Speaker 1 00:00:08 What's up, everyone. Welcome to the finance for physicians podcast. I'm your host, Daniel Raimi. Join me as we dig into what it looks like for physicians to begin using their finances as a tool to live better lives. You can learn more about our
[email protected] let's. Jump into today's episode. What's up guys. Hope you're having a great day today. We're going to jump into the first vitals check that we're going to talk through. Um, ideally your using these as, um, you know, similarly to your health vitals, quick checks, to see how you're doing in relation to the goal at hand, or what's most important or where you want to go. So we talked about last episode, making sure you were clear on your values first, so that you have something to measure against it's, it's really easy to kind of get led astray, whether it's from emotion or cultural polls or, you know, just kind of rolling with life.
Speaker 1 00:01:15 Um, it's, it's easy to get the letter stray from whatever your values might be. If you don't have that, like staked out and clearly defined. So key important first step is making sure you're clear on those values. We talked about that last episode, so definitely check that out. Um, once you're clear on those, you can start to say, okay, let's measure, let's start to measure how we're doing in relation to that and track it, track it over time to see, you know, are things changing. Are you moving in the right direction? Are you headed the wrong direction? So all of these are like kind of a lifelong things. Um, same thing, you know, anytime you're seeing a patient, you're always going to be checking vitals. It's just a regular thing you do to get a quick check. Okay. So first vital we're going to talk about today is the spending saving, giving ratios.
Speaker 1 00:02:10 What am I talking about? So what I'm talking about is, um, looking at percentage wise, basically, where is the money going you have to work with? So let's say let's use like round, uh, round numbers. So let's say you have $10,000 a month to work with, and we're going to just leave taxes out of the equation for today, just to simplify things. Um, and there, you know, you don't have much as much control over those, but let's just say you have 10,000 a month to work with. And so that's how much comes into your accounts each month. So the question is what percentage of that 10,000 is being spent and what percentage of that is being saved and what percentage of that are giving away. So a couple of quick clarifications when I say saved, I mean, save for longer term, like beyond even a year or so from now.
Speaker 1 00:03:12 So like, let's just say two years plus, so future savings. So what are you spending in the moment or in the current year? What are you saving for longer term beyond a year from now? And then what are you giving away? And so ideally you have an idea of that 10,000, for example, that you have to work with. Um, ideally you have an idea of how much of that is going to those broad categories. And this is so you, you, your mind might be going the direction of like budgeting. I'm not talking about budgeting, I'm not talking about like categorizing at all. I'm just talking about like, just a big picture metric. Like what's the total staying out of the weeds. So maybe your number, let's just say it's, um, you know, maybe it's, uh, 70% gets spent of the 10,000, so 7,000 a month you're spending and maybe a 20% is saved and 10% is given.
Speaker 1 00:04:10 So like, there's your a hundred, there's your 10,000 a month. So what the question is like, what are your percentages? Um, what's interesting. So I mentioned budgets, so this, this is totally different than budgeting. This is looking at like actual spending, not like budgeted spending. And so what's interesting about this. This is showing you like true spending. Most people do a budget and the problem with a budget is it's always underestimated. I mean, maybe one out of a million, a hundred, a hundred people is going to actually be accurate with a budget, but like 99% of people are, are very much underestimating when they budget. So this gives you a real world, like actual total spending idea of, you know, where, you know, how much in total is being spent, which is much more realistic. So I'm sure you're thinking, okay, well, what is, how much should I be doing?
Speaker 1 00:05:06 Or how do I even know what I'm spending or how much I'm saving or giving? So I think let's start with the easier ones saving is, is probably, um, easier to figure out it's for sure, going to be easy to figure out like what you're putting in your work retirement plans. And so let's say you're putting 20,000 a year into your 401k and you make a hundred thousand, so there's, that's 20% there. And then maybe you put another 10,000 into another investment account. So there's 30,000 total. So that's 30% of if you're making a hundred. So saving for those kinds of plans is a little easier to figure out now saving in savings accounts is a little harder to figure out. I think an easy way to do that is just to look your trends in how much your savings count balances going up. So a quick, easy way to do it is to say, okay, look at your savings, count balances today.
Speaker 1 00:06:08 And then look at them from a year ago, if they're the same when you net all of it out, if like the essential. So if your savings count is your total cash accounts is 10,000 today. And if you look at the balances a year ago, and it's 10,000 a year ago, basically you're not saving anything outside of work, retirement plans or whatever investments you have set up. So on the other hand, if that balance has increased by say, it was 10,000 a year ago, and it's 20,000 today, that's a really good indicator that you're, you're saving an extra 10,000 a year in cash above and beyond those automatic investment plans. So that's an easy way to, uh, back, you know, kinda, uh, identify what is being saved. Uh, giving is, uh, also typically pretty straightforward. Um, that's just a matter of like keeping track of where you give, especially when you give charitably, you know, cause you're going to need to report that on taxes.
