Upsizing Your Home

The Benefits of Upgrading Your Home

Is this not your first rodeo when it comes to buying a home, and you’re ready to get back on the horse? This blog is for you. It’s natural for young families to want to upsize their homes at some point. Common reasons for upgrading include:

  • More Space

  • Better School District

  • Higher Paying Job

  • Closer to Free Childcare, I mean, Family

Sometimes it’s fashion over function. You just want a bigger or more expensive place to live. For many Americans, a home symbolizes a level of wealth. Ironically, it can also become the greatest barrier to a family living a truly wealthy life.

Weighing the Pros and Cons

Some trade-offs, such as increased income, public schooling, or free childcare, may result in a net neutral or positive cash flow outcome, thereby avoiding the need for lifestyle adjustments. Others may result in a diminished ability to cover current expenditures and lifestyle goals. Examples of expenses and goals that could be negatively affected by a larger mortgage and escrow:

  • Education Funding

  • Retirement

  • Travel

  • Everyday Pleasures

  • Work-Life Balance

As a financial planner, it isn’t our job to plansplain what your values should be! Yes, I did just invent the word planspain. Our role is to help you clarify your priorities, establish boundaries, and evaluate trade-offs, enabling you to make the most informed decision based on your specific situation. So, what are some healthy boundaries when deciding what a reasonable amount to spend on a new home is? There are several handfuls of rules of thumb from asset-based and income-based approaches for determining maximum home affordability. I will focus on our preferred guideline, which has been adjusted to be more conservative than the lender’s standard.

Enter the 25/33 Rule, Adjusted Down from the 28/36 Rule

We recommend the 25/33 Rule, which states you shouldn’t spend more than 25% of your pre-tax monthly income on housing and no more than 33% on all debts. Other factors, such as family wealth, lifestyle, schooling costs, and overall assets, also influence your financial flexibility beyond this rule. Still, everything else being equal, going over the 25/33 Rule often causes families earning less than $200,000 to feel financially strained in other areas. 

Let’s examine sample cash flows from families whose housing costs are 10%, 20%, and 30% of their pre-tax income.

Case Scenario 1: Millennial Family with 10% Total Housing Cost

Case Scenario 2: Millennial Family with 20% Total Housing Cost

Case Scenario 3: Millennial Family with 30% Total Housing Cost

In the above scenarios, the total housing cost includes not only your mortgage (principal + interest), but also property tax, homeowners insurance, and maintenance costs. For maintenance, we always use the 1% rule, which recommends setting aside 1% of your house value annually for upkeep. As your total housing costs progress from 10% to 20% to 30% of your salary, watch that cash flow dry up. Your ability to save for your future or your children’s becomes increasingly difficult. Travel, Gift, and Education budgets could all find themselves on the chopping block. Depending on your liquid assets, you might have limited options to act or respond during times of uncertainty or when your life becomes more complicated. 

The Risk of Your Primary Residence Equaling Your Net Worth

You also wouldn’t be alone if you considered your primary home your most valuable asset and the key to building wealth. Here are the risks:

  • Lack of Diversification. While it CAN work out, putting all your eggs in one basket is a risky approach. 

  • Illiquidity and Inconvenience. If you need to take money out of the home, it could be expensive in the form of a loan. Or, you might need to sell the home and move entirely.

  • Surprise Maintenance Costs. It’s important to remember that your Principal, Interest, Tax, and Insurance is the MINIMUM amount you’ll pay. 

  • Mortgage Amortization: If you are forced to sell, you may not have built a meaningful amount of equity in the home. Depending on your interest rate, a significant portion of your mortgage payment goes to the lender as interest during the first 5 years. The payments typically don’t shift to mainly principal until 10 to 15 years into the repayment period.

The Danger in Upsizing Your Home Before Milestones, Specifically KIDS

The times when upsizing your home presents the biggest hurdles: 

  • Before you have kids, if that’s the path you’re choosing. 
  • As you are paying for childcare. 

The cost of raising children alters not just your cash flow but your outlook on life. Locking yourself into a bigger home too early, especially one at the upper edge of what you can reasonably afford, can cause financial problems if it’s not part of your long-term plan. And while you might believe you’re preparing for that moment, it’s hard to understand the unknown. It’s worth thinking about how long you stayed in your *starter* home before life changed and you began reviewing options to upgrade. Milestones tend to prompt us to reassess our lifestyles.

Renting vs. Selling Your Previous Home

If you are relocating or upsizing and wondering whether to keep your previous home as a rental, you’re not alone. We get this question often. As of the published date of this blog, mortgage rates are approximately double what they were 3 years ago. 

Here are the two questions you need to ask yourself. 

  1. Will the rental income you receive actually cover not only your minimum financial costs like principal, interest, taxes, and insurance, but also generate a surplus for unexpected expenses such as vacancies and maintenance? 

  2. Do you actually have any desire to be a landlord? If you used to worry about spending evenings and weekends on home maintenance projects and repairs for your family, now imagine doing that for complete strangers on their schedule, while you’re commuting. And oh, by the way, you’re likely moving into a bigger home, which will also require a greater time commitment for maintenance. 

