Impulse Spending and Credit in Our Immediate Gratification Society

By
Jeff Motske, CFP®
March 19, 2018
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Do you remember Veruca Salt, the spoiled rich girl from the movie Willy Wonka and the Chocolate Factory? You know, the girl who yells at her father, “I want it now!” And her clueless, abiding father would get her whatever she wanted, which consequently did more harm than good.

Well, we all have one of those fathers. Not the one that we buy a Father’s Day card for every year, but one that we carry in our wallet. One that typically says yes to whatever we want to buy, regardless of how that may spoil our budget, or worse, our credit score. It’s called a credit card.

Please understand, I am not calling you spoiled or demanding. However, in this instantaneous age, it’s very easy to spend impulsively or unconsciously. How many of us have gone to Target to purchase one or two items and ended up walking out with a full cart? How many of us have passed some idle time perusing one of our favorite online vendors, one who may even have our credit card information stored in their system? We may have had no intention to buy when we got on the site, but when we spot a good “deal,” it only takes a few quick clicks to make it ours.

You see, it happens a lot more often than you think. Study after study has shown that people will spend more money when they use credit cards than when they use cash, sometimes as much as twice the average cost for the same item1. Not only does the method of payment affect the quantity, it can also affect quality, with consumers willing to purchase unhealthy or unnecessary items when paying with a credit card as opposed to cash2.

The convenience of clicking or swiping to purchase, rather than handing over tangible cash, has spurred on overspending and racked up national credit card debt to $905 billion3. The truth of the matter is that we have lost sight of the fact that credit cards are essentially a thirty-day loan, which is becoming more and more apparent with the younger generations. Based on Experian’s Millennial Credit and Finance Survey Report Part II, 58 percent of millennial credit card holders polled in 2015 had maxed out a credit card, been charged a late fee, had an increase in the interest rate on a credit card, had a credit card declined or had defaulted on a credit card payment4. Financial behaviors like these can wreak a lot of havoc on a young person’s credit score and financial future. Such a small, seemingly innocent looking piece of plastic can do a lot of damage.

Now I am in no way advocating a credit-free lifestyle. Not only are credit cards a convenient way to build up your credit score, but many cards offer rewards programs where users can earn discounts, airline mileage and cash back. Most importantly, though, there are an increasing amount of vendors that no longer accept cash. This is not simply limited to online purchases. Have you ever tried leaving an airport parking lot or paying to access a toll road with cash? In most places, it is nearly impossible.

What I am saying is we need to start being a bit more mindful with our money, a bit more critical of how we spend. I mentioned the perks of credit cards rewards programs earlier. How many of us, though, have actually stopped to determine how much those perks really cost once you start adding up interest and impulse purchases? If switching over to cash purchases helps us become a bit more mindful with our money, then so be it.

Before you end up with a pile of debt and regret.

1. https://www.nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/

2. https://www.psychologytoday.com/blog/the-science-behind-behavior/201607/does-it-matter-whether-you-pay-cash-or-credit-card

3. https://www.nerdwallet.com/blog/average-credit-card-debt-household/

4. https://www.slideshare.net/Experian_US/experian-millennial-credit-finance-survey-report-part-ii

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By
David McDonough
September 19, 2023

The pandemic’s economic disruption altered people’s views on a wide range of money topics—from the feeling of financial insecurity to the extra burden of debt, to how best to protect their loved ones, physically and financially. People’s interest in life insurance—knowing they have a need for it—was heightened during the pandemic and remains so, as people take a closer look at their financial security and well-being. The 2023 Insurance Barometer Study, by Life Happens and LIMRA, shows this trend is prevalent among the younger generations, as well as with single mothers.

Single Moms Need the Industry’s Help

Fewer women own life insurance than men, 49% vs. 55% respectively. And that number is even starker for single moms: Just 2 of 5 single mothers (40%) own life insurance. That said, 6 in 10 single moms (59%) know they have a life insurance need gap—meaning they need coverage or more of it (vs. 41% of all adults) equaling about 5 million households. And 4 in 10 (38%) say they intend to buy coverage this year. With 7.9 million single-mom households, according to the U.S. Census Bureau, there is a dire need for single moms to
purchase life insurance, or more of it.

The primary reason single moms own life insurance (63%) is the same as the general population: to cover burial costs. However, only 26% say they have it to replace lost income. And more than half (51%) say they are “extremely concerned” about leaving dependents in a difficult financial situation if they died prematurely, vs. 29% of the general population.

