#262 – What Financial Risks Should Parents Be Ready to Take with Amanda Neely

Welcome back to the money boss parent podcast. I'm your host, Anna Sergunina, and today we have an incredible episode lined up for parents who want to build a secure financial future for their families, don't we all so I am thrilled to be joined by Amanda Neely, a certified financial planner, professional and CEO of a wealth of wisdom. Financial Amanda has dedicated her career to making financial planning accessible to everyday families, and she's here to share some practical strategies that will help you achieve financial stability without taking a necessary risk. In this episode, we'll be covering topics such as, how do we define and manage financial risk as a family some powerful yet simple strategies for long term financial security? How do we balance our finances with demands of family life? And also, Amanda will share personal insights from her own journal that she created for her clients called five smooth stones. So whether you're looking to get a better grip on your budget, start saving for the future, or find that perfect balance between, where do you invest, how much risk do I take? And what is this risk? Thing is all about. This episode is for you, so let's just jump in.

Hey, money bosses, welcome back to the money boss parent Podcast. I'm Anna Sergunina and I am excited for our conversation today. My guest is Amanda Neely today, and we're diving into how families can achieve financial security by managing risks. And risk is such a scary but yet such an interesting word that I think it's worth a discussion. So, Amanda, welcome to the show. Thanks for having me, and that's great to be here. Yeah. So I am very intrigued of how what you do in your practice, and also how you know you approach, approach risk, risk with your clients. So how about we start by just maybe learning a little bit about your background and how you know particular experiences in your life kind of inspired you to start a financial planning practice. Yeah, a couple of quick anecdotes. One, I will take you back to middle school. I remember my parents fighting about money. My mom had gotten into some credit card debt. My dad was mad about it. They were fighting, and I just didn't want them to fight anymore, so I would know money was supposed to be hard. Thankfully, my mom was really gracious and awesome, and she allowed me to sit down with her at the kitchen table, go through her bills together, figure out a plan to pay all the bills, get out of the credit card debt so that they wouldn't fight. And I had no clue that that was a job, right? That, like people did that for a living.

Fast forward, you know? I just, I was like, they taught me to balance a checkbook in sixth grade. This couldn't be that much harder, right? And just we figured it out, and my parents thought way less about money. It was great.

But fast forward, I went into the nonprofit sector because I thought, I want to make the world a better place. Like that's how you make the world a better place. That's your nonprofit work. And that's when I discovered that businesses can be really impactful in how they do their business, right, how they source their products, the materials, things like that, but also how they treat their employees, how they treat their customers, the community building that they can do, like some of the biggest donors to nonprofits, are businesses, right, and the business owners And so that inspired my husband and I just started our first business, and I was in my 20s at the time. It was really great. I call it my MBA program. I learned a lot. One of the biggest things I learned was just how risky business is,

I guess, isn't that like a movie or something risky business? That's true, right? Like, I learned that hands on, and got realized, like, how on the edge of bankruptcy we really were, and slowly walked back from that. We didn't have a lot of debt, right? I knew, like, stay away from that, but it didn't mean that I was not safe from bankruptcy. And so walked back from that, got to a much Stabler place, and then end up selling that business. And we're like, what do we do next? We've started a business. We're unemployable. Nobody's going to hire us now. And we had the guy that actually worked with us, a certified financial planner, that helped us walk back from that ledge. He was looking for people to mentor and train, and we weren't going to be ever be employees of him, because he was like, You're too entrepreneurial to do that. But he took us under his wing and mentored us and helped us grow. And it's been really great to do for others what he had done for us, and to pay forward that life changing message and getting control of our money. And that's. Change our lives. It's helped us be more generous, do some really cool things in the world, and the thing for our clients now too.

Yeah, I love that. I very much admire financial planners who focus on working with business owners, because, like in personal finances, it's like, it's personal, right? But it's very hard to separate the business, because it sort of wraps you, you know, into it and, and so, yes, I've plenty of clients that that are business owners, but it's like it was never a focus of mine. It's like it just happened. You're just, like, nice people that needed help, but they work for themselves, right? Or they had a company that they managed. So it always, it always excited me, because there's, there was more complexity that's more like my financial planning brain, yeah, thinking at the moment, at the moment, because they're like, Wow, we can come up with some creative strategies here and do really awesome stuff. So yeah, and the world, wouldn't you say, like the world has changed so much for us, especially with the pandemic, and how lots of people had to think about creative ways right to make money and and do things, you know, outside of just the nine to 5w two structure in order to make a living and have the freedom. I think the biggest realization is like we have the freedom to do a life that we really love, and like you said, make a world a better place. So I feel like it's the win across the board. Yet, as you and I know, with financial planners, there's so much to do, so many things to

learn and and implement. So I think we're on, on, on the right track here.