If you’re answer is “no” to either of these questions, you should highly consider selling your previous home. Otherwise, you’re really just speculating that you’ll get a better price in 1 – 3 years. That’s a complete dice roll. And if you don’t sell within 3 years, you miss out on a significant tax exclusion where your primary residence is exempt from capital gains tax. The Capital Gains Exclusion for Primary Homes allows you to exclude the first $250,000 of gain for an individual and $500,000 for a married couple filing jointly from being subject to capital gains tax. 

Run. Those. Numbers. Then Actually Implement It!

When analyzing upgrading your home, the same principles apply as when you purchased your first home. And now, you’re a seasoned homeowner. You know that the cost of property tax and insurance only go in one direction, up! You understand that maintenance and upkeep costs are not zero, and they are generally expensive and a hassle. You will not mistake your approved borrowing amount with how much home you can afford. 

But until you lay out your cash flow and see the trade-offs firsthand, you are blindfolding yourself when it comes to making this decision. My recommendation is to live within the confines of your new projected budget for several months to ensure it’s a worthwhile tradeoff. Are you willing to make the sacrifices necessary to your current lifestyle when it comes to upsizing to a more expensive home? Otherwise, you risk falling into the biggest wealth trap: becoming house poor.

Need a refresher on what total housing costs look like? Last month (May 2025), Lead Planner Eddy Jurgielewicz shared some helpful advice on how much money you need to buy a home. He also included one of our in-house home purchase calculators to help prospective buyers understand the total cost of homeownership. While the calculator was an exclusive offering for our newsletter subscribers, you can view the excerpt about approaching homeownership from Eddy in this LinkedIn post. Want to avoid missing out on future exclusive content? Sign up for our newsletter using this link: subscribepage.io/eXkcnF

Great Day Louisiana: Weighing Your Home Buying Options (originally aired on April 28th, 2025)

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Fiduciary, fee-only, Certified Financial Planner, Mike Turi

Mike Turi, CFP® APMA™ is the Founder and a Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Understanding Your Paycheck

Understanding Your First Paycheck for College Graduates

If you are anything like me, you may be surprised when you get your first paycheck. Until that moment, I had only worked jobs as an independent contractor, where earning a $1 meant actually receiving a $1. If you’ve accepted a job as a true W2 employee after graduation, you likely negotiated a salary that doesn’t reflect your actual take-home pay. It may not be close at all, leading you to wonder, “I think there is something wrong with my paycheck.” In this blog and the accompanying video, we clarify essential terms for recent college graduates and anyone curious about their paystub, providing a jump start to understanding the United States tax code.

Independent Contractor vs. Employee

First, it’s important to understand the difference between how the person is viewed performing the work for the business. Are you an employee of the company or an independent contractor? Certainly, some companies operate in a grey area when it comes to classifying labor. You may feel like an employee, only to discover after reading this article that you’re actually classified as an independent contractor, which essentially makes you a business owner! For this article, we will set aside the legality of the matter regarding your employer in the eyes of the Department of Labor.

There is nothing inherently good or bad about this, but there is a stark difference in your benefit eligibility, tax responsibility, and ability to make certain deductions. A deduction is something that ultimately lowers your taxable income. To qualify for many deductions, you need to be self-employed to take advantage of them.

For example, a remote worker cannot claim a home office deduction and deduct this expense from their income. However, if other eligibility requirements are met, an independent contractor can use the home office deduction to reduce their taxable income.

Important Paycheck Terms for Employees

There are three (3) general categories of deductions that reduce your gross pay. 

Employee Taxes: Ordinary income tax + Federal Insurance Contributions Act (FICA) tax that funds Social Security and Medicare

  • Federal Income Tax

  • State Income Tax: 3% for Louisiana residents

  • Old Age, Survivors, and Disability Insurance (OASDI or Social Security): 6.2% on a maximum income of $176,100 in 2025. 

  • Medicare: 1.45% + 0.90% on income over $200,000. 

Pre-Tax Deductions: These will vary depending on your employee benefits, but the common ones are:

  • 401k Contributions

  • Health/Dental/Vision Insurance Premiums

  • Flexible or Health Savings Accounts

Post-Tax Deductions: These will also depend on your employee benefits and selections, but the most common ones are:

  • Roth 401k Contributions

  • Some Life and Disability Insurance Premiums

  • Legal Insurance

Sample Paycheck

As a basic and common example, here’s what a pay period might look like for an Individual earning $75,000.

Assumptions

  • Tax Filing Status: Single
  • No Dependents
  • Pay Periods: 24 (Semi-Monthly)
  • Pre-Tax 401k Contribution: 4% ($3,000 annual)
  • Roth 401k Contribution: 4% ($3,000 annual)
  • HSA Contribution: $4,300 (2025 Individual Max)
  • Health Insurance Premium: $200/month

In this scenario, the employee’s net pay is 65% of their gross pay. 18% of their income is allocated to taxes, while 17% is earmarked for employee benefits, including health insurance and retirement savings. This leads to the individual having $2,174 less each month to allocate toward their budget for housing, transportation, food, and discretionary expenses. 

