On the latest episode of The Get Ready Money Podcast, I spoke with Hirsch Serman, Founder of Lifecycle Financial about changing the way we think about money and creating positive outcomes during times of change.
In this episode we discussed:
Hirsch Serman, MBA, CDFA®, CPA founded Lifecycle Financial, LLC through his personal financial experiences related to several life cycles including divorce and an aging parent. He has worked in finance for over 20 years (including financial planning and tax) and has taught on the university level as well as conducted seminars for high school youth on personal finances. Hirsch is a member of the American Institute of CPA's (AICPAs), the National Association of Divorce Professionals (The NADP), The Amicable Divorce Network, Institute for Divorce Financial Analysts (IDFA), and the American Association of Daily Money Managers (AADMM). Hirsch is the host of theFinancial Wellness Hour radio show.
Connect with Hirsch Serman:
Website: www.lifecycle.financial
The Financial Well Hour Radio Show: https://lifecycle.financial/financial-wellness-radio-show/
LinkedIn: https://www.linkedin.com/in/hirschserman/
Facebook: https://www.facebook.com/groups/womansfinancialwellness
On the latest episode of The Get Ready Money Podcast, I spoke with Hirsch Serman, Founder of Lifecycle Financial about changing the way we think about money and creating positive outcomes during times of change.
In this episode we discussed:
Hirsch Serman, MBA, CDFA®, CPA founded Lifecycle Financial, LLC through his personal financial experiences related to several life cycles including divorce and an aging parent. He has worked in finance for over 20 years (including financial planning and tax) and has taught on the university level as well as conducted seminars for high school youth on personal finances. Hirsch is a member of the American Institute of CPA's (AICPAs), the National Association of Divorce Professionals (The NADP), The Amicable Divorce Network, Institute for Divorce Financial Analysts (IDFA), and the American Association of Daily Money Managers (AADMM). Hirsch is the host of theFinancial Wellness Hour radio show.
Connect with Hirsch Serman:
Website: www.lifecycle.financial
The Financial Well Hour Radio Show: https://lifecycle.financial/financial-wellness-radio-show/
LinkedIn: https://www.linkedin.com/in/hirschserman/
Facebook: https://www.facebook.com/groups/womansfinancialwellness
Are you looking to get ready, be prepared and transform your financial future? Then you've come to the right place. This is the Get Ready Money Podcast with Tony Stewart, where Tony has insightful conversations with financial experts who are changing the way we think about money. Watch up on the latest financial trends and hear practical advice from Tony and his expert guests so you can build healthy habits that work. Be empowered with tips for implementing small changes that can have a big impact on your financial future. So sit back and get ready to hear from today's guest.
Speaker 2:Welcome to the Get Ready Money Podcast changing the way we think about money with Tony Stewart. I'm pleased to be joined today by Hirsh Sermon. Hirsh is the founder of Lifecycle Financial. In this episode, we'll be discussing Hirsh's thoughts on how we change the way we think about money and creating positive outcomes during times of change. Hirsh, welcome to the Get Ready Money Podcast. Pleasure to be here. Thanks for having me on. Yeah, excited to have you here. So you know, let's get started. Tell us a little bit about yourself. What is your origin story?
Speaker 3:Sure. So I've been in the finance world my whole life. I'm a CPA for almost 25 years. At this point, you know, about 11 or 12 years ago, I went through three major life cycles. That's why I called the company Lifecycle Financial, and the bottom line is the big light bulb that went off for me is we teach our kids you know how to cook a meal, change a tire, whatever it might be, but we really don't educate our kids on how to manage their finances, whether it's their daily or their long-term planning. And that was the big light bulb in every one of those three life cycles. That happened in about two years, and that's really why I do what I do today and focus on people going through transition.
Speaker 2:Yeah, well, that's so important, you know, as my son right now. I was in college and you know it's so much to help them figure out. Like, okay, you have your first credit card, don't spend all the money right away. You know, leave a little bit in your bank account, be able to pay it off each month, you know, and all the other things too.
Speaker 3:It's actually an area a lot of my clients have asked me to work with their kids coming out of college because they think they've got this big newfound income all of a sudden and they really don't have what they think they do and they don't want their kids to get into debt by the time they're 30. They want them to you know there's healthy habits by the time they're 30. And so I've got a program and you know it walks them through credit cards. It talks through debt, it talks to student loans, but some of the things that are also key is you're going into the workforce. What are the benefits all about? How do I fill out the paperwork? How do I get myself set up on payroll, like a lot of those kind of things really are do it yourself now, and people don't always do it right, and so they can cause some issues for themselves as they transition out of college and into, so to speak, the real world.
