Create A Rich Life Beyond Dollars
Welcome to The Power of Change, a weekly publication about mindset, resilience, healing, human connection, and the pursuit of joy.
This week, I’m thrilled to introduce you to my guest contributor, Donna Skeels Cygan, a CFP,® MBA, who has owned a fee-only financial planning firm for over 20 years. Donna was selected as one of the top financial advisors in the U.S. many times and retired (from serving clients) in late 2021. Donna is the author of the book “The Joy of Financial Security” and a frequent contributor to media outlets on money and happiness. She also writes a popular free newsletter called Becoming Enriched, which she recently brought to Substack. In it, Donna unravels the complicated relationship between money and happiness and shows you how to reap the rewards in your personal life.
Her writing is grounded in research and based on a deep love of psychology and neuroscience. (No wonder we hit off when we met a few years ago in a writing cohort!) After a successful career in financial planning, Donna writes to “give back.” She notes, “helping my clients achieve their goals and increase their net worth was very satisfying, yet I could only help a limited number of clients. Launching Becoming Enriched enables me to bring my expertise to a larger audience. It’s also why I’m writing my second book, Becoming Enriched.”
For this week’s edition, I invited Donna to offer her expertise on regaining financial footing after experiencing unexpected challenges or life disruptions. Please enjoy!
Create A Rich Life Beyond Dollars
The financial industry preaches a lot of shoulds:
You should save 15% of your salary throughout your working years.
You should use an asset allocation of 60% equities and 40% fixed income for your investment accounts.
You should have 6 times your salary saved by age 50.
You should follow the herd.
Most shoulds are not worth your time. They’re prescriptive and often unrealistic.
The reality is that “Life Happens.” As we age, upheavals occur.
We may become a widow or widower, get divorced, have a significant health crisis, experience the death of a loved one, lose a job, or face a myriad of other challenges we didn’t expect.
We may drift along, thinking life is good, when a zinger comes at us from left field. We can be easily thrown off track, and sometimes, getting back on a path that provides financial security is challenging.
If you experienced one of these scenarios, I recommend you expand your perspective to consider new possibilities and customize your plan to match your goals.
As the owner of a financial planning firm for over 20 years, I had the honor of working with clients from many different backgrounds and facing many types of challenges. My clientele was mostly “middle-income,” and some came from extremely poor backgrounds. They all had saved and invested wisely over many years, often accumulating over $1 million when contemplating retirement. It wasn’t always easy, and they shared the often-rocky times they endured.
The path to financial security is rarely linear. It’s full of hills and valleys, times when saving is easy, and times when it seems impossible. During the rough spells, many focused on merely “keeping their head above water.”
Isn’t that what we do when life becomes hard?
A bumpy road can affect physical or mental health, relationships, or finances. If you’ve experienced difficult times, let’s discuss how to get back on track financially.
Leave The Shoulds Behind
Because I tend to be a realist, my first recommendation is to “leave the shoulds behind.” Next, I offer suggestions to help you get back on track. They may not all work for you, so take what you like and leave the rest behind.
Write Your Heart Out in a Journal
This strategy is probably not the first thing that comes to mind when you think about financial security, but writing in a journal calms me down when I’m thrown off-track. In the 1992 classic book “The Artists Way,” Julia Cameron recommends writing “three morning pages daily. In her 2022 book “Write for Life,” she states that after thirty years, she is still writing three morning pages, and if she doesn’t have a topic she wants to write about, she writes about the weather.
Sometimes I write just one, and other times I write five, but the ritual of writing for ten minutes before I start my day helps me focus on my priorities and gather my thoughts. My morning pages often include thoughts about emotions and what I’m feeling.
If you’re financially off-track due to unexpected challenges, consider releasing your emotions in a journal. You may feel anger, sadness, despair, uncertainty, fear, grief, guilt, or impatience. Whatever the feeling, writing about your emotions can provide a sense of clarity and acceptance.