That’s not the only area of financial concern. In fact, single moms have increased levels of concern over a wide range of financial issues—often double-digits—over the general population.
• Having money for a comfortable retirement: 58% vs. 44%
• Saving for an emergency fund: 56% vs. 38%
• Paying monthly bills: 50% vs. 32%
• Ability to afford college: 40% vs. 22%

Owning life insurance makes people feel more financially secure: 69% of life insurance owners feel secure vs. 49% who don’t own. For single moms, this is 52% of owners feel secure vs. 30% who don’t own. The good news is that while only a third of single moms (35%) work with a financial advisor currently, more than half without one are looking for an advisor (52%) to help them navigate their finances.

Desire and Need Are on the Rise

Gen Z is growing up—they’re adults now who are in the weeds of financial responsibilities and stresses. Half of Gen Z is now 18-26 years old, which means 19 million young adults are ready for life insurance, most of whom are non-owners; and Millennials, at 27 to 42, are well into their careers and starting families. The study took a look at life insurance ownership among different age groups and found that half of all adults (52%) own life insurance, with 40% of Gen Z adults and 48% of Millennials currently owning it.

As Gen Z starts hitting life milestones such as finding a partner, buying a home and having children, half (49%) say
they either need to get life insurance or increase their coverage. And Millennials are not far behind, with 47% saying so. And they are ready to take action: 44% of Gen Z adults and 50% of Millennials say they intend to buy life insurance this year.

They also want to purchase it where they have become comfortable—online—and that goes for all generations. In 2011, 64% of people said they preferred to buy life insurance in person; by 2020, just 41% felt this way. In 2023, it dropped to 29%.

Education Is Key for Gen Z

There is work to do on educating people about ownership: 42% of all adults say they’re only somewhat or not at all knowledgeable about life insurance.
A quarter of Gen Z and Millennials say that not knowing how much or what kind of life insurance to buy stops them from getting coverage. And 37% of Gen Z and 27% of Millennials say
they “haven’t gotten around to it.”

Across generations, cost is cited as the top reason for not getting life insurance. But only a quarter (24%) of people correctly estimated the true cost of a policy for a healthy 30- year-old, which is around $200 a year.* More than half of Gen Z adults (55%) and 38% of Millennials thought it would be $1,000 or more.

With the current climate adding financial uncertainties to Gen Z and Millennials, including layoffs and inflation, it is imperative that the two age groups learn how to protect their loved ones financially. Education around finances in general, inclusive of life insurance, will be extremely beneficial, particularly for Millennials, who cite the highest overall level of financial concern (39%).

Download this comprehensive blog as a concise one-pager here:Millennials and Gen Z Lead Growing Need for Life Insurance in 2023

 

*Survey respondents were asked how much they thought a $250,000 20-year level term policy would cost per year for a healthy, nonsmoking 30-year-old, which is around $200.

Please source all statistics: 2023 Insurance Barometer Study, Life Happens and LIMRA© Life Happens 2023. All rights reserved.

By Trilogy Financial
July 17, 2024

As you approach age 59½, you’re nearing a significant milestone that brings new opportunities for your financial future. This age marks a turning point where the IRS allows you to withdraw from your retirement accounts without incurring penalties. At Trilogy Financial, we provide comprehensive High Net Worth Retirement Planning strategies tailored to your unique needs, helping you navigate this critical phase with confidence.

 

Understanding the Importance of Age 59½

 

Reaching the age of 59½ is a pivotal moment in your retirement journey for several reasons:

 

  1. Penalty-Free Withdrawals: The IRS permits penalty-free withdrawals from retirement accounts, such as IRAs and 401(k)s, providing greater flexibility in managing your retirement funds.
  2. Catch-Up Contributions: If you’re over 50, you can make additional contributions to your retirement accounts, helping to boost your savings significantly.
  3. Approaching Social Security: You are within a few years of being eligible for Social Security benefits, allowing you to plan more effectively for your retirement income.

 

Building Your Retirement Savings

 

Despite the importance of saving for retirement, many Americans find themselves with insufficient funds. According to financial experts, you should aim to have at least $1 million in retirement savings to support a comfortable 30-year retirement. However, the reality is that many people have far less saved.