If you’re unsure what your net pay might look like, I recommend using 60% as a baseline. This will provide a fair estimate of your actual pay that will reach your checking account before you commit to significant fixed expenses, such as rent or transportation. It also provides an opportunity to begin your journey as a saver or investor, as illustrated in the example above.

Does This Affect Independent Contractors Differently?

As an independent contractor, you’ll be paid, but you won’t get earning statements or paystubs detailing your income. But here’s what you need to understand: you owe taxes!  The United States has a pay-as-you-go tax system. If you have income, you are generally required to make payments as you earn it. As an employee, this occurs through your paystub via mandatory company withholding, as shown above. For independent contractors, you are responsible for estimating what you will owe, setting that money aside, and remitting payment quarterly. If you don’t pay your estimated taxes quarterly, you could face underpayment penalties come the tax deadline (April 15th of the following year). 

Here are the dates you are expected to estimate your quarterly taxes owed and pay by:

  • Q1 January – March: April 15th
  • Q2 April – June: June 15th 
  • Q3 July – September: September 15th
  • Q4 October – December: January 15th

As stated, there are no safeguards in place, like the mandatory withholding for employees. If you haven’t paid any taxes, you’re in for a nightmare when your tax filing software spits out the amount owed. Additionally, you owe not only the employee side of the FICA tax but also the employer side (another 7.65%). We’ll save the nuance of correctly making self-employment deductions for another day! Some individuals may not fit neatly into employee or independent contractor categories; for example, one can be an employee while also running a side hustle. Keep reading…

Is My Company's Withholding For Me 100% Accurate?

At the start of employment, everyone will fill out a W-4 Employee Withholding Certificate to instruct their employer how much money to withhold for taxes. Unless you tell them otherwise, they only account for the money they are paying you, along with the information you provide regarding tax filing status and dependents.

Have a side hustle? 

Your employer will only adjust your withholding if you instruct them to do so on your Form W-4 and accurately complete the form to take your additional income into consideration. Otherwise, you will need to manually calculate the taxes owed for this additional income and make quarterly payments, as mentioned in the section above regarding independent contractors. 

The most accurate way to do this is to go online and use the IRS’s Tax Withholding Calculator.

Negotiating Your Next Salary

Not everything that reduces your gross pay to actual pay is bad. In fact, most are either beneficial or, at the very least, unavoidable, like taxes. In our sample pay stub above, this individual had access to a 401k retirement plan and a Health Savings Account. Although not shown here, most (but not all) employers offer matches for these types of accounts. That’s MORE money paid to you than you bargained for. When reviewing job offers or negotiating your salary, it’s crucial to assess the complete range of compensation and benefits available. The most significant variable beyond any form of equity compensation is always health insurance. How attractive are the plan options in terms of the premium amount, as well as the deductible and out-of-pocket maximum?

If you’re a recent college graduate, this is the first paycheck of (hopefully) many! Set aside time to understand the foundational aspects of it so you can prepare for future earnings.

Tips on negotiating your next salary? We got you!

Tips for selecting benefits during open enrollment season? We also got you!

Great Day Louisiana: A Lesson In Reading Your Paycheck (originally aired on May 15th, 2025)

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Fiduciary, fee-only, Certified Financial Planner, Mike Turi

Mike Turi, CFP® APMA™ is the Founder and a Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Preparing for Movement in the Markets

When Do We Officially Enter a Recession?

Recessions are tough to measure definitively, but as the famous saying goes, you know it when you see it. They are typically defined as two consecutive quarters of negative growth in Gross Domestic Product (GDP), a term used to measure a country’s total output of goods and services. As GDP grows, companies hire to meet demand, productivity increases, and laborers earn more money. As GDP shrinks, we will likely see a spike in unemployment, a decrease in asset values, and a reduction in consumer spending. Let’s face it, though. No one thinks of GDP when considering the threat of a recession. It’s… am I going to lose my job? Will my 401k recover?

Lessons from History on Bear Markets

Bear markets (when the market declines by 20%) often coincide with recessions, but accurately timing the market recovery would require a time machine. If this isn’t an impossible task for you, congratulations! You’re the best investor in the world. The challenge, especially for the general public, is that market recoveries historically happen swiftly and at a moment when consumer sentiment is at an all-time low. Here’s a chart from J.P. Morgan showing sentiment cycle lows and subsequent 12-month S&P 500 returns.

J.P. Morgan Guide to the Markets

You’ll notice the disconnect between present fear and future returns. Things will never have felt worse right before the market pushes higher.

Historical Performances of Bull + Bear Markets

Bear markets are typically measured in months, while bull markets are measured in years. Since 1957, the S&P 500 Index has returned an annualized 10%, yet there are very few years when the return actually fell between 8% and 12%. In fact, across this 67-year period, it has only happened on 7 occasions. Markets tend to have bigger calendar year swings that, historically, have netted out favorably. Here’s a chart presented by First Trust displaying the importance of staying disciplined as a long-term investor.

