Transcript of Video:
Anchor: Well, every New Year a lot of us find ourselves in organizing mode, both around the house and looking at our finances. And Kurt Pearson from Compass Financial is here to help us with our money. So Kurt what’s the best way to kind of organize our money at the beginning of the New Year?
Kurt Pearson: Well I draw the analogy, Eric, to the whole idea that most of us have about kind of watching our weight a little bit more close. Same thing on the Financial side with expenses. So of course the first thing is to do the basic counting. You know, every dollar that comes into our situation gets named. Sometimes other people name it for us because of decisions that we’ve made. But it’s important to take a look and say, “OK, every dollar that’s flowing in, what name has it been given and where is that dollar flowing out?” And that managing of cash flow becomes very important to have the right processes, to have the right systems. The right process, the right system can go a long ways to that peace of mind, that sense of security that all of us are seeking when it comes to our money.
Anchor: So once it’s named and kind of organized, what’s kind of the next step to kind of get your house in order?
Kurt Pearson: Yeah, once we have our cash flow organized by category, then we can begin monitoring and taking a look at the 3 month average for that category or our 6 month average for that category. And we can begin seeing OK, how close am I this month to my 6 month average. And we begin to get a sense of OK, I’m really over budget or over what I usually spend in this area. And then we can begin making some of our judgement calls on is this how we want our money flow to go or do we want to make some changes. And then how do we make those changes. Paying yourself first, of course, is something we always like to talk about as financial advisors, but also there are other priorities that can really make sense in a person’s financial situation.
Anchor: So you kind of have things organized and you have every best intention but sometimes it just doesn’t work. Are there kind of some magical tips to kind of help us with this?
Kurt Pearson: Well, nothing too magical and we can’t wave a wand over, but practically speaking we talk about having a money buddy. Someone either in your family or in your close circle of friends or hiring a financial advisor. Someone who can help you with your cash flow management. Because I tell you as I’ve done this for over 26 years now, it’s one of the key habits and key skills that really propel people to a modicum of financial success. So if we choose to ignore managing our cash flow it could really catch up to us especially if we hit a rough patch with our work or with our finances.
Anchor: Someone to hold you accountable essentially.
Kurt Pearson: Exactly. Accountability is good.
Anchor: Whether it’s finances or anything. Thank you very much Kurt. If you want to get a hold of Kurt you can contact him at Compass Financial Services. That number is on the screen at 327-1020 out in West Des Moines. Thanks so much Kurt.