The sad part of it is that business owners need a lot of help, and especially with financial benefit, because if you look at why most businesses fail, it's because of cash flow issues and the owner running out of money.

Yeah, I remember, this was years ago, but one of the financial planning conferences I attended, they had a keynote speaker, Michael Gerber, who wrote, and I'm blanking on something like the myth, the one of his myth books that really like dives deeper into how do you go from being like the self employed, and, you know, kind of working for yourself, and taking the next step in creating a business, actual business, that's sustainable with systems in place and and people that know their responsibilities are and I remember, I was, I was just, I was just amazed that all of these things that you can put in place. Maybe that's just like, my how my brain works, like goes in direction, but it's been one of, like, the most impactful books I've ever read

in, you know, in thinking about a business, I had a different path. I didn't quite start the business. I was early on in the business, and had an opportunity to purchase it so, but I feel like I still had my starting point. Like, you know, I got to, you know, it was already established, but I feel like I started from scratch because I just, like you, I wanted to make the difference in the world. I wanted to, like, make sure that financial planning was available to the masses. And it's like, okay, well, if I want to do that, these are things that I want to work on. This is how the advice could be delivered, and so forth. So I feel like I started from fresh too, even though it was years before that.

So yeah, I think that's a great way for people to get into businesses, to buy businesses that are kind of working, and then make them better. In fact, that's probably one of the areas that women became business owners. Is working the best is when women come in and buy a business that exists, and then they add their own organizational and, you know, process thinking to it and make it better. That's one of the

like, most effective ways that women are entering the business, owner seat of a business. And I love that. That's part of your story. Yeah, no, that's interesting. I don't if I have any statistics on that, but yeah, I'm always like, Oh my gosh. You also first purchased a business, it seems like and not as common of a thing.

Talking about risk. So in personal finances, right? We this is, like, one of the first discussions with we have with clients, like, especially when it comes to portfolio conversations, I feel like that's the first, like, the other thing we gotta address, like, how much risk you're willing to take for this reward that you, you know wanting to accept and so it means different things to different people, whether they're just starting out, building their families, having kids, saving for college, buying their first homes, versus clients that are closer to retirement, or, like, just about to retire, half. So like, it's it feels like it's a spectrum in the typical financial planning process. It's pretty standard, right? Like you have this many years until you really get to need your portfolio, whether it's a full retirement phase or you're drawing down on it, and based on that, we're going to figure out how much we're going to put in the more riskier types of investments, like stocks, right? So that we can grow your portfolio, and because we have time, and they tell clients,

kind of highlight this for them quite a bit, like secret sauce to the whole investing game, is the time, right? Because more time we have, the more things we can do with your portfolio. So if we think about the risk, right, it's like this big defining factor, not just in the portfolio construction, but just in the overall like, you know, personal finances, slash business finance. It's like, you know, what are the some of the risks that are there exists and like, especially for families to focus on. And like, how do we define them? So that I that everyone kind of listening to this can start to understand, like, here's what I'm really facing versus what the news are telling us, or, like, you know, the newspaper or the latest post on Facebook. So let's talk about that.

Yeah, because, I mean, there's a whole bunch of different kinds of risk, right? There's market risk. There's you know, the risk that you know, your health might take a turn, right? There's a risk that your house could have a fire there. Like we could list and list and list different kinds of risks, and some have greater probabilities, or less probability. Hopefully, anybody that owns a home, you have fire insurance on that home, even though the probability of it catching fire is very low. That is, that's a risk that is easy to insure, to protect against, and often require if you have a mortgage, right? Because that that makes sense.

What a lot of people don't think about is like the risk that of your loss of income due to a disability, that's a huge risk that nobody wants to think about. And yet, one out of 530, some things will experience a loss of income due to a disability, whether short term or long term, before they reach retirement age. And some employers will offer, you know, accidental death and disability, you know, the Aflac commercials, all those kind of things that we see. But not all of them do, particularly small employers and business owners often aren't covered with those. So we have to talk about, like, how is that a risk you to live through, right like or live with, and what can you do to protect against that risk then? So there's also, like, all these myths around risk. You might have heard phrases like, no risk, no reward, which is actually just not true, because what's the definition of risk? It's actually you could lose, right? You could suffer a significant loss, not that you will get a reward. And so when people like, oh, I never thought about it that way, it's all they hear, repeat it over and over again. No risk, no reward. You got to speculate to accumulate, like all those things, it's like, actually, risk means you could lose. So that opens the the box to talk more about security and stability and building that, and then risking money you can afford to lose, which is a little different, and then how like, and, of course, like, there's a little bit of risk and there's a lot of risk. Nothing is risk free, right? So you kind of, you can look at what kind of portfolios have a lot more risk, what kind of portfolios have less risk, or products, right?