And to beat this point with a stick (iykyk), here’s another illustration showing how costly it would be if you were caught up in the negative consumer sentiment, sold to cash, and ended up missing the best days as the market recovered!

Hartford Funds: Timing the Market Is Impossible

Compared to a portfolio that remained fully invested, if you were caught in cash during the best days for returns, you’d be kicking yourself!

Missed the 10 Best Days → 54% Less Money

Missed the 20 Best Days → 73% Less Money

Missed the 30 Best Days → 83% Less Money

And as noted by the above graphic’s pie chart, these best days are likely to occur during a bear market. While the COVID-19 pandemic initiated an economic shutdown that resulted in GDP decline and peak unemployment in line with the Recession of 1937, the losses in the markets were a blip. If you hadn’t logged into your investment accounts for a couple of months, you would have never known it even happened. So, setting COVID-19 aside, we haven’t seen an extended contraction of the economy since the financial crisis of 2008. This means that we have twenty-somethings who were barely aware, along with individuals in their thirties who lack perspective on the mental toll of watching their portfolio decline. We even have people in their 40s who probably weren’t investors yet themselves and were just starting their careers. That’s a significant portion of the investing population entering their peak earning years without any first-hand experience on how to prepare for a recession. 

Prepare for Economic Downturns, But Don’t Panic

If you’re anxious right now, you’re not alone. According to the March results of the Harvard Harris Poll, the two biggest concerns for voters right now are price increases/inflation and the economy/jobs. Inflation continues to be the top issue for voters across party lines. Although we are not currently in a recession, we are nearing the definition of one, along with a bear market. However, we cannot predict what will happen next. We haven’t experienced a global trade war for almost a century. And after an emotionally tolling election and with the 24/7 news cycle, it’s difficult to allow yourself the space to step back from making an emotional decision. But as a local advisor and friend, Jude Boudreaux, would say, respond, don’t react. 

Now is a time for focus and introspection. What opportunities do you have to save more or spend less, and what are your household’s biggest threats?

I’m Already Struggling to Make Ends Meet, How Will I Prepare For An Economic Downturn?

Households have two options for saving more money in preparation for a financial crisis:

  1. Reducing Expenses

  2. Earning More

If you are already living paycheck to paycheck with limited discretionary income, the possibility of losing your income or the rapidly rising cost of goods is a frightening prospect. Reducing expenses is already a finite solution, and if you’re living paycheck to paycheck, your ability to do so is severely diminished. 

Additionally, if your household’s income comes from a single source, you are at greater risk of needing to withdraw from your savings or rely on credit if the economy experiences a downturn. Income preservation, similar to asset protection, is most effective through diversification. It’s easier said than done, but do you have a path toward increasing or diversifying your income? Can you pivot and further your education on a clearly defined path that leads to career advancement? Can you add extra income to, at the very least, build an emergency fund, perhaps through seasonal employment or gig work? While recessions are undeniably bad, opportunities can emerge. Be realistic about your current situation and how it will project into the future. Don’t be afraid to invest in yourself or leverage your connections toward a brighter future. Nothing worth doing is easy.

Reducing Discretionary Expenses

There’s no time like the present to reevaluate your discretionary spending habits. It’s better to act before a crisis takes hold, but you certainly would not be alone if you delayed this difficult internal evaluation upon reaching an inflection point. As a financial planning note, we hope that you completely avoid being between a rock and a hard place by practicing what we preach regarding cash flow flexibility:

Building a proper Emergency Fund (discussed in the February 2025 Newsletter)

Keeping fixed expenses like home and auto at a conservative percentage of household income, rather than borrowing the maximum a lender permits. (discussed on Great Day Louisiana)

Successfully benchmarking your salary and negotiating a raise (discussed in the March 2025 Newsletter and on Great Day Louisiana)

However, if those opportunities have passed, we also have a great guide on taking control of your cash flow.

To quickly reduce spending, here are four key categories to explore for opportunities to make immediate adjustments. 

Dining Out: Meal prep at home is always cheaper than dining out and healthier. 

Travel: Experiences can add up quickly if you’re not careful. 

Impulse Purchases: Create some framework around necessities vs. nice-to-haves. 

On-Demand Services: Are you paying a hefty surcharge for convenience services such as same-day shipping, meal delivery, and rideshares?

The Moral Of The Story

As of this writing, we aren’t in a recession or a bear market, and attempting to predict one or how long it will last isn’t worth your energy. I would even go so far as to say that if you have a financial advisor who is making market timing predictions with your money, you may want to reevaluate that service or at least question the methodology of when their crystal ball indicates to reenter the market. Especially considering what you know now about consumer sentiment and diminished returns from missing the best days. 

History is a cycle. On a timeline long enough, we wouldn’t be surprised by much. Unfortunately, our moment happens in a blink of the universe’s eye. It’s difficult to stay disciplined when times are uncertain. In today’s world, it’s crucial to uphold your values and what matters to YOU, rather than succumbing to peer influence or the blatant deception found on social media. Life is too short to confine oneself to someone else’s definition of success.

