Frank Congilose and David Suckey of C&A Financial Group spend some time sharing their insights on financial literacy and how factors like education, accountability, and coaching are key. 2023-153968 Exp 04/25
To learn more about C&A Financial Group or to consider a fulfilling career with us, visit us online at www.ca-strategy.com for more information.
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Frank Congilose and David Suckey of C&A Financial Group spend some time sharing their insights on financial literacy and how factors like education, accountability, and coaching are key. 2023-153968 Exp 04/25
To learn more about C&A Financial Group or to consider a fulfilling career with us, visit us online at www.ca-strategy.com for more information.
Follow us online on Facebook, LinkedIn and YouTube
The following show is for informational purposes only. Individual situations may vary and the information should be relied upon only when coordinated with individual professional advice.
Speaker 2:Welcome to discovering responsible wealth. This is your host, Frank Angelos, our guests today, executive vice president of Ritzy and a financial group. Dave Suki. Dave, welcome to the show. Always good to be here frank. So hard to believe we just finished the first quarter of 2019 here we are in April and April is financial literacy month. So we're going to spend a little time sharing with our listeners a little insights on financial literacy. So you know it's interesting is you know when we talk about financial literacy, people think, oh that's not for me. But you know, it's kind of for everybody. I mean when you think about it is like, you know, Dave, what's your perspective on financial literacy? Who had thrower and so forth? Well it is for all of it
Speaker 3:was frank cause I've been doing, this is my 20th year right? And you've been doing it 36 36
Speaker 2:years. I started when I was 10 so I learn new stuff every month.
Speaker 3:So I think it's a constant education. Um, it, we never stop, you know, and as far as literacy concerns, you can have varying degrees of it. Things that the 43 year old version of Dave Sucky and Financial Advising and coaching knows is different than when the 23 year old when I started. So I think it's for everybody and we're constantly learning or we're falling behind. I think you, you said that a lot of years ago. I, you're not moving forward. You're moving backwards.
Speaker 2:Well, you know, it's interesting is, you know, um, from time to time I'll visit with someone. I had a couple in yesterday and uh, there are new clients of the firm and we're having a conversation. And I just said, it's a very simple question. And I said, how long have you lived in where you're living? And so they told me it's about 12 years. I said, oh, at the same house and everything else. And they go, yeah. And then we were talking about their current income and then we were chatting a little bit more about it. And I said, back 10 years ago, how much were you earning then? Yeah. And when they thought about it, it was about half. And so I turned, I said, so are you saving that other half of your income? And they just smiled. And I said, hmm. I said, sounds to me like that savings you were doing. So if you're doing 401k at 10% or whatever, you're still doing 10% but you're making 100% more. So it was like there was a gap that occurred, you know, with regard to, you know, where you're at, what was occurring and so forth. So they looked and they go get in and look at it that way. And I said, there's strategies that we have to look at to help that. How common is that, frank? It, it's really common. The more we make, the more we spend. And it is what it is. And that's why, you know, we talk about financial literacy and you know, that's why we say is, hey, if you're young and just starting out, it's for you if you're already established but you're in accumulation mode because you know, you're still bill, you're working, you've got cashflow and so forth. This is the time you got to set yourself up because the next move is going to be distribution. And it's even for distribution. Because if you're in distribution and you don't have this under control, you live in fear.
Speaker 3:Absolutely. So you, so your focus of your literacy will maybe be dependent upon where you're at, what stage in your financial life you are. Perfect. Perfect. Right? So for me, uh, um, you know, I have three kids, a seventh grader, sixth grader and one that's going to be in kindergarten next year. What do you think is on, you know, my family's mind at times, what that little cheap conn college, right? What you went through with three of your children. So of course, you know, my focus may be that among other things, but it depends sometimes where it stage you're out in life. And where your energy and focus may be. So you want to become educated in that different area as well as the fact, frank, we, we do holistic planning. One area can be focused on but you can't forget about the others. And I think
Speaker 2:what happens is sometimes what we do is we tend to go along in life. So we're going along, going along, going along and we don't always keep score. And I think the key really is that we should be keeping score from year to year on how we're doing, both in asset value, also in cashflow. And also when we talk about asset value and cash flow, um, they're not always the same. In other words, you can have substantial net worth that you're building, but it may not really be necessarily that you're feeling wealthy because the cash flow may not go along with it. So if you're, as an example, so if you've built a lot of equity in a house, um, the houses in an acid or is that a liability?
Speaker 3:So maybe you will take that. Most of the times for a lot of us, you think it's an asset. Like initially I, you know, I bought it for this. It's worth that I've upgraded this, you know, and uh, it's really a deferred asset. If we're lucky, why we live in it, frank, it is a liability. It, we see it with clients. It's, it's, it takes money from our pockets. It doesn't put money in our pockets. So that really to me is the definition difference between an asset and liability. Is it providing me cash flow or is it taking cash flow out of my life and I have to keep it up and I got to pay bills and taxes and expenses on it. It said a wealth enjoyment is really what it is. Like, you know, it's why we all like to have nice homes for the most part. And living in a nice area. Nice town and community. It's not really an asset and it does not show up in retirement really is an asset.
