By: Andrew Rosen, CFP®, CEP®

There’s always that one kid. You may recall him growing up, or maybe they are a member of your child’s sports team. You know the one – they have loads of raw talent, but no finesse. They would show up to practice wearing the wrong clothes, and not even know all the rules or strategy. Yet, once they started playing the game, you realized this kid was super talented–they could be a real superstar, but only if someone harnessed all that talent.

Spoiler alert–that kid was never me. Someday, I’ll find a sport that rewards slightly above average athleticism, mediocre speed, and an ability to eat pizza like none other.

In the meantime, I get to see that kind of person as an adult all the time in my conference room. Of course, I’m not referencing athleticism, but rather the raw talent of “financial athletes.” I’ve seen all sorts of financial character traits from great savers, to shrewd investors, and plenty of over spenders. But, I get truly excited when I see those clients who possess what I consider the number one trait to being financially coachable.

The trait.

I know what you are thinking: “Out with it already!”

Fair enough.

The trait, my “IT,” is when a client spends well below their means and income. When I see this, I get confident that I can help them achieve their goals. I know they have the basic skills to make a great success story. Regardless of their current financial status, everything gets easier to manage when ones monthly cash flow is minimal. These are generally people who are very open to advice and, more importantly, willing to do what is necessary to get on the right track. (I’m not saying that if you have expensive tastes you can’t be helped. Instead, it means simply that when your monthly outflows are reasonable things get easier.)

I’ve talked about it many times through the years–the number one thing in financial planning is having an understanding of your expenses. Thus, I get excited when I see a couple who not only understands their expenses, but also who live below their incomes.

The consequences of spending less.

Let’s take a second to think about this from a planning perspective. What are the unintended consequences of spending less?

  1. Less money needed to be saved for retirement.
  2. Less risk must be taken on that money to subsidize retirement.
  3. Generally, a higher percentage of retirement expenses are covered through fixed retirement incomes such as Social Security and pensions.
  4. There is more money to work with now to make up for lost time or get them on track.
  5. It is easier to model these individuals.
  6. One can retire earlier.
  7. There are less negative surprises.

What if I like to spend?

I don’t want those of you who enjoy spending (throat clears as I look at my beautiful wife) to start getting paranoid. This doesn’t mean you’re not coachable or “bad” clients. Rather, it means there is more work ahead. It also means you may be given less choices when it comes to certain decisions, such as retirement age. You may have to work a little later or invest sooner to have enough funds available to subsidize your retirement.


In the end.

I enjoy working with a broad range of clients. Each always presents itself as a fresh challenge. Every client whose life we change is equally rewarding and is why I walk into work with a smile on my face each day. That said, not all people are created equal. Controlling one’s ability to spend is that one common denominator that makes financial success easiest.

Financial planning and Investment advisory services offered through Diversified, LLC, a registered investment advisor. Securities offered through Securities Service Network, LLC, Member FINRASIPC. Some associates of Diversified, LLC are registered representatives of Securities Service Network, LLC, a registered broker/dealer, 9729 Cogdill Road, Knoxville, TN 37932. (800) 264-5499.