By Kevin Gibbons
We truly do live in a wonderful technological time. We have the world’s history and current information at our fingertips. We have videos and tutorials on virtually any subject instantly available. And we can access that information on our cell phones almost anywhere. We are rapidly approaching the point where it seems we don’t need experts for anything. A good wireless connection and a YouTube video can solve most of our problems.
In our work creating Spending Plans for clients and the clients of financial advisors, we have seen and heard about many planning apps. A common response when we talk to financial advisors about our service is, “You guys should create an app.”
Don’t mistake the tool for the process
Creating a viable Spending Plan is about more than generating a spreadsheet or filling out a form. It starts with understanding your priorities and the areas with which you have the most concern and anxiety. An automated program can take your input of how much money you make, what your bills are, even a ranking of what’s important to you. But it cannot tell when your voice changes when you talk about how buying organic food is important to you because your family has a history of cancer, or when you and your partner suddenly get tense when discussing how much you spend on children’s clothes.
Apps and programs are great tools for tracking spending and helping you keep on the plan that you have created. They can show exactly where your money is going and guide you in putting your money in the correct buckets to achieve your short- and long-term goals. Their advantage is that they work 24/7 and keep you “honest” because they aren’t swayed by your emotions. They are great tools for implementing your plan.
But the process of creating that plan is nuanced, and understanding the underlying thoughts and issues is beyond the scope of most software. To create a workable plan, the planner has to have a mix of detachment and empathy. Detachment so they can be separate from the emotions that may keep you from seeing the clearer path to your goals; empathy so they can understand and incorporate what is truly important to you, even if you may have difficulty assigning a simple 1-10 weighting factor on it.
We typically spend four hours in one-on-one conversations with clients over the course of the process, learning what their day to day lives are like, where they stand financially, what their goals are, what is important to them. Some of that information comes directly from the questions we ask. Some of it comes from how they answer, how they interact with their partner during the conversation, sometimes, even what they do not say. We learn how tech-savvy they are, how interested they are in the nuts and bolts of tracking spending and planning. Then we create a Spending Plan that reflects those attitudes while addressing their situation and goals. Once the plan is established, then the packaged software can help them execute it. Or not; we do have clients that track their spending and manage their cash flow using traditional accounting ledgers or paper notebooks. The point is, apps, programs, and ledgers are tools. Use the tool that works best, but don’t mistake the tool for the process.
Kevin Gibbons is a Cash Flow Planning Expert, the Vice President of The Savvy Life and co-author of the international bestseller Living The Savvy Life. For the past eight years, Kevin and Savvy Life Founder Melissa Tosetti have worked with over 525 individuals and families to create Spending Plans.
They also work with financial advisors and their clients doing cash flow planning as well as giving Savvy Living presentations via webinar and in-person to audiences across the U.S.
To learn more about how Kevin and Melissa work with clients, visit The Savvy Life’s Programs Page.
If you’d like to learn more about how they work with financial advisors and their clients visit: The Savvy Life Advisor’s Page