A Letter To My Girls

As the year comes to a close, I find myself reflecting on 2022 in a variety of ways. Every year, I make it a point to review my life over the past year both personally and professionally to identify and to celebrate the wins – as well as understand where I have room for improvement. During my ruminations this year, however, I decided that this year will be a little different. With three daughters who have now entered adulthood,  this seemed like a great opportunity to write down my wishes and dreams for their future. My role as a father will never end, but my influence over them will likely lessen as they pursue their independence.

On a personal level, I hope that they will forgive Jill and me for the mistakes we’ve made in raising them, and know that we were only doing the absolute best that we could. And that they can confide in us like a friend, but respect us enough to remember we are still their parents. I hope that they will find a career they are passionate about, one that brings them fulfillment and purpose. And of course, that they will have a lifetime of a healthy mind, body, and soul. 

But beyond these, I would be remiss as a finance guy to not also share my advice for their financial lives. While it may not be a warm and fuzzy concept for discussion, financial issues can have a significant impact on our happiness throughout life. Being rich itself does not create happiness, but the reality is that we all spend money and for most of us it is a limited resource. Money affords us the autonomy to make choices about how we live our lives. So this week with our time together, here is the advice I offer to my strong and beautiful daughters – and to all you parents reading this.

Let me start by saying that being financially successful does not involve magic or secret formulas. Rather, it is the result of being disciplined with your money. It means setting a budget so that you spend wisely and are consistently investing money for your future. 

Now if you think about a “typical millionaire”, you might think about a top executive, surgeon or famous lawyer who makes a huge salary. But this isn’t necessarily true. 

Get this, folks – according to research by Dave Ramsey’s company, Ramsey Solutions, that couldn’t be further from the truth. According to his survey, The National Study of Millionaires, only 31% of those surveyed averaged $100,000 per year over their entire careers. One-third never made six figures in any year of their careers. The folks responding to this survey represent over 10,000 millionaires, who were asked about their careers, financial habits, and much more.

In fact, the top five careers of millionaires identified in this study are engineer, accountant, teacher, management, and attorneys. Clearly, not each of these are careers you’d typically associate with millionaire status. Don’t get me wrong – of course, the more you make, the more you should have to invest. But those with moderate incomes can also reach financial success with discipline. 

So here’s the financial wisdom I hope to impart on my daughters. First and most important – don’t spend more than you make. While this may seem elementary, you would be astonished how many people live outside of their means through loans and credit cards. According to Dave Ramsey’s survey,  94% of those surveyed said they live on less than what they make and nearly three-quarters of them have never carried credit card debt.

Make a plan to save at least something every month, starting when you’re young. It’s OK to start small, but by your thirties I’d suggest socking away at least 20% of your income. And of course, stay away from high-interest loans and credit cards. 

You then need to make a plan for investing your savings. When you’re young, your best bet will be investing. According to Ramsey’s survey, eight out of 10 respondents invested in their company’s 401(k) plan and three out of four also invested outside of company plans too. It’s interesting to note that 75% of those who responded also said that regular, consistent investing over a long period of time was the reason for their success.

You will have an almost unlimited number of investment options, from purchasing single stocks to mutual funds, exchange traded funds and more. And from passive investments to actively managed trading. What makes sense for you will likely vary by your risk budget and ultimate financial goals, but you will generally be able to invest much more aggressively when you’re young and have time on your side. As you near retirement, you will want to consider a more managed approach incorporating a downside risk mitigation system to help ensure a market crash before your retirement doesn’t decimate your portfolio and derail your plans. This is where the help of a qualified financial professional can help you map out your plans for retirement and ensure you have a system in place to create the income you’ll live on as you weather the inevitable ups and downs of the markets.

At the end of the day, money won’t create happiness for you . . . but try living without it.  So, making smart decisions in your personal life and your financial life will provide you with greater choices. Choices in how you spend your time, with whom, doing what, and so much more. So let’s get ready to make financial success a reality beginning with the New Year.

And as always – be vigilant and stay alert, because you deserve more!

Happy New Year folks!

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, and Mansfield, MA. 

Insurance offered through its affiliate, CutterInsure, Inc. We do not offer tax or legal advice. Jeff can be reached at jeff@cutterfinancialgroup.com. This information is intended to provide general information. It is not intended to offer or deliver investment advice in any way. Information regarding investment services is provided solely to gain a better understanding of the subject of the article. Different types of investments involve varying degrees of risk, including the potential for loss. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Market data and other cited or linked-to content is based on generally available information and is believed to be reliable. Cutter Financial does not guarantee the performance of any investment or the accuracy of the information contained in this article. Cutter Financial will provide all prospective clients with a copy of Cutter Financial’s Form ADV 2A, Appendix 1, applicable Form ADV 2Bs and Form CRS as well as the firm privacy policy. Please contact us to request a free copy via .pdf or hardcopy. 1. https://tinyurl.com/bdh5s8fr