Speaker 2:Yeah. It's a feel good cause it, you know, when you do a financial statement from year to year and you write down, all right, I got my house and let's say it grew in value, when does towards 500 or whatever that number is and the mortgage went down. So I've gotten more equity. So your net worth shows better, but it didn't do much for cashflow. Right. As a matter of fact, if the tax assessor's following you around it probably ate up a little bit more cash flow cause they're gonna get their piece of. So, you know, just as we talk about, you know, one of the things and keeping score is, you know, um, especially, you know, we got through the first quarter, um, market wise as good first quarter, not a bad thing to do a financial statement, just kind of identifying where yet, what are your assets, what are your liabilities? And then also when you look at each asset, um, you know, I have a new acronym, you know, I have a new book coming out and I came up with, I call it ACF, which is what's that asset cashflow? And that I think is a barometer of how healthy you really are. Says an example, if you were to look, he said, wow, my net worth 500,000 my net worth is a million. And then I said, okay, so assume you stop working today. How much cash flow does that acid do? Those assets give you? If the answer is none, it's like you're fooling yourself because cashflows, what's going to dictate your quality of life. So you know cashflow is very relevant and asset cashflow is very key
Speaker 3:and you've got to realize early on in your, in your working career and through your working career, you are your best asset. Without question, he would provide the most cashflow into your world in any other asset, most likely you mature. And I'm seeing clients, they get older and start to think about retirement they may have accumulated, you mentioned accumulation phase, other assets, real estate, business interest portfolios, 401ks that can provide cashflows now or in the future. But that takes time, frank. And the only way you get there is by savings.
Speaker 2:Accumulate the right assets. Yes. So key, you got to start somewhere. So we mentioned about tracking asset values. We mentioned a little bit about uh, cashflows. And you know, it's interesting, you know, we, nobody wants to be on a budget. You know, it's like, you know, if I bring up the B word, I don't want to do that diet. I want to be on diet. Nutrition plan sounds better than so. And so what sounds better than budget is have a spending plan and then you're spending plan, it's going to break down to two things. You're going to have fixed expenses each month. That's the mortgage, it's the taxes, it's the insurances. Um, and then on top of that, you're going to have variable expenses. And what we're not looking to do is to go through and say what you should or shouldn't be doing. What we're just saying is track it. You know, it's no different than if a, if Dave, you said to me, hey frank, I'm going to try to lose weight. And I said, here's what to do. Start writing down everything that you're eating. Just subconsciously. What you'll start to do is you'll start, I don't want to eat that cause it's gonna. You know, as soon as you start tracking it's like, should I be doing it? And you start actually holding yourself more accountable and you make intentional yeah.
Speaker 3:Decisions. Yeah. See, so in a parallel that it's like, you know, the most successful weight management program in the world.
Speaker 2:I do know, but go ahead. Weight watchers. Yes.
Speaker 3:Why you think of that has been around the loan accountability, Accountability and coaching. So they're keeping score and there's coaching and during the week there's a system in place, a process they show up to the person that people follow. And as they get on track with it, they find that they make a shift. And I, frank, you know me, I talk about one degree shifts. So in weight loss, you don't lose 30 pounds over night, but you might lose two and then another two and then another three finances and not all that different. If you're keeping score, you might be able to save$1 here,$100 there,$500 there. Next thing you know, you're starting to accumulate savings and having a discipline around what you're doing and behaving with your money.
Speaker 2:So having said that, you know, um, we all have heard and we've heard since we're young and most of us heard when we start out, hey, pay yourself first. You know, that's, that's the cutest longterm savings. However you have to have a process for pay yourself first. Yeah, so some very simple, uh, Dave maybe just walked people what a process might look like and there's all different variations. We have actually a friend of ours is coming out with new technology that we'll talk about in a couple of months on a one of our shows, but maybe just talk about that simple process of what somebody could do.
Speaker 3:It's interesting, frank money comes into our world and it all tends to go to the same spot. It goes into our bank account or checking account. We pay our bills and then we try to save kind of what's left. What if we just changed the flow? You call inflows, right? What if the inflow went to a separate account? First Wealth Coordination Account. And a reservoir type of account where you can save the money and then you live off of a spending plan. Right, so it hits that account first. Then you send money from that account into a checking account and that's what you live off of and pay your bills fixed and a variable. Right, but you're saving money first. What's interesting is this, I said to all my clients in the beginning of last year, you know that you all got a raise when they looked at you like, what do you mean? Well, in your paycheck, because of the tax law change for most people, their paycheck went up a little bit. Yup. What do you think we do when the paycheck goes up a little bit and we spend more and they just live into it. It doesn't, sometimes it's not even thinking about little frank yet. If we measured it, you said You keep score on it over five years or 10 years, what that money may have been worth had you saved it. Maybe it's going to help pay for college or help pay for something in your life of vacation. Something that you don't have to put on a credit card or some other debt. So little shifts like that in terms of how you handle your month to month finances can make a big difference.
