Stop Being Creative (when it comes to money)
“I am too creative for a nine-to-five job… and also too lazy.”
- 500 DAYS OF SUMMER written by Scott Neustadter & Michael H. Weber,, directed by Marc Webb
(3.5-minute read)
I love the creative types. If you’re reading this, that probably means you. I played sports growing up, but I was also in the school plays. Being surrounded by creatives is so much more fun. It stimulates the brain and can get you thinking on a different plane. Even if you’re not an artist, being creative can allow you to solve problems. Creativity grants you permission to look at something from ten different angles.
In a Writers’ Room, the Showrunner has the difficult task of reining in all the creative ideas that are spewing from the writers’ brains. A director can set up a shot a hundred different ways. So I’m here to say: stop it. Stop being so creative when it comes to your money.
SHOW ME THE MONEY
Arguably the most challenging task as a Financial Planner is bringing on a new client. There is a lot of work to do upfront. Some of that work involves finding out where all the money lives. But it’s deeper than simply asking for bank statements. Money can live in multiple retirement accounts, brokerage accounts, pensions, CDs, savings, under a mattress, etc.
But money has also been used to purchase policies and products such as life insurance, annuities, real estate, automobiles, art, jewelry, collectables, and so on. We have to figure out where all of it lives.
Don’t forget about monthly expenses. Money comes in from jobs, but also goes out for living your life. Where does that money go? How do you organize it? How many different accounts do you have where money is flowing through?
TOO CREATIVE
A colleague recently admitted that many of my clients have scenarios that he’s never seen before. This made me realize that my clients are creative in everything. Sometimes they’re creative in places where they don’t need to be.
Let’s take budgeting as an example. I’ve seen clients “get creative” and open more than twenty different financial accounts. Twenty! They may be getting paid through eight different avenues such as PayPal, Venmo, CashApp, Square, Zelle, personal checks, cash, and a traditional paycheck.
Now let’s look at some of the ways they track the outgoing money. Again, they “get creative” to track their spending. They log their spending into, in some cases, nearly forty different categories such as Dining Out-Bars, Dining Out-Restaurants, Dining Out-Coffee Shop, Dining Out-Delivery, Utilities-Energy, Utilities-Gas, Utilities-Internet, but then completely ignore Entertainment as a spending category. Expenses can be broken down into Necessary -vs- Flexible with a few subcategories underneath each one.
Other examples of “creative” financial planning are placing money in an unnecessary Trust, buying a Life Insurance policy as a gift for a niece, stock picking, and trying to get cute with taxes. I’ve also seen multiple credit cards for reasons like, “this one gives me cash back from this store while this one gets me miles but this one had a promotion running for three months and this one…” It’s exhausting. These scenarios rarely work out as intended. They can cause more confusion and, unfortunately, more money.
FINAL SCENE
I’d like to propose something to my creative friends: stop being so creative when it comes to your money. Financial planning should be boring. Well, it should be boring to you. I love it! So it’s kind of exciting for me. But I chose this career for a reason. You chose your career for a reason too, and it’s probably not because finances are fun.
Simplify your finances. Pare down your accounts. Track your spending in simple categories. Cut down on credit cards. Invest in easy-to-understand assets. Simplicity can be your friend. Try not to get too creative until you have a professional in your corner who can walk you through your entire financial life.
If you’d like more information about personal finance, you can schedule a complimentary meeting HERE.
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