Financial Makeovers: Stellar Transformations

byKatie Melynn

Sun Feb 04 2024

@ CompanyLLC
Financial Makeover

When venturing out into the financial universe, it’s helpful to learn from the brave explorers who have gone before. You don’t need to explore the unknown reaches of space without the help of a guidebook put together by those who have surpassed financial hurdles already.

When considering case studies, it’s helpful to look at the progress made by others to help create your own roadmap through space. These stellar transformations show just how many strategies and tools are available to make leaps and bounds of financial progress. 

Budgeting for Financial Wins

Rob and Sarah were living paycheck to paycheck, never quite sure why they didn’t have any money left at the end of the month. Both had full-time jobs with benefits that covered all of their essentials and provided some money to go on trips and have fun. They were able to pay their bills but always felt like they were running out of fuel to help them navigate through life. When unexpected bills came up, they worried and sometimes had to put off other mission-critical tasks to cover them.

Once they decided to get their financial ship on track, the first thing that Rob and Sarah did was create a budget. They recorded all of their expenses, both the ones that they expected and the ones that snuck up on them. It turned out that they were spending a lot more money on certain things, such as restaurants, than they realized. Seeing this analysis helped them understand where they had gotten off course. Once they took charge of their budget, they were able to make decisions about what to spend money on and how much to set aside. It took a few months to readjust their thinking and learn the discipline needed to stick to their budget. But once they had a budget in place, they were able to pilot their financial ship through even the most dangerous and difficult of hazards without worry.

Investment Returns

When he first started working at his firm, Noah set up a retirement account, savings plan, and good budget. Like any good financial explorer, he went into things with a plan. Every month, he reviewed his spending and made sure to contribute to his company’s 401K plan and his IRA. But as the years went on, Noah realized that he wasn’t seeing his retirement accounts grow like he expected. His retirement plan wasn’t living up to the mission plan that he’d created!

This prompted Noah to check the way that his investments were set up. When he first opened his retirement accounts, he set up an automatic contribution, chose the default investment portfolio, and let it go from there. His retirement rocketship was fully automated, just the way he wanted it. Because it was all automatic, he didn’t need to go into the account manually and make any adjustments. But when he did look closer, Noah realized that he could select a Target Date fund that adjusted the actual investments to reflect his preferences. When he was younger and had more years until retirement, the investment portfolio tended to allow for more risk. This assumed that he would be able to make up any losses over time. It also allowed great potential for gains. As he got closer to his target retirement age, the risk profile changed to be more conservative. Noah selected the Target Date fund to keep the automation that he liked with a more personalized approach to reach his target mission date.

Planning for Retirement

Andi had a good job with benefits. But she wasn’t taking advantage of her company’s retirement plan. She always said that she’d contribute when she could but didn’t remember about it most of the time. After all, she had a lot of other ships to keep on track with her demanding job. Retirement may as well have been in a different galaxy and she knew she had plenty of time to catch up. A few years went by and Andi only had a small retirement account. She didn’t check the balance or add to it other than a few times per year, just a couple of hundred dollars each time. 

One of Andi’s friends mentioned that their company offered free consultations with a financial advisor once per year. That sounded like a free call back to NASA for mission guidance so she set up a meeting. At the consultation, the financial advisor asked her about her plan for retirement. Andi said that she’d stop working when she was eligible for retirement. 

“That’s great but how will you continue to pay your bills?” the advisor asked her. Andi didn’t have an answer, which made her realize that her “plan” wasn’t much of a plan at all. She wasn’t even on track to stay in the right financial universe. The advisor gave her information about the retirement plan at her company, including how to set up automatic contributions. Andi knew that she struggled to prioritize retirement because it seemed so far in the future. To make contributing easier, Andi set up a monthly contribution that went straight from her paycheck to the retirement account. That way, she didn’t have to remember or even think about it. She received raises a few times over the next few years and designated some of her increased income to go toward her retirement. Everything was fully automated and accelerating her retirement to warp speed without her even realizing it. Andi also took advantage of the annual consultation with the financial advisor to make sure that she was destined for mission success.