Speaker 1 00:07:08 A lot of times now, if you just give kind of like cash or give randomly, it might be a little harder, but you know, really, all you have to do is just kind of keep track of what that is in most people in my experience do that. And so spending is always the hardest one. So, and a lot of people start with spending first and they try to figure out spending and then go to the other categories. What I would say to do is figure out saving and giving and then assume you spend the rest of it because you are, I mean, you ha you would have to, so if you can figure out savings and you can figure out giving and then, you know, what your take on pay is, then all you got to do is back into what was spent. So there's your, there's your numbers right there.
Speaker 1 00:07:53 So ideally you start with saying, okay, where are you today? So your, your current vitals for spending saving, giving, what are those percentages for you today? And so then you got to say, okay, what are we measuring against? So like, let's say you're spending 70% saving 20% giving 10%. Is that good? I have no idea. It depends on what's what you're working towards. What's most important. So that's where you, you know, revert back to, um, you know, what those values we talked about what's most important and you know, you do a values check. So maybe your, your goals and values are to, um, give charitably and maybe 10% is your, um, you know, goal there. Or, you know, maybe it's to give as much as you can, maybe your savings goal is to, or your value there is to, to have a, uh, you know, be on track for being able to be financially independent by age 60 or whatever that looks like.
Speaker 1 00:08:58 Um, ideally you are able to work in or calculate how much that's going to take savings wise. So this is probably a good part of the conversation to kind of take a time out and, um, talk a little bit more about strategy here. So I'm talking big picture today. A lot of this stuff you can easily get into the weeds. So, um, there are a lot of, uh, you know, more detailed calculations that go into all this stuff. So when I, when I start to say something like retirement, making sure you're saving for retirement and coming up with the percentage you need to save for that, that in itself is like a big old topic and you can spend weeks and months and years on it. And so for the sake of today, we're just talking big picture. I'll circle back to that towards the end of this series.
Speaker 1 00:09:54 Um, when we talk about like actually executing on this, ideally either you're doing that yourself, you're, you're able to, or you're in a position to be able to calculate these things yourself and you have a good process for that, or you're working with someone like us, like we're financial planners, that's kind of what we do. So ideally you are working with someone like us, or you're doing it yourself and you have a good process so that you can quickly calculate what those numbers need to be for you to be on track with those values. So just wanted to kind of take a time out and make sure and clarify that first I'm going to stick to big picture. There is a lot more to this we'll circle back to the execution aspect towards the end of this series in a few episodes ahead of this one.
Speaker 1 00:10:39 Okay. So ideally you have an idea of where you are today in terms of spending percentage of income, saving percentage giving percentage, and you know, that actual number. And then, you know, by this point you have an idea of where you want to go, what's most important and you can measure against those values and you can say, you know, so this is as I'm recording, this is like November, November 30th. So we're getting towards the end of the year. Uh, so you can also use this vital to start to say, okay, what do I want to work towards, uh, in the future? So let's say your income is going up next year. And so, you know, what do you want to do with it? So ideally this is about being intentional and having a good pulse on things. And so maybe you start to look at what do you want your future?
Speaker 1 00:11:34 What do you want the, uh, this vital to look like next year? Um, and so go back to the goals again, like what of those is most important? Like what would have, which of the, uh, which of your values and goals would you like to put more, more emphasis on next year? For example, maybe it's, um, you know, saving for a home project. Um, so I ideally you say, okay, let's make sure that percentage goes up next year with my additional income and make sure we lock, you know, force it, you know, ideally you kind of forced this savings. Save first, spend the rest. Ideally you set up a system for making that happen ahead of time and automate it and, you know, get it out of sight out of mind and do that before the year starts even so that you have a target.
Speaker 1 00:12:26 So now in 2022 or next year, you're now measuring against a different set of vitals or different percentages, at least. So you can start to see how this might play out. Um, the key though is having a quick check. So ideally you have a process for you or a habit you've established a process for like getting a quick, uh, check on these and if you're not doing it, ideally you're working with someone or you're, you have a tool that can help you do it, and you are measuring it against your value. That's the most important thing. If you're not doing that, that's, that's what you need to start doing today. Hope this has been helpful. We'll jump into the next vital check. Next time we're going to be talking about network. So, uh, look forward to catching up then, and we'll talk to you later as always.
Speaker 1 00:13:21 Thank you so much for joining us today. If you found this valuable, please give us a review on iTunes and share with a friend. Also check out our website at finance, for physicians.co for all sorts of additional content. See you next time. Finance for physicians is not an investment tax legal or financial advisor. All content included in this podcast is for informational purposes only and should not be considered financial tax for legal advice. Material presented is believed to be from reliable sources and no representations are made by finance for physicians as to another party's informational accuracy or completeness, all information or ideas provided should be discussed in detail with an advisor accountant or legal counsel prior to implementation. If you don't have an advisor or like a second opinion, feel free to check out our website for recommended advisors.