Great Day Louisiana: How Movement in the Markets Impact You (originally aired on April 21st, 2025)

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Fiduciary, fee-only, Certified Financial Planner, Mike Turi

Mike Turi, CFP® APMA™ is the Founder and a Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

How to Take Control of Your Cash Flow

How to take control of your cash flow

I believe the venerable Wu-Tang Clan hit the target when they posited that “cash rules everything around me”. It’s a simple yet profound fact of the modern world we live in, largely applicable to those in all walks of life. Equally important, in my mind (though not as likely to serve as the foundation of an iconic hip-hop track), is that ruling your cash flow is one of the single most impactful steps to making progress towards financial goals.

Having the right system in place delivers real peace of mind and points you more directly towards what you hope to accomplish. Meanwhile, if no effort is made to intentionally manage the flow of dollars through your day-to-day life, you’re likely feeling the stress and holding yourself back.

So that’s what we’ll work through here: some strategies on how to take – and maintain – control of your cash flow. Because once you get that money, you still gotta know what to do with the dollar, dollar bills, y’all.

Who Needs to Take Control of Their Cash Flow?

Well, everyone!

The needs and reasons may be different person-to-person, but everyone stands to benefit from being in greater command of their cash flow.

It is not just for those who…

  • Are running a deficit each month
  • Are working to get out of debt
  • Need to build up their savings
  • Feel stressed when thinking about their income vs. expenses

It is also valuable for those who…

  • Have a high income
  • Are already saving at a strong rate
  • Are on pace to meet their financial goals

By the way, controlling your cash flow doesn’t have to mean meticulously tracking every single dollar that passes through your accounts – though that might be the right move for certain people. And it’s also not strictly synonymous with saving or investing more. In some cases, it may even entail spending more in certain areas of your life. It really boils down being in tune with how money is generally moving and directing your available resources in a way that aligns with your intentions.

Where to Begin

Awareness is always the first step.

You have to run a thorough diagnostic to understand if there are any issues, and what exactly they are, before you start considering how to fix them. Don’t think there’s anything wrong? There might not be! But even highly profitable companies conduct financial audits. Regardless of how you feel about your current situation, this is a must.

To get the best picture of what your current cash flow looks like, I recommend reviewing at least the last three months. The most accurate approach is to pull up the statements for all your credit cards and bank accounts. Once you have them:

  1. Go through each one line by line, categorizing every expense and savings contribution (a simple spreadsheet can make this easy). Examples of these categories might be:
    • Utilities
    • Restaurants
    • Gas (vehicle)
    • Subscritptions
    • Hobbies
    • Emergency Fund Contributions
    • etc…
  2. Add up the total amount in each category per month and then average them out. 

This will give you a usable figure for how much you’re currently spending and saving on a monthly basis in different areas. Of course, spending on certain things (such as eating out or gas for your car) will fluctuate. But getting a working average is perfectly fine. 

When people take the time to go through this exercise, I almost always notice the same results:

  • They find the awareness gained from this process very powerful, often learning things they didn’t know or finally facing head on something they tried to ignore.
    • “Ok, I didn’t realize I was spending that much on Amazon.”
  • It becomes immediately clear where adjustments can be made.
    • “I know I can definitely rely on Uber Eats less and still be ok.”
  • If needed, people are generally more prepared to act on any changes.
    • “Let’s go!”

Find a System to Manage and Track Your Cash Flow

Having a reliable framework and a continuous feedback loop (that works for you) helps you get more organized and then stay in control.

If your financial status quo has some cracks in it, it’s worth looking for tools to make your life easier. There is no shortage of apps out there designed for tracking your cash flow. A couple that I regularly hear success stories about are:

Additionally, a variety of different budgeting “approaches” exist. The right one for you depends on your needs and your style. A few of them include:

At Upbeat Wealth, we like to steer the households we work with into a “Flow-Based Budgeting” system. We first learned about this method from a presentation given by Natalie Taylor and have incorporated our own flavor. At a very high level, here’s how it works:

  • To start, all income gets deposited into a single primary checking account (a “source” account, if you will).
  • Then, you break down your spending into three categories: 
    • Fixed Expenses are anything that does not change (or stay about the same) month-to-month, such as mortgage, insurances, gym membership, phone bill, monthly investing/saving, etc.
    • Flex Expenses are those that do vary on a monthly basis, including things like groceries, self care, entertainment, etc.
    • Non-Monthly Expenses are things that might get paid quarterly, every six months, or simply come up irregularly. Examples include travel, insurances, property taxes, etc.
  • After you lay out all of the “fixed” and “non-monthly” expenses + savings, it becomes clear how much is available to go towards the “flex” category of spending. This creates a natural guardrail in your budget. Whatever that leftover amount is, that’s what is free to go to these expenses each month. You can even break it up into a weekly figure to monitor it more closely.
  • The “source” checking account feeds everything:
    • All “fixed expenses” are pulled out of here, ideally via auto-pay. 
    • Automated transfers are established to fund the “non-monthly” account. If you total the annual expense for all the non-monthlies, divide that by 12 and transfer that here each month.
    • Finally, you can set up weekly transfers to the “flex” account to cover those. For some this is likely a category of spending that goes on a credit card. If so, you’ll want to keep that weekly card balance within the set limit and pay it off at the end of each week.