Create A Plan
Take an hour or two to examine your current financial situation. Gather recent statements for your investment (and retirement) accounts, credit card bills, mortgage, car loans, and student loans. I offer a free net worth statement (an online template at www.donnaskeelscygan.com/tools).
Consider your current income (from your job or working for yourself). Are you enjoying your current job, or is there something you want to change?
Do you earn enough to support your current lifestyle? Do you earn enough to save each month in a retirement plan, a brokerage account, or a bank account?
Take Action
If you earn enough—but are not currently saving—set up saving “systems” that will occur automatically each month. Start funding your employer’s retirement plan if you have access to it. Choose the Roth option if there is one available. Contribute at least enough to get your employer’s full match. (For example, employers will often contribute 3% if you contribute 6% of your salary).
If you don’t have an emergency fund that will support you for 4-6 months, set up a savings account that will become your emergency fund. Have money directed (automatically) into that account as soon as you receive a paycheck every 2 or 4 weeks. Leave the money in cash or a money market account so it is accessible if an emergency arises.
If you cannot access an employer retirement plan, open a Roth IRA for yourself at a brokerage firm, such as Schwab, Vanguard, or Fidelity. Set up a monthly transfer so the money will flow from your checking account directly into your Roth IRA each month.
The amount is not important. If you can afford $50 per month, choose that amount. If you can only afford $10 a month, contribute $10. The key is to set it up so that it occurs automatically. When you’re in a situation where you can increase the amount, do what you can. This is the concept of “pay yourself first.”
When you have additional money available–perhaps from a tax refund, a bonus, or a gift from a relative—save (and invest) at least 50% of it. It can help you make quick progress in getting back on track financially.
I wish there were a quick fix. There isn’t. However, a few “tried and true” strategies exist to improve your finances.
1. Decrease your expenses.
2. Increase your income.
3. If you can do both, even better.
Spending less and saving more is a simple concept. It may require you to downsize your living arrangement or change your lifestyle to spend significantly less money.
4. If you’re over 50, there are a few other strategies to consider:
Take advantage of higher annual contribution limits for retirement plans.
Delaying retirement to a later age than you had planned is an option.
Work part-time after retirement.
The key component in all these is setting up your savings plan so it happens automatically. Remember, it’s never too late to start saving.
A Rich Life
Another strategy, although it may not improve your finances, is to remind yourself that money is not the most important thing in our lives.
A rich life is not contingent upon the size of a person’s investment account.
A truly rich life is based on strong relationships with friends and family, the opportunity to give back to our community, express ourselves creatively, lead healthy yet simple lifestyles, and spend our money in a way that’s aligned with our values.
Getting back on track financially after a setback is well worth your effort. However, it doesn’t need to be your sole focus.
Consider other ways to experience a rich life – such as spending time in nature, with family and friends, or with your pets, exercising, helping others, trying new activities, meditating, and returning to simple activities such as playing and reading. And don’t forget the importance of laughter. Even during difficult times, let yourself laugh. These are all small but important to the big picture.
If we consider “living life fully” a puzzle, money is one piece. It’s important, but many other essential pieces help us complete the picture and create a rich life.
New This Week
Thank you to Donna for contributing to The Power of Change this week and to all who support my work as a free or paid subscriber. A warm welcome to the many new members who joined recently. I’m grateful for your support! 🙏🏻.
In other news, this past week, I was thrilled to be interviewed by the powerhouse author, podcaster Danusia Malina-Derben at Parents Who Think. Danusia has been interviewing parent-writers, and I’m humbled she included me in her interview series. You can read it here:
Until next week, be mindful and stay safe.
xo Tracy
If you enjoyed this post, please click the ❤️ at the end so more people can discover it on Substack and share it with someone you know! If it resonates, drop me a note and let me know how. 🙏🏻
Wow! What a beautiful and inspiring advice!
Great guidance here. Thanks for the encouragement and the tips.