By now, it’s likely you’ve seen an abundance of “personal finance essentials,” all focused on New Year’s resolutions. While I’m also here to offer personal financial advice, before to do so, I think it’s safe to start with why. After all, the “whys” are the reasons I stay motivated to keep my financial situation in order. When the “whys” become important and important enough, then the “must-dos” and planning become easy. As you read this, think about your motivations and don’t be afraid to ask yourself what your whys might be.

My three reasons:

1. Celebrate retirement: A friend and his wife go on a backpacking trip to celebrate their milestone. This one will be different from their previous adventures. It is designed to be flexible and unscripted – a three month trek of diving, hiking and exploring the Maldives, India and Nepal. Whether my fiancee Georgia is ready for a similar adventure or prefers a five star tour for our future retirement is another question. Nonetheless, their journey is inspiring and represents what financial independence means to me: freedom, choice and options. What is important to you about money?

2. Safety net: Half of Americans have less than three months of current spending accumulated in cash reserves, according to Bankrate’s July 2021 Emergency Savings Survey. One in four Americans say they have no emergency supplies. My wife and I learned to “not cross the hill without a full tank of gas” and to have a fund for the rainy days. We passed the same lessons on to our daughter. How to train future generations to build their safety nets?

3. Aging with dignity: Most people want to live with dignity and independence and not be a burden to anyone. However, life has a way of surprising us. I want to voluntarily give up my car keys when needed (hope I’m not a stinker by this time) and have no idea how bumpy my last years of life will be. I don’t have the impression that “the one who dies with the most toys wins”, especially if you are not in good health. How do you build and protect your physical and mental health in addition to your finances?

Now for these three tips, I think everyone hates to hear hopefully made more bearable if you have your “why” in mind:

1. While it’s best to save for retirement as early as possible… it’s also important to just save. Albert Einstein once described compound interest as the eighth wonder of the world: “He who understands it, wins it; the one who does not pay. Compound interest is all about reinvesting your earnings, earning interest on the interest, and helping to make your money grow faster. The earlier you start, the better. A person who saves $ 6,000 per year starting at age 25 accumulates about twice as much at age 65 as someone who starts 10 years later at age 35 ($ 928,000 versus $ 474,000 at a 6% return) . Two boxes: First, many investors start saving for retirement later in life. Priorities in their early years may include building their careers, buying a home, and educating and educating families. And second, no sophisticated investment strategy can compensate for insufficient savings.

2. Stop trying to time the market and other bad investor behavior. Even though we think we are making smart and rational decisions, we are often our own worst enemy. Emotions and prejudices get in our way, and we can be predictably irrational, says Dan Ariely, author of Predictably Irrational. A study by Dalbar, Inc., a company that studies investor behavior, shows that the average investor has below average returns. According to their 2021 study, the average equity investor underperformed the stock market by almost 1.5% per year over the 20 years to 2020. This gap is attributed to poor investor behavior, particularly the market timing, over or underconfidence, panic, speculation, leverage and sequel. Good market timing requires you to do two things exceptionally well: exit (sell) and reenter (redeem). You can have just one, but rarely both. Instead, it’s usually better to weather stormy market conditions.

3. Anticipate the inevitable. Many investors are eager to discuss tax and investment strategies, downsizing homes, and financing education. However, estate planning often takes a back seat or a “let’s come back to it later” attitude. The reasons can include mortality, disability (dementia or Alzheimer’s) and family dynamics to name a few. What would it take to have such ‘elephant in the room’ conversations?

May this wise advice help you secure your future with wisdom.

Brian Loy, CFA, CFP, is President of Sage Financial Advisors Inc. of Reno. Contact him at