Fair is fair. Nick interviewed Dave about his personal finances in How Financial Planners Handle Their Own Finances, so in this episode, Dave gets a chance to interview Nick.
What is important to Nick Nauta about money?
For me the most important thing about money is family. Not only the ability to take care of my family but also how I spend my time. We don’t always think about that as money, but to me it certainly is. So, not only how I spend my money, but also my time. Spending time with family and being able to do things, share experiences, spend time with my kids when they are young and still in school.”
How do you implement that? What is your approach to personal finances?
The first thing is cash flow. If you want to know what is important to someone, look at their bank statements and their calendar. What do they spend money on and what is blocked off on their calendar? How much time is devoted to family time?
Budgeting: This is what needs to get paid. What do we want to do this year? One thing that is important to us is taking a vacation. So we allocate a monthly amount to that fund. We do the same thing for home improvements and things like that that are important to us that we want to make sure we are actively saving for. But the second half of that is balance. Not only what we want to do this year, but are we going to be able to do that in 5, 10, or 15 years from now. So, what are we saving for, like retirement, over time?
How often do you and your wife talk about money?
Typically in our house, we are making these larger budgeting decisions, like how much to save annually for vacation, on an annual or semi-annual basis if things change throughout the year. And then a monthly basis for our overall budget. As things fluctuate we have to move money from different pockets and so that is a monthly conversation.
How have you seen this change over your adult life?
That is a great question because, and I like to tell people, my wife and I come from different sides of the philosophy on this. If it was up to me we would save everything and if it was up to her, we’d probably spend everything. So, what I constantly have to remind myself is that neither one of us is right. If you save everything there is no guarantee that tomorrow is going to come. So what is the point in saving everything and give up the experiences and the things you want to do now? The flip side of that is if you spend everything and tomorrow comes – that sucks too. It’s about that balance.
So early on what I had to learn about myself is because I am a saver, I have slowly tried to not be so worried about retirement and savings. I’m trying to be a little bit more relaxed and know that we are saving enough for retirement. Peeling some of that back and being able to spend some money now for those experiences. It has changed a lot from when I was younger.
I have been in this business long enough to see clients on both ends of the spectrum. Not a lot of them come back to me and say, “I wish I would have saved more money.” Most of it is about their time and health.
Do you bring your kids into these discussions?
I defiantly try to. My daughter has a job and a car, so she has some expenses and so it has been a progression of, “Hey, if you spend money that you make and all the sudden you don’t have gas money or you have to ask dad for a loan, that is not the greatest feeling.”
We’ve definitely had the conversation about saving and having a cushion. It’s been pretty easy with her. My son is younger so he gets money for his birthday or something it is usually spent before he goes to bed that night. So, it’s a bit different, but he is younger.
There is a book called Raising Financially Fit Kids that I really like. There are a lot of different tactics you can do based on age groups and one of the things I love about her book is she has this principle of an allowance. It’s a tool for teaching about money, it is not a reward.
There are 3 buckets, spend money, save money, and give money.
You figure out how much you want to put in each of those buckets and that really helps kids get this concept of money management.
The broader thing is that money can be so secretive in families so I try to bring them into the conversations at a level they can understand. Not necessarily the deep budget but the overall concept. The more that you can bring kids into those conversations the more you can help your kids have a healthy relationship with money.
I want my kids to know that money isn’t everything. It is a means to an end. There are things that are worth spending your money on and not.
How do you go about structuring investments for your family?
The biggest thing I’ve always tried to do since I graduated and got a real job is put money into retirement. My goal has always been to hit 10-20% between the matching funds that I receive and my own contributions. Somewhere in that range. We have been lucky to work for some places that had a good match. Starting young, saving, and investing. I am ok with having a mortgage and car loans, with where the rates are. With credit cards, I like to play the game where we get the points and pay everything off but we never carry balances.
The other side of that is that I am not a big cash person. I don’t need to have a lot of cash on hand.
Investing-wise it has been on par as to what we do for our clients. 401Ks and model diversified portfolios. One could argue I may be a bit more aggressive than I should be at this stage of the game. But I know how it should play out over time.
I don’t follow the market every day, because I look more long-term. I don’t need to get rich quickly or make a huge return in order to be successful. I am able to achieve all of my goals with the rate of return I can expect.
We know what risks are and are not worth taking.
What do you worry about financially?
I don’t worry about too much. But I do worry about if my wife didn’t work for the State of Michigan anymore, how would we afford health insurance. So that is a big one, the rising cost of health insurance. Our approach is to be healthy.
We also have disability and life insurance.
Is there anything else you want to add?
The biggest thing for me and the biggest change has been focusing on what is most important to you. Making financial decisions based on what that is and getting yourself closer to being able to do that. How many times have we seen people who have 40-50 year careers and just want to retire and do something they could have done 20 years ago?
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