isn’t until a major event (marriage, death, divorce, child birth, retirement, major surgery, etc.) happens that they realize that not knowing is problematic. It’s scary not knowing what shape your finance are in. Wondering if you have enough money saved to make it through your retirement.
But figuring it all out takes a lot of work, and many simply don’t want to put in the time. They are ignoring their financial health, and as you might imagine, this is a real problem.
Let’s put this in perspective and think about it a different way.
Most American households have a vehicle. If you’re in the majority and have a car/SUV/truck/van, do you do maintenance on your vehicle? Cars require a lot, from getting gas and putting air in your tires, to timing belts and oxygen sensors, to transmission repairs and new engines. Repairs and maintenance can be big or little, expensive or cheap. But if you want your car to remain road-worthy, it must be completed.
Imagine you get in your car one morning. You set your travel mug full of coffee in the cup holder and start the car. Maybe you turn on your favorite song and are singing along. It’s not until you back out of your driveway that you notice your car doesn’t sound right. You turn off your radio. Yup, your car’s making a funny sound. When you stop at the light, it dies on you and takes two attempts to start again.
Your car isn’t doing what it should, which is running. You depend on it to get you from place to place safely, in a variety of weather conditions. You have only one car, only one way to get to work, the store, the doctor, or wherever.
What do you do?
I’ll tell you what you don’t do. You don’t ignore it, and keep on driving. You take it to the mechanic. You take it to get fixed. If you don’t, you never know when, or where you will be when it dies on you. You could wind up stalled out on the side of the highway, maybe halfway to Florida on a family vacation. Kids or grandkids screaming from the backseat that they’re bored and hot and have to go to the bathroom, while you wait for the tow truck. The whole time worrying about how much it’s going to cost you.
It’s important that your car is road worthy. You depend on it, so, hopefully you take care of it. You pay attention. You get oil changes, new tires, perform routine maintenance, and you take it to the shop when it isn’t running right. You don’t ignore the problems, because they won’t go away. Often, they get bigger. Worse. More expensive to fix.
Your finances are arguably more important than your car. Why would you give them less attention than your car? Without money, you’d have no car after all. And if your finances fail, the consequences might be worse than a long wait for a tow truck and a repair bill. You could end up broke, unable to retire, or needing to go back to work.
Ignorance is not bliss.
Let’s go back to your car. It’s making that funny noise, and not running like it should. If you’re not a mechanic, and you don’t know how to fix it, you probably don’t try to do it yourself. Even simple repairs and upkeep, like changing your oil and tune-ups, you probably leave to the experts. You might know how to do both, but it’s a hassle. A dirty job that you don’t enjoy doing.
So what do you do? You take your car into the shop.
Managing your money and planning for retirement is complex, just like the inner workings of your car. Your finances are a complicated, inter-connected machine, that depends on all its parts working—and those parts working together.
If you don’t know how to keep your finances running, how to do the maintenance required—or perhaps you just don’t enjoy doing it—it’s smart to seek help.
A financial planner can help you get a deep look at your finances, plan for retirement, and hopefully feel better that your “vehicle” is roadworthy. An investment manager can manage your money, helping you to avoid common mistakes while building your retirement nest egg. A trusted team of financial advisors can help you feel confident that you and your future will never be left waiting for a tow truck when you should be enjoying your retirement vacation.