"Get Action" Toward Financial Health.

John Markham, Pinnacle Financial Partners

John Markham, Pinnacle Financial Partners

My desire at Arena of Man is provide content that will encourage and equip you to be your best in every arena of life. To accomplish this, I invite experts from the different arenas to contribute. This article is written by my good friend, John Markham. John is a financial advisor working for Pinnacle Financial Partners’ Client Advisory Group.

Below you’ll find John’s article as well as action steps and helpful links to equip you to be your best when it comes to money. I hope you’re encouraged as we step into the arena of career and finance.


Money. Whatever our upbringing, we all have a relationship with it. And that relationship shapes both the way that we treat it and the financial decisions that we make every day. Money is a blessing (and can be used to bless others). But it can also be a curse. Here are a few things to think about when you think it about money:

YOU NEED TO KNOW WHAT YOU HAVE

There are a ton of great resources available on the internet that allow you to aggregate all of your banking, investment, and debt accounts into one place. They give you a snapshot of your net worth (i.e. all of your cash and investments minus all of your debt) and will also categorize your spending for you so that you can easily see where you are spending money. If sharing your log-in information on a third-party website makes you feel a little queasy, you can accomplish all of the same things in Microsoft Excel or any other spreadsheet software.

SAVE AN EMERGENCY FUND

This is pretty straight-forward. Once you know what you have, make sure you have three to six months worth of your expenses saved in cash. Unexpected things happen. If you get into a car accident or you need to replace the air conditioning unit on your house, having an emergency fund will allow you pay cash without dipping into your savings or having to use a credit card.

DEBT IS GOOD…AND BAD

Some debt is a good thing. You can use it to buy appreciating assets that you couldn’t otherwise afford. (An appreciating asset is one that is likely to increase in value over time – like a house.) However, not all debt is created equal.  Far too many people carry high balances on their credit cards. The typical interest rate on a credit card ranges from 15% to 20%. If you are not able to pay off your credit card bill each month, then what you owe in interest can soon outstrip what you spent on the items you actually purchased. (See the paragraph on compounding below.) 

COMPOUNDING IS A BEAUTIFUL THING

Save early and save often. In the same way that compounding can work against you if you don’t pay off credit card bills, compounding can work for you if you are setting aside money each month to invest. Using a simple example, let’s assume at age 25 you began saving $100 per month ($1,200 per year) and that money grows at 5% per year. At the end of 10 years, your savings would have grown to just over $94,000. However if you waited five years until age 30 and then began saving the same amount, your savings at age 35 would be just $27,000 – a $67,000 difference.  

IT’S HARD TO BEAT THE MARKET

Unless you have hours and hours each day to spend researching individual stocks in which to invest, then invest in low cost index funds. Professional investors have a distinct advantage over their non-professional counterparts because of the information they have access to and the time they spend reviewing that information. And over time, even professional investors rarely outperform the market.  Low-cost index funds are (by their very name) inexpensive and track the market’s performance over the long-term. When paired with the power of compounding described above, you will very likely increase your wealth over time. The key words: “long-term” and “over time.” Markets move up and down every day. Trying to time when to buy and sell securities in your portfolio is a recipe for disaster. 

This list is of course not the “end-all-be-all.” It is simply a place to get started. The key with finances – like it is with so many other things – is to be intentional


ACTA NON VERBA…Deeds Not Words.

  1. Utilize apps like “Mint” or Dave Ramsey’s “Every Dollar Easy Budgeting” or create a simple spreadsheet to discover your total financial “net worth.” Links to apps are below.

  2. Calculate your range for an emergency fund (3-6 months expenses) and begin saving toward that total.

  3. Once the emergency fund is in place meet with a financial planner to help you develop a plan for savings and investment. This may be in addition to your employer contribution. Then begin contributing on a regular basis.

Mint Financial App
Dave Ramsey’s “Every Dollar Easy Budgeting App