This is the latest in our series of introductory “101” financial guides. Each guide reveals a set of wise actions as well as a set of behaviors to avoid. The goal? Help you make smart choices at every turn in your financial road trip. Your financial success will be exponentially enhanced when you make wise financial decisions repeatedly over a long period. This month’s focus is Budgeting, the center of your financial plan.

Compounding Wisdom:  Budgeting

Compound Wisdom Actions

• Write it down – a budget is a formal, written monthly plan for your money, developed before you spend it.
• Liberate yourself – eliminate the guilt that comes with spending, knowing it was all part of the plan.
• Be patient – it takes three or four months of budgeting experience to feel confident in your plan.
• Toss the straitjacket – plan for fun, so your budget expands and doesn’t constrict your life.
• Keep it balanced – plan for all your needs, enough of your wants, and most of your savings.
• No leftovers – a zero-based budget accounts for every dollar of income, spending, and savings.
• Every dollar has a name – each dollar is either spent or saved and is assigned a category.
• Keep it simple – create a great budget with less than 20-30 categories.
• Keep track – track actual spending so you can adjust your plan for the next month as you improve.
• Minimize marital stress – it’s much easier to discuss money before it’s spent rather than after.
• Set it and forget it – using an automated tool is a painless way to plan and track your money.

Actions to Avoid

•  Failing to plan is planning to fail – Don’t procrastinate; jump in, and start a monthly plan today.
• Too needy – don’t limit your budget to just the necessities – plan for family fun and relaxation too.
• What happened? – the plan has limited value if you don’t track your actual results and evaluate the plan each month or so.
• Cast it in stone – don’t treat your budget as a “read-only” document – update it often as life changes.
• Give up too soon – financial planning gets easier over time, but you must get through those first few months of learning and developing your plan.
• Mind the gap – don’t forget about planning for emergencies, gifts, vacations, large purchases, kid’s activities, and all those non-recurring one-off expenses.

Feel free to pass this along if you know someone who might benefit from the guidance and look for more from me in this monthly series.

I lead our Hillfolio level client service and planning efforts, learn more about me here and reach out if I can help you put the magic of compounding on your side.

I taught personal finance and leadership at the high school level for over twelve years. One of my favorite concepts I loved to communicate was the magic of compounding. Although great financial value is derived by recognizing the wisdom of compounding, I believe there is even greater value in recognizing the compounding of wisdom.

Could your financial success be exponentially enhanced by making wise financial decisions repeatedly over a long period? 

In the months ahead, I’ll share important ideas I’ve seen result in positive financial outcomes, and give you the roadmap. The goal? Help you make wise choices at every turn in your own financial road trip. Think of it as an introductory – or “101” – guide to compounding financial wisdom.

Compounding Wisdom on Investing:

Compound Wisdom Actions

• Pay yourself first – invest every time you get paid, even if the amounts seem small, through automatic transfers to either your 401k/403b or personal accounts. 
• Stretch to invest – target 15%-25% of your income to save or invest each year.
• Diversify – spread your investments across multiple asset classes to manage risk.
• Leave nothing on the table – make sure you receive the full match your company offers.
• Look out for Roth – consider the Roth 401(k) option if available in your employer plan.
• Control for fees – you can’t control returns, but you can control investment fees by investing in low-cost funds.
• Keep emotions in check – you invest for the long term, so resist the urge to trade urgently, or time the market.
• Rebalance – keep your investment allocation in balance across asset classes.
• Harvest your losses – take advantage of down markets to accumulate valuable capital losses.
• Be aggressive – as a young adult, don’t fear an allocation that is dominated by equities.
• Look under the covers – many target date funds are costly and may not be appropriately allocated. 
• DIY is difficult – work with an advisor who always works in your best interest (also known as a Fiduciary). 

Actions to Avoid

• Waiting to get started – your most valuable dollar invested is your first.
• Failing to sign up for employer retirement plan – start the first month you are eligible.
• Failing to earn the entire match – one of the only free lunches around.
• Investing in mutual funds with high fees – don’t be seduced by sexy short-term returns that are unlikely to persist.
• Paying penalties – don’t incur penalties by withdrawing from retirement accounts early.
• Abandoning your plan – don’t get sucked into the latest “can’t miss” stock recommendation you hear online or from a friend.
• Timing the market – invest regularly or whenever you can, as early as you can.
• Loving your company too much – monitor the risk you may incur from owning too much company stock.

Feel free to pass this along if you know someone who might benefit from the guidance and look for more from me in this monthly series.

I lead our Hillfolio level client service and planning efforts, learn more about me here and reach out if I can help you put the magic of compounding on your side.

Today’s news is a two-for-one deal, introducing our new team member PJ McDaniel, as well as Hillfolio™, our ground-breaking new digital platform. We’d be hard-pressed to decide which we’re more excited about! Fortunately, we don’t have to. In a perfect pairing, PJ has joined our St. Louis office to oversee the new service.

What’s Hillfolio? We’re glad you asked! Hillfolio will bring evidence-based investing and institutional-level portfolio management to a wider audience, including those who might not otherwise be able to experience the high-touch care we strive to make the hallmark of every investor’s experience here at HIG. We’ll be covering it in more detail in the months ahead; for now, call it one of our most ambitious dreams being realized.

Back to PJ. Although new to the team, his relationship with us began six years ago, when he and Matt Hall both began serving on the Saint Louis Club board. Besides bonding over their status as the group’s “young guys,” they also became co-mentors, each learning from the other’s perspectives.

PJ had spent more than a decade in alternative investment sales. As he consulted with financial advisors across the country, he kept seeing huge variations in the quality of advice investors were receiving … and it bothered him. From Matt, he grew to appreciate the powerful differences a fiduciary mindset and efficient evidence-based investing can bring to people’s investment outcomes.

“I am excited to play a direct role in moving more people into evidence-based investing,” says PJ. “Once you understand that you cannot predict the markets, you get to focus your time on family, friends and other activities that make life enjoyable.”

For Matt, PJ’s experience in launching and growing new businesses was equally inspirational.

Call it fate or just good timing, but as PJ found himself increasingly uncomfortable in his career, we were beginning to seriously advance our Hillfolio platform, to the point where we needed a new team member to become its full-time champion. That’s when we and PJ realized we had a unique opportunity to join forces on our shared dream to put logic, data and evidence to work for every investor.

In addition to his 13-year career as a financial professional and an advisor to advisor firms, PJ holds a bachelor’s degree in business administration from Regis University. He also was selected to attend a “Semester at Sea” program where he studied international finance. Married in 2008, PJ and his wife have grown “the McDaniel tribe” to a party of five, including their three boys Jack (6), Patrick (4) and Henry (2). His wife is an accomplished evidence-based dietitian, cookbook author, corporate wellness guru, and media spokesperson who you may have seen on St. Louis’ local Fox 2 station.

When he’s not working or parenting, PJ can be found running, swimming or playing a round of golf. During his college years, he was a caddy at an exclusive country club, where he had the opportunity to caddy for Tiger Woods, then-sitting President Clinton, and countless other characters. Reflecting on the experience, PJ says, “Whether you watch a pro player or the leader of the free world duff a chip, it reminds you that we’re all human. The real eye-opener is how people handle or recover from their mistakes.” This is a lesson he hopes to instill in his boys as they grow old enough to take on summer jobs of their own.

Please join us in welcoming PJ to the HIG team … and watch for unfolding Hillfolio news to come!