Free up Some Cash Flow by Targeting the Low-Hanging Fruit

There are almost always some easy places to win back cash flow.

Did you watch the Severance season 2 finale and know you won’t be opening Apple TV again until the 3rd one comes out? Cut that bill. If there are any subscriptions or memberships that you’re not actually using (or can easily live without), maybe it’s time to unsubscribe. A few bucks here and there add up. Mike writes more about our 3-step guide to evaluating your memberships and subscriptions in another post.

When’s the last time you shopped your auto or homeowners insurance? These types of coverages (and other property & casualty lines) are worth reviewing at least every few years. If it’s been a while, you very well may be able to lock in a better rate for the same coverage with another carrier. 

Clarify Your Purpose and Any Trade-Offs

If change is necessary, zero in on your motivation to reinforce your efforts.

What is your specific goal in wanting to improve your cash flow management? It’s one thing to say you want greater control. There’s going to be much more friction if you’re crystal clear on why. Maybe you want to…

  • Shrink that high-interest debt balance a lot faster
  • Finally build up to a full Emergency Fund
  • Save up for an international trip later in the year
  • Treat you and your partner to more fun date nights
  • Get closer to maxing out a retirement account
  • Save for a house down payment
  • Etc…

Whatever it is, put that purpose at the front of your mind. Without it, it will be hard to maintain motivation because any changes you have to make are going to involve very real trade-offs. Maybe putting more money towards saving for a much-needed new car will require spending less on eating out. If so, spelling it out like this might lead to better results than simply telling yourself that you’re going to restaurants too much and need to cut back. 

  • Lame: “We spend too much money at restaurants and have to cook from home more now.”

  • Cool: “By cooking from home a little more, I’ll be able to put $500 more per month towards the next car my growing family needs and drastically speed up the purchase timeline.”

Make the effort to define what things are most important for your money to go towards and why. Similarly, identify the things that aren’t as important for you to be directing resources towards.

Keep it Realistic and Celebrate Small Wins

Take it one step at a time.

If you’re normally spending $400 per month on food delivery services, it may not work very well if you immediately try pulling this down to $100 each month. Incremental steps over time will help you ease into change and keep with it. So maybe you’d target spending $100 less each month until you arrive at your goal of $100. 

Are you focused on growing a bucket of savings for a major expense like a house down payment? Maybe you have a pile of credit card debt, and it’s tough to fathom getting past it. Financial obstacles like these could easily take several months or even years to overcome. A seemingly long road ahead can be daunting. Along the way, focus on smaller targets, acknowledging and celebrating in some way each time your balance for the down payment grows by another $10,000, or you pay off another one of the credit card balances. A lot of the big milestones we work towards involve major dedication. So help keep yourself on track by recognizing the smaller wins as you progress.

AUTOMATE, AUTOMATE, AUTOMATE

Remove as much thinking as possible. Automate savings and debt payments.

The less manual an action is, the more likely it is to occur. If you determine that you’re able to save or invest a certain dollar amount each month, go ahead and set up automatic contributions into those accounts. The same can be done with debt payments. You can set your credit card balance to autopay and even automate extra payments to any type of liability for those you’re working to aggressively pay down.

Automating gets you out of your own way. It also helps with the practice of “save first, spend second”. By ensuring your goals are being met first, it frees you up to spend what’s left over without any guilt.

Consider Setting the Credit Card Aside

If spending or credit card balances are getting hard to rein in, switch to strictly using the debit card.

By exclusively swiping your debit card, you can only spend what you have in the bank. It forces you to think a bit more before any purchase. On the other hand – with credit cards – it doesn’t matter how hard we tell ourselves otherwise, they simply don’t feel as real. And don’t worry about the points. The cash back and those miles are no good if chasing them ends up costing you more in the long run. It doesn’t have to be a permanent change, but it’s a sure way to curb spending. 

Be Mindful of Lifestyle Creep

Take a proactive stance when income increases.

As your income goes up over time, continue to keep your focus on what is most important to you and your family. It’s ok if that means spending more money on certain things – as long as your other priorities are met too. You worked hard for it, why not put more towards travel, treating the kids, or whatever else brings you joy?

At the same time, a jump in pay is a wonderful opportunity to enhance progress towards goals. So when this happens, take a pause. Revisit your financial plan. See if you can identify tangible ways to put those new dollars to work in a way that supports your goals. If nothing else, consider initially saving at least half of the increase. Be thoughtful with what spending areas get the other half of the increase. One thing is almost certain – if you’re not intentional with it, the new income will find a way to disappear.

In closing, I can’t overstate the benefits of ruling your cash flow. While it may not make a good hip-hop hook, it is most definitely the foundation of a healthy financial plan.

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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Our Journey of Comingling Finances Before Getting Married

comingling finances, marriage, financial planning

What does a financial planner reflect on in the final days before getting married??? 

Finances.

Ok. Sure – a couple of other things too… But it’s up there. It’s who I am.

