Is it better to eat well or sleep well? Can you do both? It’s an interesting question.
As a financial service professional, I am privy to the financial information of many business owners and professionals. My clients discuss the things that matter most, things they most care about, and the things that keep them up at night, staring at the ceiling at 2 AM -worried with fear.
We all know these issues: they are the things that drive us, that challenge us, what we most fear and care about, things we are scared to death of. Things like “what happens if I get sick,” “can’t meet cash flow,” worries about money, payroll, deadlines, acceptance, our parents, our kids, finances, bills, retirement, marriage, health, etc.
We all want to “live the life” in every way: nice cars, lovely homes, travel, remodel, educations, bar mitzvahs & weddings, tutoring, jewelry, vacations, Maestros dinners, looking good, and keeping up with our peers. The use of social media has furthered these desires, giving the perception of everyone else’s fantastic lives, displayed instantly – causing many people to feel inadequate and giving a sense that everyone is “eating well.” But, are they “sleeping well”?
“The truth is that most people have very little real accumulation for their future and also have very significant debt.”
For most of us, we have simply become accustomed to living this lifestyle and because of the demands on our income to create the life, many are ill prepared for our financial future. The truth is that most people have very little real accumulation for their future and also have very significant debt.
The concept of using debt to finance lifestyle has simply become ordinary. At the amazing (crazy) low cost of borrowing, it’s no wonder many professionals live above their incomes, financing many of these “must haves” via home equity loans, leverage or just (expensive) consumer debt. We are eating well!
This phenomena, living large and spending large, with little or no retirement accumulation to speak of, feeds into the consumption mentality that drives the U.S. economy, and in many ways it also allows us to earn great livings. (How many of us have jobs in the entertainment industry?)
Consider these issues:
- People will live longer than their money and ultimately will not have enough money to live the way they want to live
- Healthcare expenses will consume considerably more of our income in later years than people realize and few have resources to pay for the costs of care
- Longevity will have a devastating impact on the U.S. economy and create significant burdens
- Lifestyles will be forced to suffer significant changes if interest rates rise or if earning capacity dwindles
- Technology may make many current careers and ways of income generating become obsolete sooner than people think
- The lack of true financial planning is at the heart of our eat well/sleep well dilemma
- Living beyond our means and keeping up the perception of we can “do it all” is a hard reality to maintain, even for the wealthiest. From my experience, many of us are in a more serious debt situation than we realize. Sleeping well is a problem.
Those who can consume, because they are either truly independently wealthy or because they will receive a legacy from parents or inheritance, who have set the bar high for many “mere mortals” – the “keeping up” mentality is a real wealth killer.
For those not expecting a legacy, insurance planning is critical. And may help you sleep better!
“The concept of using debt to finance lifestyle has simply become ordinary.”
If people have significant debt, they absolutely need to maintain an appropriate level of life insurance to pay off the debt and to provide for the lifestyle needs of their survivors. Even if there is no significant debt to address, many still want to create a legacy for their families and children.
What if you become sick and can no longer work or provide for ongoing financial needs? This is the single largest exposure facing working professionals, yet few have adequate income protection in the event of sickness or illness.
Long Term Care Insurance
Even more significant and pressing is the challenge of outliving your accumulation, depleting assets needed for health and long term care. How many of us have seen relatives exhaust their assets paying for care and support for daily activities. How many are paying for support for others?
Ask any financial planner how many people are truly on track to live the rest of their lives the way they want to, or if they will be forced to make significant lifestyle changes in their older ages. Eating well and sleeping well don’t always go together.
With that in mind, what can you do today to assure you don’t wind up in dire straits, forced to make significant lifestyle changes or be dependent on your children?
Consider how establishing a financial plan, including adequate insurance protections, can positively impact you, planning for current and future needs, and also to assure a successful and financially stable retirement. Good financial planning may allow you to both eat well and sleep well. The choice is yours.