As a daily money manager (DMM), I like to say that I help people achieve financial goals that a person is having trouble meeting themselves. Money is emotional and sometimes it is hard to see the bigger picture forest through the day-to-day trees. Our society is also reticent to discuss money. When we don’t manage it well, we don’t want to reach out to others for help. I can recall my mother telling me about one of her friends. This friend was rather well-known as being one of the “socialites” in town. Yet one day she revealed to my mother that she was living above her means. She had no savings.
A DMM Can Help With A Plan For Saving
This is where a DMM can help. As a non-judgmental outside resource, I help my clients improve where they struggle and help them both set and achieve their financial goals.
One of those goals I help people with is savings. The purpose for savings will mean different things at different points in life. But the essence of saving is to provide delayed gratification.
DMMs Help Provide Guidance For An Emergency Fund
For younger clients who are just starting out living on their own, saving means putting enough aside to be able to deal with an emergency that costs more than what might be in the checking account. Much like my young niece and nephew, they are starting to learn the concept of savings. My niece and nephew can spend their $5 now and then want to spend $20 more that is beyond what they have, or they can spend some of their $5 and save some of it. Through saving, they can afford the $20 item later. For grown-ups, the same concept can apply.
When an unexpected expense occurs, rather than pulling out the credit card and going into debt, savings is available for these unexpected expenses. We work together to find where to tighten the belt a little bit (not drastically!) to free up some of that income to put aside. We delay some of their immediate gratification of spending everything that is earned to provide a reduced stress when an unexpected expense comes. I also become a cheerleader, encouraging with every success.
Helping To Save For The Longer Term Through Investments
For clients who have dealt with the emergency fund and have some more money available, we work on starting to save with investments. This might be a couple getting by on what they make, but then one or both get a raise and now have a little more income available. While I don’t specify what to invest in, we do talk about concepts of funding a regular amount in order to meet a future goal. These goals can vary from wanting to fund a vacation of a life-time, to saving for a child’s post high-school education, to providing for themselves after retirement. For this type of savings, we are looking at goals that are 10 or more years in the future. This is a longer-term delayed gratification.
Depending upon the level of time a person wants to put into managing the money, I can either teach the basics of investing, or I can make introductions to financial professionals who can manage it for them.
Helping To Live The Good Life But Also Save
The next phase of savings that I assist with is the mid-level person or couple who is making quite a bit of money, but it all seems to be gone at the end of the month. They live comfortably and are saving for retirement, but they don’t seem to have any extra for one-time larger expenses. As a DMM, I work with the client to create an expense report. We review where the money comes from and where it goes. We then review their expenses against what is important in their lives to see if they are spending on what they think is important. If there is a discrepancy, then together we create a future spending plan that realigns with their priorities so that they receive the most personal value for their spending.
Helping With The Retirement Spending
The last phase of life where a DMM can assist with savings is during retirement when one source of money for expenses is the accumulated savings. This is where I help clients understand what their advisor is doing to manage their nest egg. This is also when my clients may want help understanding their different sources of income. They may also want help coordinating information about the daily expenses with the financial advisor. This helps the client with a budget that includes savings. And for the financial professional, it provides additional information about savings usage that helps him or her better invest those funds.
Regardless of where a person or couple is in their life, a DMM can assist clients with their savings plan.
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