Money + Romance = What You Make It

We’ve all heard some version of the statistic about money being a common cause of divorce… Whatever the real percentage may be, or the specific money-related issue that tips the scale – I knew I didn’t want to be in that number. So as I count down the final hours before my wedding, I find myself thinking back on the journey my partner and I have taken to navigate the financial waters together. 

While I wouldn’t say it was the first thought that came to mind after she said “yes” (I was mostly consumed by relief that I got the answer I’d been hoping for and somehow managed to string together adequately coherent words), it wasn’t too long after our proposal that I started to think about how Christina and I would begin tackling finances together. I’ve been part of too many conversations with spouses who were already years into their marriage and still dealing with the heavy burden of misaligned thoughts on money. I’ve seen up close the strain it can have on a relationship when matters aren’t properly addressed early on. For me, it was critical to tackle this head-on in my own romantic partnership – so that the two of us were in control, rather than the other way around.

Now let’s lay some things out there before we get into it…

  • It’s not a given that finances will be a point of distress for all couples. It may naturally work for some. But it will definitely be a matter worth giving time and attention to for most.
  • People are not likely to fully change how they think about or interact with money. They will continue to have their own unique habits and mindsets that stick with them. But couples can learn how to work positively together despite such differences.
  • Before any couple can begin to work through financial matters together, they MUST first work to understand the other person’s money story… Their influential memories, their emotions, any anxieties or convictions, and so on.
  • Any level of judgment will make the conversations exponentially more difficult. Money is already a topic that requires substantial vulnerability for some individuals. It will never help to feel as though someone is looking down on how they handle or think about things.

More on Why I Felt This Was Important

It’s probably no surprise, but money stuff comes fairly easy to me – it’s what I do and talk about all day every day in my professional life. That’s not the case for my fiancée. She’s a psychiatrist who would rather think about most other things besides money. And while she’s a hell of a lot smarter than me, it’s just not something she enjoys devoting a lot of mental space to. Now I know that I’m going to spend the rest of my life with her and I hope it’s a long, happy one! But if I’m suddenly not around one day or lack the mental capacity, I would like Christina to feel confident enough to manage important financial affairs independently. 

I’ve seen a similar dynamic in plenty of other couples too. Quite often, one partner is the “chief financial officer” of the household and makes the majority of the decisions. While I’m not opposed to a spouse taking on this role, I do believe it’s highly beneficial for the other person to at least understand what’s being done and why. Further, they should be invited to provide their input – if nothing else, given the opportunity to say, “It’s up to you”.

So it was ultimately a two-part goal… 

  1. Learn how to weave healthy joint financial decision-making and expectations into our relationship early on.
  2. Ensure that both of us understand, have the chance to be a part of, and can comfortably handle the most important money matters.

Where Did Each of Us Come From?

Our socioeconomic backgrounds are quite different. I’m the son of a teacher and a carpenter, whereas she’s the daughter of a cardiologist and a mother who raised her and her five siblings full-time. I went to public school, she went to private. I carried the financial responsibility of my education and she had a college fund to take care of that. I say this simply to help illustrate that we had very unique interactions with money from a young age. As a result, we now have stark differences in how we approach financial matters as adults. I tend to stress over expenses and consider a cost for far too long while Christina generally has no issues in that department. I’m naturally more of a saver. She’s more of a spender. Neither is right, neither is wrong – we’re just different.

All that to say… if WE can figure it out, YOU can too!

What’s Our Account Setup?

Joint finances account setup for couples

Some couples go all in on doing everything jointly. Others keep it fully separate. For us, we have things that we do together and shared hopes for the future. As individuals, we have our own preferences and unique goals. Our framework is structured to allow for money movement in both arenas. 

For things we do together and use together, we’ll typically pay for those out of a shared account. For those things we do independent of the other, they come out of personal accounts. That way we can avoid any potential judgment on how the other spends their money. As long as we’re both putting the right amounts towards the things we need and want together (both for fun and necessary goals), we’re each free to spend our other personal dollars how we want.

Taking it Beyond the Accounts

The train can’t stop at simply setting up joint accounts. Opening a savings account together won’t automatically create magical money harmony. And in my mind – this is the MOST important aspect of the journey to comingle finances… It’s the process of having meaningful conversations about how to handle financial decisions together, about how you each interact with money individually, and what your future financial goals are – both those that are personal and shared. As I referenced earlier, conversations were also important to help share my financial acumen with Christina – so that she’d better understand the value of having appropriate cash savings in place, how to optimize various tax-advantaged accounts, where and why a brokerage account makes sense, even how to place trades, and so on…

I have to say, it was an especially proud partner/financial planner moment when Christina first told me she’d maxed out her Roth IRA and invested the money (without me doing it with her)!

How Did We Do This?

Money Dates! 

I hear you… it doesn’t sound all that romantic to discuss finances on a date. But here’s the thing: I believe it is much easier to talk money at an agreed-upon and preset time when both parties are expecting it, rather than randomly when one person may be caught off guard. It’s helpful to protect the time too, or it may never happen. It’s easy to put things off if they’re not on our calendars. Further, making it a date can hopefully create a more enjoyable environment. Pour a glass of wine, crack open a beer, go to your favorite dinner spot… do something to set those positive vibes. Finally, limit the time. If one or both of you aren’t all that excited to have this kind of conversation at first, knowing that it will only go on for a short chunk of time might make it more agreeable. 