Speaker 2:Yeah, definitely. Employee benefits are a whole other subject we can spend many episodes talking about. Yeah, you know, it's been my experience. I even did some open enrollments very early on in my career and you know there's just not good information to help people make their benefit selections, you know. So that's an important thing. So for people watching and listening, like always there will be links to Hirsch's website so you can find out about his resources and see if they're right for you. So, hirsch, why is it important to focus on life cycles when thinking about our money?
Speaker 3:So in general, I think there's a heightened anxiety or stress when you go through a transition. You know when they talk about the most stressful times of people's lives. It's when there's a change and so when you emotionally not at your best, you don't make the best decisions, both financially and non financially. But I think that's a big piece of it and the truth is as well. In general, our finances are more about the emotions associated with our finances and the finances themselves very often. So I think putting it all together, raising that stress level, obviously really having the right plan or the right thoughts, are going to help you significantly as you go through those transitions.
Speaker 2:Fantastic. So you know how do we go deeper, how do we create those positive outcomes during times of change.
Speaker 3:I think one of the biggest things that people don't do that they should. The first thing, I think you know. Coming back to what I said earlier, I think most people wing it when they're doing their finances, but one of the things I do, for example, I work a lot with people going through divorce. I work with people who are seniors, often transitioning out of the workforce and really getting a full, deep understanding of what are your values, what are your priorities, what do you want it to look like after this, so to speak. Transition or event is over, so you go through this life cycle and you want to have some goals as to what it's going to look like. You know, and I think, as I said, I work with people going through divorce, new college grad seniors. They have very different focuses, but keeping that in mind and really, you know, for a new college grad starting their career with financially positive habits, it's going to be an amazing thing 20 years and 40 years down the road when they starting to pay for college for their kids or when they starting to think about retirement. So really having a different perspective, not just living for today, which I think unfortunately too many people do, but having the goals in mind and understand what they're trying to accomplish. You know so.
Speaker 3:Another example, just real quick, going through a divorce. The divorce you may be thinking you know, am I going to be okay financially? Well, what does that mean? What is you know? What do you want in your life? Well, you know, can I afford the house? I want to keep the house. That's a whole. I spent a whole session often just on discussing the house. Is this a financial decision, emotional decision? Just because you can afford it, is it still the right decision? All these kind of things, A lot of things that can play in. But again, if you're just thinking a week or two down the road instead of a year or two years down the road, it's going to make a big difference in how you go through that transition.
Speaker 2:Yeah, no, and I'm with you 100%, you know, as I urge people to think about their goals first rather than particular products or outcomes. You know, and like with divorce, that that's a great thing to discuss is the house. You know that's the biggest asset. But does it make sense to keep the house and is it part of your goals and values? You know is. Is it a good opportunity to move and downsize? You know, are you in the right neighborhood where you want to be? You know you're, the rest of your life is changing and maybe you need to. You know, or want to change where you live. But people oftentimes get duck in that like, ok, well, let's divide the house, what are we going to do with it? Rather than like, ok, well, right, is the house part of, you know, our plan?
Speaker 3:And I'll give you, talking about the house, a perfect example in a divorce where, where often this happens, somebody will say to me you know, I'm just going to stay in the house two or three million years till my youngest graduates high school.
Speaker 3:All right, well, let's think through that situation right. If you sell the house today with your spouse while you're still married, you may get up to $500,000 capital gains exclusion. If you get divorced and hold it for two or three years, 250 or 1000 of that goes away. So you could be creating a capital gain situation or on average, it's roughly 8% to sell your house between commission and other closing costs. Are you going to want to split that with your current spouse or you want to get divorced and then you've got to absorb the entire cost of selling the house to three years later when they graduate. So that's an example of maybe a better example of what I mean by don't just think for now, you know, month or six months down the road, but really looking and taking each of those major decisions and maybe looking at it three years, four years, five years down the road and what the impact.
Speaker 2:Yeah, and I think that's really valuable advice. Is you know it's thinking through each of your options and how it's going to impact you down the road? Is you know it's like thinking back? You know, like you said, is looking four years down the road and going, okay, if I had done this option, how would it be different? Yeah, and I think people oftentimes rush in or they have tunnel vision, especially during a stressful time. It's hard to take that step back and say, okay, here are my options when they're starting to deal with the emotional trauma that comes with a change in marital status.
