High inflation, low housing supply, and recession warnings: When people think of financial planning, they usually don’t think of joy – especially in today’s economy.
“I think that joy has to be rooted in your financial planning,” Mitlin Financial Founder Lawrence Sprung told Yahoo Finance Live (video above). “And there has to be a reason why you are doing what you’re doing.”
When it comes to planning out income and expenses, people should not, he said, just focus on the money. They should figure out what they want to build their wealth for—and what they will do with those funds. Sprung also criticized financial advice that focuses on taking away items that make people happy in their everyday lives.
“People talk about, ‘oh, well, maybe you shouldn’t go get that cup of coffee, because if you save those few dollars every day and save it for the next 20 years, you’ll have $25,000 more for retirement,” he said. “That’d be great, but we also have to think about the joy that we’re getting from that money and what we’re doing today. And if that’s important to you, that cup of coffee, then as long as you plan for it, do it, use it, drink it.”
Sprung acknowledged that people frequently get overwhelmed by the idea of financial planning because they do not have a game plan—and they’re juggling multiple jobs, children, and other financial responsibilities.
The first step, he said: Creating a budget that isn’t stressful. That starts with aggregating income and expenses. From there, it’s easier to find out what needs to be cut.
“A lot of times, there is some fat in there that you could usually trim, maybe some old subscriptions, maybe some subscriptions that you have that you’re not using as much of, services that you can downgrade,” Sprung said. “But get an idea of what that budgetary process is, and then take a look at where you are today versus where you want to be.”
Sprung added that it is also essential to attach the financial budgeting process to exciting future plans and joyful experiences – such as buying a house, a second home, a new car, or sending your children to college.
“[A]s you put that money away for those goals, it’s not like you’re feeling the pain of putting the money away because you’ve now attached that joyful experience to what that money and those goals and objectives are,” he said. “So if you inject joy into the process, it just makes it easier. It makes it more beneficial. It puts you on a path that you want to plan. And, ultimately, puts you and works you closer to reaching those goals that you want to reach.”
Jared Mitovich is a writer at Yahoo Finance. Follow him on Twitter @jmitovich
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Read the latest financial and business news from Yahoo Finance