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4 Steps to Be Fiscally Fit

It's that time of year again.

The holidays are a blended cocktail of fun and frenzy. One moment you're engorging yourself with Thanksgiving turkey and trimmings, and the next, you're popping a bottle of bubbly on New Year's Eve.

Blink twice, and you’ll miss it.

Amidst the crazy, it's essential to set goals. Yes, of course, the ordinary resolutions hold. Try to eat better and perhaps move a bit more. That's all good. But have you thought about who you want to become financially?

If not, I’m here to help.

Here are the four necessary steps to becoming fiscally!

Step 1: Protect Your Todays

Protection should always be the first financial consideration. Before focusing on building your tomorrows, it is prudent to protect yourself adequately against what might happen today.

Most people know they need to ensure their life, their car, and their home or condo. But they often overlook insuring their most valuable asset - their ability to earn an income. Your income is the primary source of funding for a lifetime of things, from basic necessities to the hopes and dreams you have for yourself and those you love. The $3-9 million or more you'll likely earn throughout your medical career is undoubtedly an asset worth insuring.

But what would happen if your income stopped because you were too sick or injured to work? Without a paycheck, how long could you pay your rent and utilities, buy groceries, make student

loan payments, etc.? In all likelihood, your life would be thrown significantly off course.

Before you say this could never happen to you, consider the fact that 1 in 4 of today's 20-year-olds will become disabled before they retire.[1] And if you're thinking that most disabilities are the result of freak accidents, you're in for a surprise. The vast majority of disabilities, about 90%, are caused by various forms of illness including cancer, mental disorders like anxiety and depression, muscle and back problems, and heart disease.[2]

Disability insurance can help replace your paycheck if you can’t get up and go to work. Should disability strike, it pays cash that can be used to keep your household running as well as to help you adjust to your changed circumstances. While it’s common to have some disability coverage through your employer, these types of policies might not be enough. An individual disability policy can help fill any gaps that your group-disability policy may not cover.

Click here to learn more about protecting your income.

“But Kyle, insurance costs money and I can’t afford another bill!”

Every dollar is precious! However, getting coverage is not as expensive as you think. Premiums for an individual disability policy typically cost between 1-2% of your gross income. For a someone making $50,000, that’s less than two dollars a day to protect over 4-million dollars of future income!

You've made a significant investment in time and money to build your career with the promise of financial security and the other rewards your profession provides. But should you become too sick or injured to work, that promise evaporates.

Step 1 on your fiscal fitness journey is to protect your greatest asset, you!

Step 2: Become a World-Class Saver

Once you’re properly protected, and ONLY when you’re properly protected, will you be ready to start building wealth for the future. But when should you start saving? How much should you save? These are great questions with crucial answers.

Start Saving Today

“The best time to plant an oak tree was 30 years ago. The second-best time is today.”

-Chinese Proverb

Retirement is an oak tree. It takes decades of nurturing and attention to grow those first few pennies into a healthy sum of money from which you can retire.

To illustrate my point, let’s look at two different scenarios.

Brian Proactive recently graduated from State College. He understands the important of saving and makes it a priority to squirrel away as much as possible. He saves 10,000 a year for 40 years. Assuming a 6% rate of return, he would end up with somewhere in the neighborhood of $1,600,000.[3]

Jenny Procrastinator, on the other hand, put off saving. She spent most of her 20s and 30s eating out, going on expensive vacations, and driving new cars. On her 40th birthday, she starts feeling behind on saving for retirement. To catch up, Jenny begins saving $20,000 per year for the next 25 years. Assuming the same 6% rate of return, she ends up with roughly $1,100,000.

Even though Jenny saved double the amount per year that Brian did, she has significantly less money. How does this happen? Time. Brian had an extra 10 years for her money to compound and grow that Jenny did not.

So as the wise man once said, start saving as soon as possible!

Save 15-20% of Your Gross Income

There are a lot of forces working against your money: taxes, inflation, new products and services, replacing old products, living a better lifestyle, and unexpected life events. What does this mean? Life gets more expensive.