Speaker 3:Right, and I will say I think you know, especially more recently the last five to seven years, there are so many wonderful resources out there, like your roadmap as an example, just helping people through the year, guiding them in kind of incremental steps in how did you really change your, your life, financially, or working with someone like myself who is engaged in that specific task at hand, if you want to call it that.
Speaker 3:I don't think a lot of the resources we see around now we're around even 10 years ago. You know, and I think really you don't have to go at yourself, so to speak, and maybe it's not through a school or through your parents are you learning some of these things. But you know, when we spoke a couple months ago and I found out about your roadmap that time, I've signed up for it, I've read them. I think they great ideas of just just something for the week. Just, you know, implement this and bring it into your life. And, as you said earlier, small things can make a very large difference over time, right? So I think, drawing on the resources that are out there, I think are huge and six months, but I think six years or 10 years what they could really be doing, you know, as you change your habits and as you develop new, healthy ones.
Speaker 2:Definitely. And you know, I look back to John Wooden for those who may not be familiar with him. He was a one of the best all time college basketball coaches and he said you know, it's small details that matter. You know now it's the thing he honed in on as a big part of his formula for success. So first let's switch gears for a second and talk about the get ready questions. So the first one is what is one simple thing you can do each year to set yourself up for financial success?
Speaker 3:I think it comes back to a lot of what we've been saying. You know, there's, there's resources out there. Don't wing. It is the overriding. Let's get educated. And then going back to our goals and our priorities what is it that we're looking? What is it that we want for this coming year?
Speaker 3:You know, a lot of people say I want to take a great vacation. Well, if you don't plan ahead, that can be an overwhelming financial burden for you, you know. But being able to think it through becomes a much more less daunting thing for you to look at as you go through it, you know. So we've been speaking a little bit more about new college grads and divorce.
Speaker 3:Let's take, for example, a divorcee, right. What are they looking for? What are their goals? What are they thinking about? Do they want to travel and see the grandkids a little bit more in the kids, right? Those are the kind of things that you want to think about. So it's really planning ahead, looking at your priorities and saying how do I fit these in and other things I might have to scale back on in order to accomplish what I want to. And that's the big thing is those small adjustments. I don't have to cut it all out of my life, but I might have to scale back on a couple of things in order to accomplish the things that are more important to me.
Speaker 2:I think it's something that people sometimes overlook is that you can make small adjustments. It's not always a take it or leave it. The popular thing is like give up your daily coffee. Well, maybe, but can you give up your daily coffee a couple of days a week and make that small change and still enjoy? I think coffee is a good example for all of us, because it's a microcosm of all the other decisions we make. So, along this line is what is one habit that people can change when it comes to their money?
Speaker 3:I think that don't wing. It is a habit that people or winging it, I should say is really the habit. I think getting educated is an enormous piece of this. I've had so many people come to me and they are so clueless on how to manage their finances and they get a bill and they pay it right away, but they don't think it through. They don't necessarily look at the bill and go, oh my gosh, my cable bill. I'm not a big fan of cable, so I'll cut that one out completely. My internet bill just jumped $35.
Speaker 3:If you're just winging it and you're doing it by road, you're not looking at some of these small things that add up. And, as we said earlier, there's no one magic silver bullet that's gonna change your financial landscape. There's just not. It's gonna be a little bit here, a little bit there, et cetera, but you add $35 here, $50 here, before you know it. Over the year you're saving a few thousand dollars sometimes. And even more Understanding. I've got a client that I work with. He's in his 60s at this point, does a lot of woodworking and uses, subscribe to these gorgeous I mean absolutely gorgeous periodicals that would come in. And he said to me Hirsh, I haven't looked at one of those periodicals in three years. When I've been doing my woodworking, he goes to YouTube, he clicks play, he watches what he wants, pauses and goes and does it. He said why am I still paying $180 a month in subscriptions? Right, those are the kind of things that we can think about and be more present and stop winging it.
Speaker 2:As I said before, yeah, I think that's super valuable advice and that's where I was going, you know, when I wrote the Get Ready Blueprint is to get people to review the areas of their financial life that they put on autopilot. And if I understand you correctly, is what you're really saying is think about what's on autopilot, review things that are on autopilot.
Speaker 3:Yes, the order bill pay is an amazingly convenient thing, but it also can be a very expensive thing if you don't. So I'm not saying you have to hand write a check for every single bill that you have. I don't do that. I don't recommend that people do it, because then it just becomes frustrating in many ways. But it doesn't mean that you shouldn't be reviewing those bills. I review my credit card statement line by line. Just check that there's nothing suspicious there. Right, that's also where I catch. Did my internet bill jump up for $35 for the month? Oh, I need to make a call. What happened? Why did it change? What specials are you running now? I need to bring that down. So, yeah, definitely don't set it and forget it, as they say. Set it and review it, I would say is a much better approach.
Speaker 2:I love that, set it and review it, and I think I would urge people also to do. What you're talking about is review all these statements that you get, go through them line by line. Yeah, it's gonna take a little bit, but oftentimes you find things that you don't expect. And that's an easy way to be financially efficient and for me I do it with my wife is I go through it and if I don't recognize the charge, I ask her. The other thing and I don't know if you've noticed this it's a lot of companies bill under different names. So you go and you buy something from a company A and it's billed from a company B.
Speaker 3:Correct. Absolutely they, so to speak, doing business as. But when you see it on the bill and I do that almost every month because I have a daughter in New Jersey, I live in the Mid-South in Tennessee and I look at that and I say I'll text her or whatever and say, hey, did you have a charge with XYZ? She's said herself I don't recognize that, call the number and they answer with the name. That, whether it's a restaurant, whether it's a retail store, whatever it might be, puts it into perspective. So absolutely those charges, and you wanna verify them because sometimes I've seen they are not the charges that you think they are. So definitely wanna review them.
Speaker 2:Yeah, and I don't wanna pick on any big companies, but I also noticed that sometimes the amounts aren't quite the same as you pay at checkout. So I'd urge people to compare. You know, I mean you don't have to go through a $2 charge, but you know, if anything maybe over $50 or $25, whatever limit you set for yourself is to go back through and see if that's actually what you thought you were paying. Because companies oftentimes make adjustments. I'm not gonna pick on a big e-commerce giant that does that for people. We'll leave it at that. I think everybody knows who I'm talking about.
Speaker 3:Right, I think so.
Speaker 2:So, Hirsh, what money myth are you trying to break?
Speaker 3:What money myth? That is a tough one. I think there's a lot of myths out there about your money, the one, though.
Speaker 3:you know I do work quite a bit with people who are going through credit repair, if I can call it that. One of the big myths out there related to credit card usage or available revolving credit is you should use 30% of that revolving in a month. You can pay it off, no problem. But you should, and the truth is that actually is not true. That's actually a very detrimental number to hit. So I think understanding how credit works and understanding that with credit score, should I say there are two major factors that play in. One is how consistently do you pay it back, and the other one is the usage. This is that 30%. How much of that credit are you using? And when you get to 30%, the companies that monitor your credit actually look at that as you are reliant on your credit as opposed to just using it in a healthy way. They don't want somebody too reliant and depending on credit to get through the month, and that will drop your credit score. That's a big one that I work with for people.
Speaker 2:Yeah, and I think that's super important is credit scores, you know, and they also make a difference in your financial life, because they make a difference in the interest rates that you pay Absolutely when you take out a loan or a mortgage and they come back in so many different ways.
Speaker 3:It's got a ripple effect for sure.
Speaker 2:So it's not something people think about. So I'd urge you to go out and get your credit reports. Do a little bit of reading about it. You know it's great advice. So, hirsch, let's get out the time machine now. If you, what advice would you give your younger self if you could go back in time, knowing what you know now about money?
Speaker 3:I think the biggest one is just put that 1% more into your retirement. You know this. I think everybody makes mistakes. As I said, I've been in the finance world my whole career. I've still made mistakes.
Speaker 3:But long term, being able to just even save 1% more towards retirement or towards your savings Think about it at the average person, if they're coming out of college or even grad school in the early mid 20s and they work, let's say, till 6770. You got 45 years roughly of growth of that money. You know my kids joke with me. I showed them something when they were in high school. I said if you put money into an IRA from the age of 20 to 29. Okay, and you just stop there and you let it grow till you retire 6570 in that range.
Speaker 3:Person B says I'm going to party through my 20s, I'll start at 30, but I'll just, I'll put in that IRA every single year till I retire. I asked my kids who's going to come up with more? Right, remember the one person's putting about three times the amount of money than the person who started at 20. And they said oh, of course it's got to be the person who put three times more money in and it really doesn't work out that way. It comes out pretty close and I'm saying you can just put that 1% more over that 45 years. It makes a significant, significant difference. And again, now you have more options when you want to retire, how you want to retire. Do I want to work, do I not want to work? Or sometimes people unfortunately now have to work, and so this can really change your life in a vastly different way as you go through life.
Speaker 2:Yeah, well, you said so many things in there that I think are so important for people. As one is, you know, as you talk about the magic of compounding interest, right, and the longer your money's at work for you, the better off you're going to be, and it's you know, it's a subject that should be taught in school. I'm sorry to reach everybody to go out there and learn something about compounding interest. I talk about it in my newsletter once a month. There's tons of great articles about that. But I think the other thing that you point out is that people will need to think about their long term goals as well as their short term goals.
Speaker 2:Is, you know, we get caught up in like, oh well, you know, we need to get this new car, we need to go on vacation, but there's a trade off with when you'll be financially independent, and I've been using that phrase more than retirement is because I think that's what retirement is really about. It's when are you financially independent? Because, like you said, as age 65, you may not be able to stop working If you don't have enough money put aside unless you have a great pension plan right, which most people don't so, unfortunately. So you know, to wrap up is what is your number one tip on changing the way we think about money?
Speaker 3:So I am going to come back to living a values-based life. I think that is enormous. I think so many people are keeping up the Joneses, living the way that everybody else lives, and they don't really focus in on what brings me joy, what gives me fulfillment in what I do. I think this comes back to changing the habit, getting educated. Most people the statistics I see, 70% of people don't have a budget.
Speaker 3:If you don't have a budget, you don't know where you're spending your money. You often are spending money on things that don't bring you joy and you're just not even aware of it if you're not living your life in a more deliberate way. I think the family next door to you may have a similar home, similar number of kids, drive the same kind of cars and have completely different financial picture and need than you do, but you're trying to live their life, sometimes not your own life. So I think it's going to be cheaper doing it that way. It's going to be far more fulfilling and rewarding as opposed to frivolously spending money trying to find what brings me happiness and joy 100%.
Speaker 2:I think you said something super important that you also mentioned earlier is going back and monitoring all these different things. If you don't like the word budget, don't use the word budget, because it's all about monitoring your income and expenses. It goes back to your origin story of being a CPA is you have to monitor your company's balance sheet, which is your personal balance sheet. Know your numbers, just know their numbers. You should know your numbers whether or not you want to call it a budget or not.
Speaker 3:We get upset when the government overspends, but are we doing that ourselves and we just not even realizing it and not having the same reaction which we should be? You're right, we absolutely should be.
Speaker 2:I think the other point that I'm taking away from what you've been talking about is to be mindful about your spending and to think about what you're spending. So that's wonderful advice.
Speaker 3:And I'll just throw out one more quick one, which has been very effective for people, especially the impulse buyers. Just ask yourself the question. So, me Hirsch I'm going to say Hirsch is future Hirsch going to be really upset when he gets the bill? Give yourself five seconds to pause and realize I don't really need this item and put it back on the shelf.
Speaker 2:Yeah, that's great advice, and it even gets back to what we were talking about very early on, like with my son getting his first credit card. It's like you can't keep spending the same money over and over again. Exactly, you have to think about that as well. So where can people learn more about you? Your financial wellness radio show and your financial wellness academy?
Speaker 3:So all of that is actually on my website, or links to it, at least on my website, the company name. My company name is Lifecycle Financial. The website is lifecyclefinancial. That's that simple, nonetcom, it's just lifecyclefinancial, fantastic.
Speaker 2:And for everybody watching and listening. Like always, I'll have links to Hirsch's website, as well as his social media channels, so you can get in touch with him, learn more about him and his work. So, hirsch, thanks for coming on the Get Ready Money podcast today.
Speaker 3:This is great. I love what you're doing and I appreciate being a guest.
Speaker 2:It's been fun Well thanks, and I love what you're doing as well, because I think that changing this conversation to life transitions, life events, is really a different way and an important way to look at your financial life than focusing on the financial services and products, making sure you have the right financial services and products for the phase of life that you're entering. So I'd urge people to really check out what you're up to and thank you, oh sorry, and thank you everyone for tuning in to this episode of the Get Ready Money podcast. Please be sure to like this video and subscribe to the Get Ready Money podcast Until next time. Let's change the way we think about money.