I admit one of my greatest challenges as a financial planner is understanding the feelings and priorities of clients who don’t look at money the same way I do. I am very much a numbers-driven person, and let cold, dry calculations drive my investment and personal finance decisions and recommendations more than most. My preference for spreadsheets over stories is so strong, I probably wouldn’t even be that tempted to read an ex-girlfriend’s diary if it were left open on my desk (though I’m sure someone reading this might want to test me on that, especially if I knew it contained confessions of financial habits).
As a former New York City resident, I was naturally drawn to start reading the two front-page articles showing what a week in the Big Apple looks like financially for someone earning $45,000/year vs a couple earning 12 as much ($540,000/year). In the first story, I was more interested in how this brand coordinator managed what seems like a very tight budget in the expensive city, while in the second story, I was more focused on law associate’s saving, investing, and tax planning practices. I noted that even with a relatively high income (and being in a high tax bracket), the law associate recently cut her 401(k) contribution to only $100/month (contributing the full $1,500/month could easily defer thousands this year in taxes), but that she was saving $10,000/month in a taxable account earning only 1.8% per year (short-term US treasury bills pay over 2.2% and are exempt from New York State and City income taxes, and she could net even more in tax-exempt muni bonds or in stocks, depending on her time horizon).
Happy Friday Reading!