Our approach? We decided to have one 30-minute Money Date one Sunday per month.

It’s worth mentioning that this was a very helpful method in our relationship. Part of why Christina doesn’t like to talk or think about money is that it can easily make her anxious to do so. Again, I have no issue talking about it. By putting these short time blocks on our calendar, she was way more receptive to the conversation – it was never a surprise and she knew it wouldn’t go longer than a half hour (we even cut the first few down to 15 minutes). 

I want to be clear: I’m not saying this has to be the ONLY time you and your partner discuss finances. But it may be the easiest and most productive way to do so while giving it the prioritization it deserves.

The Result

As with other areas of our relationship, the work is never done. Nonetheless, I’m happy to report that – after about a year and a half – I feel great about where we are. There aren’t any issues or doubts about what our shared and individual financial expectations are. Money has not been a source of contention for us. And don’t just take my word for it! I did ask Christina what her feedback on our Money Dates and overall journey has been. She expressed that, while she was very hesitant at first and really didn’t want to have “talks about money”, it’s been extremely helpful. Now she’s far more open to discussing finances rather than pushing the topic aside. 

So forget about that statistic! For us, money will be something we… 

  • Work on together
  • Have clear expectations on
  • Understand and are comfortable managing
  • Discuss openly and honestly in a healthy way
  • Agree on for big picture planning and household goals – even though we may interact with it differently in certain aspects of our lives
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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Upbeat Wealth on the News: Planning your Christmas Budget

Mike Turi sits down with host Malik Mingo on Great Day Louisiana’s Christmas in July special about planning your end-of-year gift budget.

Great Day Louisiana: Christmas in July

Budgeting for Christmas

First and foremost, you know it’s coming. Don’t spend January stressing over your credit card bill, wondering how you overspent. Christmas falls on 12/25 every year, indefinitely, until we are swallowed up by the sun or whatever.

The recurring theme in all our budgeting discussions is, to be honest with yourself about how much you want to spend and to be intentional about how you save for it.  If it’s important for you to have a certain amount of money to spend on Christmas, divide that number by 12 and start setting aside money for it beginning in January. For larger financial goals, it’s helpful to get into the habit of paying now by saving and then actually buying them later.

Best Savings Vehicle

I’m a big fan of categorizing funds into different buckets or accounts. My mind is already a mosh pit, so I enjoy having my spending goals clearly defined.

What’s more effective: having $10,000 in a general savings account or distributing the money into separately labeled accounts/buckets for specific purposes ($5,000 Emergency Fund, $2,000 Travel, $2,000 Home Improvement, $1,000 Gifts/Celebrations)?

My ultimate advice is to BE SPECIFIC. It’s the key to guilt-free spending. I recommend all my clients use Ally Savings for this very reason. Ally allows you to categorize your goals into buckets under one high-yield account, eliminating the need for multiple bank accounts. All you have to do is start funding them! Once again, you’re paying now and buying later using this method, so it’s much harder to overspend as opposed to buying now and paying later. When you buy now and pay later, you’ve detached receiving a good or service from its affordability. Most importantly, by setting clear goals and aligning your spending, you are beginning to gather empirical data on your priorities and can more thoroughly review your trade-offs.

Struggling with Budgeting?

Regarding our budget, water always tends to find its level. But that level isn’t always healthy. At the most basic level of financial health, your income must exceed your expenses. For instance, I worked with someone recently who had an average credit card debt of $20,000 for over five years. That was their emotional level of being financially “okay.” However, that $20,000 annual credit card balance cost them $5,000 in interest charges. That’s not good.

In general, I think the biggest challenge we all face is the evolution of our needs. “Wants” are subconsciously being converted into “needs” hence the term lifestyle inflation. Need evidence? Reflect on what you considered a “need” 10 years ago or in college. You’ve likely also had a decent raise in income from that time, but your spending might be moving in lockstep.

So what are your options? 

  1. Go all cash. There’s a big difference between clicking a few buttons online and spending $100 and physically handing over a $100 bill. 

  2. Get back to basics. Tear it all down—not your housing costs, daycare expenses, or any other true needs. But maybe you have 1000 subscriptions? Or the convenience of Amazon and online shopping is overpowering. Cancel it all and see what you actually miss. Or set up a specific routine for when online purchases can occur. Take the spontaneity of having anything in the world delivered to you within 48 hours. It’s probably costing you a small fortune.

Alternative Forms of Gift Giving

We are constantly bombarded with advertisements for material goods. It is what it is. It doesn’t mean that’s what’s important. A common observation I’ve made while working with families is that experiences and time spent with loved ones far outweigh consumer products. And that upon deeper reflection upon one’s spending, most consumer products are an expression of such. As in, if you peel back the layers of why someone might want a really nice dining room table, it’s actually because they need one that is big enough to have family meals. So it’s probably not important for it to be fancy – just spacious and sturdy.