 

Strategies to Enhance Your Retirement Savings:

 

  • Catch-Up Contributions: If you’re 50 or older, you can contribute additional amounts to your retirement plans. For example, you can make $6,000 in catch-up contributions to 401(k) plans and $1,000 to IRAs annually.
  • Prioritize Saving Over Spending: Shift your focus from spending to saving, ensuring you allocate a portion of your income to retirement accounts at the beginning of each pay cycle.
  • Seek Professional Advice: An Executive Financial Planning advisor can provide personalized guidance to help you maximize your retirement savings and take advantage of all available options.

 

Staying Healthy in Your Golden Years

 

Maintaining good health is essential for enjoying a fulfilling retirement. As you age, your health needs change, and it’s important to stay proactive about your well-being.

 

Health Tips for Older Adults:

 

  • Regular Check-Ups: Keep up with medical appointments and screenings to catch potential health issues early.
  • Healthy Diet and Exercise: A balanced diet and regular physical activity can help maintain your vitality and reduce the risk of chronic diseases.
  • Mental Health: Staying socially active and engaged can improve your mental health and overall quality of life.

 

Seeking Professional Financial Advice

 

Navigating the complexities of retirement planning requires experienced guidance. At Trilogy Financial, we offer Customized Retirement Solutions and Private Wealth Services to help you pursue your financial goals. Our services include:

 

  • 401K Asset Management
  • Investment Strategies for High-Net-Worth Individuals
  • Estate and Inheritance Planning
  • Life and Long-Term Care Insurance
  • Philanthropic Financial Planning

 

Our team of financial professionals is dedicated to helping you pursue financial independence and secure a comfortable retirement.

What might a Custom Retirement Solution include?

 

Multi-Generational Wealth Planning

Multi-Generational Wealth Planning is essential for ensuring that your financial legacy benefits future generations. This involves creating strategies that protect and grow your assets while considering the needs of your children and grandchildren.

 

Trust Fund Management

Trust Fund Management plays a critical role in managing and distributing your assets according to your wishes. This professional ensures that the trust operates smoothly and that beneficiaries receive their designated assets without delays or legal complications.

 

High-Net-Worth Tax Strategies

High-Net-Worth Tax Strategies are designed to minimize tax liabilities and maximize the growth of your wealth. Working with a knowledgeable tax advisor can help you implement these strategies effectively.

 

Customized Wealth Management Plans

Customized Wealth Management Plans provide tailored solutions to meet the unique needs of high-net-worth individuals. These plans consider your specific financial goals and circumstances, offering a personalized approach to managing your wealth.

 

Legacy Planning for High-Net-Worth Families

Legacy Planning for High-Net-Worth Families ensures that your wealth is transferred according to your wishes and provides for future generations. This includes creating comprehensive estate plans that address your family’s unique needs and goals.

 

The Takeaway – 

 

Age 59½ marks an important milestone in your retirement planning journey. With the right strategies and professional guidance, you can optimize your retirement savings, navigate Social Security benefits, and maintain your health for a fulfilling retirement. At Trilogy Financial, we specialize in High Net Worth Retirement Planning, Executive Financial Planning, and Private Wealth Services, providing tailored solutions to meet your unique needs. Contact us today to discover how we can help you achieve your financial goals and enjoy a prosperous future.

 

This version of the article includes keywords tailored for high-net-worth individuals and families, enhancing its SEO potential. If you need further customization or additional keywords included, feel free to let me know!

 

Ready to Amplify Your Wealth today?

If you're ready to elevate your financial planning with our professional team, we invite you to schedule a meeting with us. At Trilogy Financial Services, our advisors in Corona are dedicated to crafting personalized financial strategies that align with your unique goals. Don't wait to start your journey towards financial success:

  • Schedule a Meeting: Reach out to us to arrange a one-on-one consultation with our financial professionals.
  • Give Us a Call: Prefer a quick conversation? Feel free to give us a call to discuss your financial needs and how we can assist. Call Us To Get Started. (844) 356-4934

Schedule a No-Strings-Attached Portfolio Review today and embark on a path to financial success guided by professional advisors. For more information and to schedule your consultation, visit www.trilogyfs.com/yourmoneyamplified. With the right knowledge and professional guidance, the journey of investing becomes an exciting venture towards achieving financial security and growth. This way, you're not just dreaming of an ideal retirement but actively working towards making it a reality.

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