March (Money) Madness

Posted on Mar 19, 2016 in Planning

March (Money) Madness

It’s that time of year again when offices across the country experience an uptick in employees who call in sick, and a widespread reduction in productivity. No, it’s not flu season, it’s March Madness.

I played basketball in junior high, shot hoop on the floor of Portland’s Rose Garden, and follow the sport a little, but I wouldn’t have deviated from my usual routine for the three weeks of collegiate competition. I have no idea about the merits of one team or another, I have placed no bets and have formulated no brackets.

What did get my attention was another bracket asking me to choose my Final Four – and my Number One Pick to win a Financial Four. This roster was a little different: it’s March Money Madness.

Often in financial planning, it’s hard to know where to begin. Which tasks do you put first? Review your insurance? Pay-off your credit cards? Save for check your credit score? The National Endowment for Financial Education and the Financial Planning Association put together a Financial Final Four to help us get a clear picture on how to prioritize our fiscal goals. Financial experts have entered their brackets, weighing in on what Americans should be thinking about as their top priorities in 2016.

And you can play along as well.

Thirty-two financial tasks are grouped into four “regions”: 1-Growing Your Money, 2-Spending Wisely 3-Protecting What You Have, and 4-Learning & Talking About Money. In each division, two financial actions are pitted against each other until the Sweet Sixteen become the Elite Eight, the Final Four, and at last, Your #1 Financial Priority.

My Final Four, the winners of each “region” are:

1-Start saving early
2-Have a spending plan
3-Maintain adequate insurance
4-Identify Financial Values

Even after more than 15 years as an advisor, it was still an interesting exercise to winnow down deserving financial tasks to get to my Final Four. The philosophy behind my selections involves controlling what you can, and beginning with the end in mind.

1-Start saving early
This is the same as going to practice every day, improving your skills over time. As Yale Bulldog Makai Mason, who scored a career-high 31 points in Yale’s upset over Baylor, put it: “I was just trusting in my practice, hours and hours of just shooting foul shots at the end of a workout and making a certain amount in a row just before I’m able to leave the gym,” he said. It’s a little bit of money over a long period of time that gives you a financial win.

2- Have a spending plan
You might want to be an all-around great player, but you have your unique set of skills and limits. You can shoot but not jump. You’re not tall but you’re fast. You need to understand what your limits are and spend your resources (time, practice, money) where it makes the most sense for you. To just throw yourself into a game understanding your best athletic talents is no strategy. Once you get beyond the essentials (food, shelter, clothing) you start to have choices about how you spend your money. Focusing on what really makes you happy – like what makes you shine on the court – is what you focus on. Spend where it gives you the most pleasure – but you trade off something else to stay within your limits.

3-Maintain adequate insurance
You’ve got to understand the risks you are exposed to, and decide whether to retain them, eliminate, reduce or transfer them. If I’m a basketball player with a shot at playing in the NCAA finals, maybe I’ll accept the risks of playing other sports to cross-train. Maybe I’ll skip the sky-diving. Or avoid getting into a fight that could get me suspended or injure my hands. It’s just not smart to risk your major assets when you could walk away or otherwise avoid a catastrophic loss. Similarly, the most well-constructed portfolio won’t get you very far if you have a major health crisis without adequate insurance, or are sued for a slip-and-fall injury on your property. If you have good health, income from a job, or a few nice things, you’re going to want to protect them.

4- Identify Financial Values
You don’t get to the Final Four without making sacrifices. Time with friends, partying, and other classic college activities are typically set aside when you’re in training. You need to be disciplined, you need a goal. You have to want it. Similarly, it helps to know why you’re saving to stay on track. If someone just tells you you need to get more exercise, they might be right but it’s not so motivating. If you decide you want to manage your health to be there for your family, that’s a prize that can keep you going to the gym even when you’d rather not. Knowing what’s important to you gives you the motivation to keep to your plan, even when it gets tough.

My “winner” in this game of March Money Madness is identifying your financial values. Many of you have heard me say that I don’t know what to do with a portfolio until I understand what you need it to do. Your goals drive how your resources get allocated. Your financial values will be at the center of your financial life, and will ground you when you start to drift. If you want to save for a two-month sabbatical in France, identifying that goal can help you when it’s so easy to spend money elsewhere. Like picturing holding that trophy when you’re tempted to skip practice.

My perspective on the Final Four holds true at any age: if you’re already in or nearing retirement, it doesn’t much help for someone to tell you to start saving early. But you always have to formulate your financial values as a target so you can even know whether you’re “winning.” If you want to fill out your own roster of Your Financial Four, you can do that here:

You can submit your bracket to see how your results compare to the team of financial advisors.

As for basketball, Yale (grad school) made its first NCAA appearance in my lifetime as winner of the Ivy League. UC Berkeley (undergrad) was out after the first round, so my personal interest in the rest of the tournament is minimal. But Yale moves on to play Duke, and that has at least spawned some humor in a host of tweets and memes about the match-up.  You can get out your polo shirts and boat shoes and read more on that here: