Beginning My Journey
Abby is 29 years old and has been working in the philanthropy department of a large corporation for 3 years. She earned a bachelor’s degree in Sociology from her state university and went on to prestigious private university in NYC for a master’s degree in Political Science. Abby met Ryan at work a year ago; their relationship has gotten serious.
Living on her own, Abby makes ends meet and has been diligent about paying off her credit cards each month. She took on significant student debt while working on her grad degree and has been making minimum payments. Retirement seems light years away and she has avoided the topic.
Abby is passionate about fitness for health and stress management. She’s been working with a personal trainer at the gym and sees it as a necessity rather than a luxury. She loves traveling and learning about other cultures; she and Ryan took a trip to Mexico a few months ago.
Concerned about the homelessness in her neighborhood, Abby wants to make a positive difference by giving to local social service organizations. She hasn’t been able to save enough to make any significant donations…
Recent changes in Abby’s life
Abby just landed her dream job as a senior policy analyst for a think-tank focused on solving global poverty. The job requires she move to Washington D.C. where the cost of living is higher. She negotiated a significant raise.
Shortly after accepting the new position, Abby and Ryan got engaged to marry. Ryan will move to D.C. with Abby. They will live together, sharing expenses such as apartment rent, utilities, and food.
Ryan just joined a private technology start-up. He’s taking a significant pay-cut and giving up the generous employee benefit package he’s been enjoying. Part of his compensation will be in stock shares of the business with the financial potential that brings. He will need to tap into his savings over the next few years.
Abby was excited about recent changes in her life but was feeling stressed at the same time. She didn’t feel she and Ryan had the time or experience to make the important financial decisions today to set themselves up for a comfortable life and achieve their career, family, and community goals. A friend suggested they needed financial guidance services from an expert planner.
Abby scheduled a complimentary Introduction Call with Mandala Financial Advisors. Abby shared her immediate concerns. We described how we guide people in similar situations to hers using a comprehensive wealth planning process. We agreed that it felt like a good mutual fit and that we should advance to a deeper-dive Discovery Meeting. We suggested that Abby include Ryan in meetings going forward since they both will be contributing to their financial future.
In our Discovery Meeting, we focused on gathering information and listening. We came to the meeting with questions across a wide range of topics for Abby and Ryan to answer separately. We explained there are no right or wrong answers. We wanted to understand both Abby’s and Ryan’s circumstances, dreams, and concerns.
After the conversation, we organized and documented what we heard and sent our notes to Abby and Ryan for their review. We included descriptions of the goals they had described, refining them over a few email exchanges.
We described how we would work with Abby and Ryan to help them achieve their goals. Together, they decided to engage us by subscribing to our ongoing Full Service Model which provides both comprehensive financial planning services and sustainable investment management services.
Get Organized Activities
Abby and Ryan provided financial statements for their bank accounts, credit card accounts, 401(k) accounts from their prior employers, student loans, and auto loans. They also provided copies of their job offer letters, new employee benefits manuals, and new apartment lease.
We provided Abby and Ryan access to our financial planning portal where they used a tool to help them organize and estimate their monthly living expenses. We needed that information for our next meeting, Explore the Possibilities.
We had an independent research firm send Abby and Ryan a risk tolerance questionnaire for them to complete separately. The results of this research helped us understand the appropriate level of investment risk to target when helping them select investment funds for their respective savings accounts.
Explore the Possibilities Meeting
We opened the meeting with a list of initial recommendations based on information we had already collected.
- Abby to contribute enough to the 403(b) plan at her new employer to receive the full employer matching funds (i.e. never turn down free money!).
- Abby to enroll Ryan on her employer’s health insurance plan under the domestic partner provision.
- Abby and Ryan to set up a joint checking account to which they would each contribute their share of living expenses; all bills would be paid from this account.
- Abby and Ryan to each open an account and each begin contributing to an emergency fund that would cover 3–6 months of living expenses should they lose their job.
- Abby and Ryan should keep their other financial accounts separate for now, agreeing to discuss combining accounts at a point in time closer to their wedding date.
- Abby and Ryan to create a monthly budget, track their actual expenses for next 6 months, and measure the differences between the budget targets and actual amounts spent.
Working together on the financial planning portal, we explored various scenarios that measured the likelihood of their achieving their goals under assumptions for future income and expenses. Ryan’s future income from his new employer presented the biggest wildcard.
Abby and Ryan were surprised how seemingly small differences in their monthly lifestyle expenses had large impacts on their success in achieving their long-term goals. We looked closely at their cash flow over the next few years, particularly in light of Ryan needing to tap into savings.
The information we gathered during these exercises were important to developing an initial financial plan we would present to them in the next meeting.
Plan Delivery Meeting
We presented an initial plan to Abby and Ryan. Together, we settled upon the the following actions:
- A budget for a modest wedding was set; Abby and Ryan would open a joint savings account and begin contributing to it each month.
- Abby and Ryan would begin saving towards a downpayment on a home, although timing on a purchase would depend on how Ryan’s income evolves over the next few years.
- We would assist Abby in selecting ESG funds for her 403(b) account that matched her risk tolerance level and offered the greatest positive environmental and social impact.
- Abby would continue fitness training but would have to limit her sessions to twice per month.
- Abby would pay down her student loans in our recommended order to minimize interest expense.
- A budget for travel was set supporting holiday visits to their families and destinations within driving distance of Washington D.C..
Their financial plan did not allow for Abby to make significant cash donations to local nonprofits over the next 5 years.
We discussed ways Abby could make an immediate impact by volunteering her time and expertise in meaningful ways at local social service organizations focused on supporting homeless people.
Ongoing Financial Planning
We all agreed to meet quarterly and reassess meeting frequency at the end of the first year. We would continue refining the financial plan for other topic areas identified on our service calendar, such as estate planning (particularly with the pending marriage) and insurance. We would update the financial plan as Abby and Ryan’s circumstances and goals change over time.
Along the journey we would provide Abby and Ryan coaching on their financial habits, thereby increasing their financial wellness and likelihood of achieving their goals. We would continue to educate Abby and Ryan in sustainable investing, preparing her for the day she has the financial resources to invest in positive change for her community.