Speaker 2:So just that process alone, which is, you know, and then in that first account that you had mentioned, what happens then is you end up accumulating more because even like, you know, we have clients that'll maximize it 401k maybe halfway or three quarters of the way through the year and next thing know their paycheck increases on the tail end. And so one way or the other that account's gonna accumulate something and then it's intentional. I always say it's either it goes to the we account, which is, hey, why don't we go out and have fun with it? And I call that wealth enjoyment or it goes to the let's do something for our future account, which is let's put it into something smart, build more assets and you know, put it towards something that makes sense. So that was, you know, how we would look at cashflow. And then the last thing I think, you know, just touch on a little bit when we talked about financial literacy is really understanding the significance of the timing of money and the timing of savings. And so it's interesting. So you're talking about kids and military college and so forth. And I remember all of my kids when they were finishing, you know, they start working somewhere and you know, they go, Hey dad, I got this, you know, from the HR department, the signup for 401k or whatever. And I said, those are great programs. I said, but there's an order of things and if I start doing the wrong term savings, you know too soon it leads to problems down the road. So maybe Dave take a couple of minutes and talk about, you know, the different aspects of, you know, timing of savings and you know,
Speaker 3:what people should be looking at. Know we say a good short term savings plan. So oftentimes doesn't work really well in the long term. The good longterm savings plan oftentimes doesn't work really effectively in the short term. Just so in terms of our lives, if we figured out, okay, between now and let's say two to three years from now, I would classify as what I would say short term. Yup. Do I have money in my life, save somewhere that if I needed it for, for anything, something good. Maybe it could be something bad. Okay. Um, a life event, anything that happens, do I have money stored up in that framework that allows me to access it from that next step? We call it mid. So That's short term money fragment, midterm money, let's say say to the listeners, think about it in terms of let's say three to five years to let's say 15 years out. Opportunity money we call it. Yes. So if you're thinking about saving for college and you have a newborn, if you're thinking about buying a second home, okay. Investing in, so on the property for real estate and an income purposes, whatever that is, there should be money placed in your world and your balance sheet that's performing so that you can have it available when you need it. And then ultimately where people get stuck sometimes is they immediately go to the long term. So they s they store money away right away into longterm savings plans like Iras, 401k's. Again, great accumulation vehicles, not great assessable liquid vehicles where you, if you're prior than 59 and a half to get funds out of. See it all the time.
Speaker 2:And I always tell people, as you know, I'm not a fan of credit cards, I say credit cards and the ordination of our country because the interest rates are so high. But the reason credit cards become out of control or they end up on someone's financial statement as a liability is because they didn't have short term funds available when an expense showed up. So when the radiator went, yeah, on the car, whatever the case might be, and I had to get something fixed, or you know, the heating system at Almont, it was, you know, several thousand dollars it was like, I don't have any cash. We throw it on a credit card. Next thing you know that credit card was that 0% rate, which is 1820 4% and I might've had an an IRA or something else, but the cost of accessing those funds may have been 30 or 40% between taxes and penalty. So Dave, when you were just talking about having short term, mid term and long term money, it's extremely important. Yeah. And Frank, based on where you're at in what stage in life you are, we talked oftentimes write about the three R's. So early on for literacy, you gotta understand your rate of savings throughout your whole life is really critical. And then once you understand that you can start, which is what we used to get questions about, where should I invest my money? Which what's basically someone's asking, what is my rate of return? I want to make sure it grows more than inflation, right? Because we need it to, and then at the end, in terms of when we get to retirement, you're having conversations all the time with clients about what's called their rate of distribution. So they're all intertwined, right? But it all starts with understanding and assessing where you're at today and then how to make sure you're managing your affairs as efficiently as possible. Great insight. And as we're wrapping up, um, we'd be remiss if we didn't say, you know, anytime that you're looking at financial literacy and you're getting your finances in order, you always have to protect today as you're planning for tomorrow, which is making sure the auto insurance, the homeowner's insurance, the disability, the life, making sure your insurances is right when you're doing it as well. Cause you can't leave, you know, you think of castle and moat, which is if your castle is the wealth that you're building, it always needs sab, that moat around it to protect it from things that happened because things happen. So, uh, frank. Absolutely. So would that being said, for all of our listeners, you've been listening to discovering responsible wealth, uh, you've had Dave Suki over at CNA financial group. One of my partners there, and this has been Frank Cangialosi, we wish you a great month and a great spring and we look forward to speaking to you next month.
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