By Daniel Staiger, CFP®, CRPC®. Financial Advisor.
Many tradespeople are used to building or fixing things with their hands and they can easily see the tangible product that’s been created from their hard work. Because of this, it may be difficult to get excited about the idea of financial planning. It’s an abstract concept filled with spreadsheets, numbers, graphs, and predictions, but none of it feels particularly relevant to your day-to-day life. I get it. But financial planning is just another form of building, one in which you are working toward an ideal financial future for you and your family.
Whether you are managing your finances on your own, or working with a professional, understanding the importance of proactive planning is a crucial step in building an effective financial plan. That’s why I’ve put together this guide to explain the 3 most common mistakes I see tradespeople make and how proactive financial planning can be used to help them.
At Matarazzo Staiger, our clients are hardworking tradespeople who tend to be frugal and diligent about saving money, especially if they did not make much during the earlier years of their careers. They want the best for their families, but they sometimes shy away from full financial planning because it’s not their specialty.
Unfortunately, this is one of the biggest mistakes I see tradespeople make. Not meeting with your financial advisor often enough (or at all) can have a huge impact on the overall effectiveness of your plan. It is not something to be set in stone and forgotten about. It needs to be actively managed and monitored in order to be useful.
For instance, if an important life event occurs, like getting married or having a child, your financial plan will need to be updated to account for these significant changes. You will want to make sure you have adequate life, health, and disability insurance, not to mention proper estate documents completed in the event of incapacitation or death. The last thing you want is for your accumulated wealth to pass to the wrong people because you didn’t create a will or update it when your child was born.
Other important events like large purchases, job changes, or job loss should also be incorporated into your plan as a way to proactively mitigate the risks these events may cause.
Another mistake I often see is tradespeople being too conservative in their spending habits. This is especially common for people who weren’t earning much in the early years of their career and became accustomed to a lean lifestyle. Once they’ve saved enough to actually feel good financially, they keep saving for fear of not having enough. This can create a situation whereby you become so money-conscious and frugal that you forget to actually enjoy your life.
What is the point of working so hard if you can’t take a little time (and money) to enjoy the fruits of your labor? I sometimes have to remind my clients that it’s okay to save a little less and take your grandkids to Disney World or go on a vacation with your spouse. Accumulated wealth can provide comfort and confidence, but it can also provide the means to create unforgettable memories with your family—and sometimes that’s more important.
Though many of our clients are diligent in their savings and frugal in their spending, there is a tendency to think that saving and minimizing expenses is all they need to do to meet their goals. Unfortunately, this is a mindset trap that couldn’t be further from the truth.
There is so much more that goes into being financially secure than just how much money is in the bank. For instance, if you are simply putting your money in a low-interest (or no-interest) savings account, it will actually lose value over time due to inflation. Similarly, if you’re not proactively utilizing tax-advantaged strategies (like qualified retirement accounts), you are missing out on major savings and compounded growth that can be used to strengthen your financial future.
Insurance and estate planning are two more crucial aspects of a comprehensive financial plan. You can have a sizable amount saved for retirement, but that can be wiped out in an instant if you were to get sick, get in an accident, or experience any number of the financial curveballs that life may throw. Estate planning is necessary to ensure that what you’ve built over your lifetime is properly passed to the next generation.
Many people often overlook the full scope of a comprehensive plan, one that includes more than just saving, and it can have devastating effects on your accumulated wealth. Making sure you are adequately covered now will save you time, money, and energy in the future.
Are you working in a trade and struggling to manage your finances or trust the financial planning process? At Matarazzo Staiger, we’re here to help. As fee-based advisors, we can help you avoid these mistakes and more through our comprehensive financial planning process. Schedule a no-obligation introductory meeting by emailing me at daniel.staiger@raymondjames.com or calling (631) 319-6777.
Daniel Staiger is a partner at Matarazzo Staiger Wealth Management and Financial Advisor with Raymond James Financial Services. Matarazzo Staiger Wealth Management is an Independent Practice and our team is committed to helping families, pre-retirees, and union employees build a sense of security and confidence around their financial future. With more than 10 years of experience, Daniel is dedicated to providing trusted advice and tailored solutions that help his clients realize their financial potential. He is known for building relationships with his clients so he can better understand their values and the goals they want to pursue. As a CERTIFIED FINANCIAL PLANNER™ and Chartered Retirement Planning Counselor℠ professional, Daniel specializes in serving union employees, such as tradespeople and teachers, with well-thought-out guidance and a personal touch. When he’s not working, Daniel spends his time pursuing interests such as guitar, volleyball, golf, and cooking. He is also an active member of his church. To learn more about Daniel, connect with him on LinkedIn.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
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