The markets reached an all-time high last week, with the S&P 500 crossing the 5,800 mark for the first time. Inflation data came in mixed, with CPI a little higher than expected and the Producer’s Price Index a little lower. Over the next few weeks we’ll see publicly traded companies reporting quarterly earnings, and there may be some volatility with that.
With the boat shows wrapping up, I had a social conversation with a young couple that would really like a boat, but they knew they couldn’t afford one. I nodded along, but the conversation continued on to all the wonderful restaurants in the area, and the ones where they regularly eat. For most of those restaurants, the check for two people with drinks is easily $100, and they are probably eating out 10-12 times a month, on the low end. The simple fact is that they can afford a boat. They have other priorities.
Many of us are fortunate to be in a position to have pretty much anything we want. We just can’t have everything we want. Over my career, I’ve had this conversation professionally with many clients. They want a boat, or to travel more, or to pay for their children’s education, and feel as though they can’t afford it.
The deck is stacked against us. We live in an expensive area. Over a quarter of Anne Arundel residents spend over 30% of their income on housing.[1] But the bigger problem is that the majority of our spending is unconscious. Most bills are on autopay, and we put everything else on a credit card that we pay – or not – at the end of the month. And human brains are not wired for self-deprivation.
There are a few things you can do to turn the tables. First, start paying attention to where your money goes. You can keep a spending log or sit down weekly to review everything you’ve purchased. Merely paying attention and seeing how much you’re spending eating out or shopping online can be an eye-opener.
Figure out your priorities and set goals. It may be to get out of debt, or take that vacation, or buy the boat. Your brain works better when you’re choosing something you want, rather than depriving yourself of something else. You can buy that cool gadget online. You can go out to eat or order delivery. Frame it as which do you want more: the vacation or the gadget? To be debt free and cook dinner, or add more debt while you sit on the couch?
Pay attention to your spending, and make conscious choices that align with your goals. Just remember to send us a postcard from your vacation.
Your action item this week is to start decluttering before the holidays. Your unwanted items can be someone else’s holiday gifts. As the weather cools and we spend more time indoors, a home with less clutter is less stressful.
Be sure to check out our website at covingtonalsina.com, or our Facebook page, for more information and to register for our upcoming educational events. Don’t forget to drop by our office with a sweater, fleece, or sweatshirt for #justonesweater.
CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
[1] U.S. Census Bureau, Burdened Households (5-year estimate) in Anne Arundel County, MD [DP04ACS024003], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/DP04ACS024003, October 13, 2024.