The proper way to fix this problem is by saving 15-20% of your gross income. Doing so will put you in the best position to recreate today's lifestyle in retirement. This means someone making $50,000 should make it their goal to save approximately $10,000 per year.

It’s okay if you’re not there yet! Here are some tips to find extra cash to put away.

  • Pay raises

  • Tax refunds

  • Overtime and/or holiday pay

Step 3: Prepare for Life Events

Changes in life often come with financial consequences. For both opportunities and setbacks alike, it’s necessary to have money set aside upon that you can rely on. Therefore, you will want to always maintain a balance between your liquid assets and other long-term financial strategies.

Liquid money is money that can be easily converted to cash quickly, with minimal impact on the price received.

Some Examples of liquid places to save

  • Savings accounts

  • Checking accounts

  • Money markets

  • Non-qualified “taxable” investments

Long-term investments can be illiquid. This is money that can be difficult to convert to cash, or difficult to access due to taxes and penalties.

Some Examples of relatively illiquid places save

  • Retirement accounts – 401(k)s, 403(b)s, IRAs, Roth IRAs

  • Real Estate Equity

The most prominent mistake people make is over-relying on their 401(k). While retirement accounts are great for 30-40 years from now, they’re not so useful if you need that money before then. Money inside of a retirement plan is inaccessible without taxes and penalties until the age of 59 ½. Rather than putting 100% of your annual savings into a 401(k), consider reducing your 401(k) contributions to the company match and saving the difference in liquid places.

Here’s an example.

Someone making $50,000 should save $10,000 to become a world-class saver. That $10,000 should be equally divided between: cash savings, taxable investments, and a retirement account.

Remember, it’s about balance.

Step 4: Live Debt Free

For most people, especially those just beginning their careers, debt is the biggest concern. Between student loans, car payments, and credit cards, it can be overwhelming. Rightfully so! Short-term debt can be a destructive force and can significantly affect your wealth-building results. However, knowing when to handle short-term debt is equally as important as not having it. Once you’ve protected your today’s, become a word-class saver, and prepared for life’s curveballs, then you are in the position to attack debt.

High-interest debt should be the first to go. It’s nearly impossible to make progress with investments when they’re paddling upstream against 15-30% interest rates on credit cards. Pay off cards with the highest interest rates first. Once the credit cards are paid-off, reroute the funds that were going to the credit card company to somewhere productive on your balance sheet. That might mean you boost your emergency fund or start saving more into longer-term strategies. But regardless of where choose to save it, the goal is not to spend it!

For lower interest debt like student loans or mortgages, don’t be in such a hurry to pay these off. The interest portion of your payments is tax-deductible, and lower interest rates may allow you to out-earn your cost of borrowing out.

Debt can feel like climbing a mountain where you never reach the summit. Be patient. Understanding that you don’t have to pay off everything right away gives you the freedom to breathe. You can’t let paying down debt get in the way of protecting your income, saving for your future, or preparing for what life has in store.

A New You

Improving your financial health is going to be difficult. There are going to be times when you’ll feel frustrated, angry, and want to quit. However, struggles are par for the course.

The key to success is knowing that setbacks are normal and having a plan to get back on track. Discipline is required, yes. But transformations aren’t about hitting some arbitrary number or committing to a goal for a finite amount of time; they’re about becoming a better version of yourself.

It’s about becoming fiscally fit.

Enjoy the process, and the results will come.

Stay savvy, my friends.



[1] U.S. Social Security Administration Fact Sheet, October 2015.

[2] Council for Disability Awareness 2014 Long-Term Disability Claims Review

[3] This calculation does not take into account the effect of fees and taxes. 6% is an arbitrary rate of return that may or may not reflect actual market performance. Past performance does not guarantee future results.

By providing this material, we are not undertaking to provide investment advice for any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your location. The Living Balance Sheet® (LBS) and the LBS logo are service marks of The Guardian Life Insurance Company of America (Guardian), New York, NY. © Copyright 2005-2020 Guardian 2020-92335 Exp. 01/22

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). 244 BLVD. OF ALLIES PITTSBURGH, PA 15222. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Lifetime Financial Growth is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services, and make no representation as to the completeness, suitability, or quality thereof. CA Insurance License #0M64579

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