Which is fun, which a business, right? Most people like, well, I've never thought about risk in a business, especially one of the riskiest things we talked about, how many of them failed, right? Like, oh yeah, we talk of the business owner, and we talk about, like, the risk that you lost income. It's not just because you got a disability, it's because there's a new competitor in the space the market shift your you know, the landlord cancels your lease, right lots of things that could happen, not just health that impact your ability to make an income. And so we can then talk about like, how do we mitigate those risks, but also, how do we build personal wealth that allows you to overcome any type of thing that can happen? So this happened to us. I, you know, talked like we.

Back from that edge, we were building more personal wealth, creating that stability through our business, right, to make sure all of our eggs weren't in one basket, right? We're told to diversify as a way to keep away from risk. And so we had some personal wealth we were building we were keeping secure. We knew it was there, because it was supposed to be our edge of protection against if the business had something happen. And sure enough, after a few years of building that our business had to close because the building had the roof off for a roof repair, and a rainstorm, like freak rainstorm just came and just flooded the business. So we had to close. And of course, yeah, we had, you know, renters insurance. We had loss of business insurance, but they'll take a while to pay out. So we would have to go groveling to a bank or putting money on a credit card to, like, cover those things. But instead, because we had personal wealth, but actually lend that to the business to get the business through that time, meet our payroll, you know, pay the bills that needed to be paid, even, you know, pay our rent, you know, things like that. And then we got reimbursed for that later through the insurance, and we were able to put that back into our pocket, so we didn't lose a dime of interest to the bank or the credit card companies during that time. And actually showing Hey, the business was paying us an income that we could use to build wealth, that's actually helped us to sell the business later, right? The person that bought it. So, oh, you're paying yourselves. You were able to get through this. How cool I can. I can do that same thing, right? And so the lot easier to do that. So now let's apply that to like people that maybe aren't business owners. Yes, let's, you know, the stock market cyclical. It goes up and down all over the place.

Wow, right? Like people always think, if I'm taking money out of the risk, I'm not going to make anything. I can't make anything. It's, you know, no risk, no reward. Well, it's actually the safety allows you to be able to do things that other people can't. Yeah, get through a crisis in the business, or, you know, whatever it might be. Go ahead, what? Sorry, one. I think one of the like, maybe examples like that we can share on, take on this spectrum. If risk is like, a spectrum from low and then all the way to the high risk, like, what would be some examples like, and I feel like we've been in a really good interest rate era for the last few years, where even, like, the the low risk type of, you know, financial products were paying us pretty good, you know, returns, like a savings account, right? Versus, like, all the way at this other side of the spectrum, where we have stocks and Bitcoin and all of this other exotic kind of things, like where, you know, maybe you can make a lot more money, but you take a lot more risk. Talk, let's talk a little bit about what are some of these examples, because I know that we all have them in our lives, right? We just, we tend to get so busy and just kind of like dismiss them, or not really fully think about them, unless something happens like.

Maybe there's an election or interest rates are being cut, and we're like, oh my god, the roof, you know, the the sky is falling. We don't know where to pinpoint these, these risks.

Yeah, there's actually a really cool diagram that I saw when I was studying for the Certified Financial Planner exam. And it was, it was shaped like a pyramid, and at the bottom was the lower risk, and then at the top was the higher risk. I bet Googling, anybody could find a similar pyramid, look up and be like, Oh, interesting. For instance. Like, where would you put precious metals on that pyramid? Most people be like, oh, yeah, those are safe. Like, those. Have you know? Like, been around for a long time. Everybody's always buying those. There's a market for them, but they're pretty high on the pyramid because they're so volatile, and the swings of those can vary so much. And really, if you look at Sure, it's maybe kept up with inflation. But I've had people that bought at when gold was going up during the Great session that are still waiting for it to get back to where it was at its peak. And like, you have to look at the real consequences, right? Like, because of things can be so volatile, similar with businesses, right? Like, they're pretty high up there, when most people would think they're they're stable. Like, it's giving you an income. You have tangible assets like that. At the bottom, there's this funny thing, like, you've got your checking and savings account, your US Treasuries, but there's a funny thing called life insurance that builds a cash value that's actually right there.

Yeah, I love that. And thank you for giving some of these examples. Because, yes, I think we put different risk values, you know, whatever your scale is, or like, one to five, one to 10, right on, you know, depending what your experience is. And I've had plenty of clients you mentioned, like the Great Recession. I have plenty of clients who of clients who thought, like, gold or silver weren't the best thing, right? And, you know, looking back at it for someone didn't quite work out. Or, as a lot of people thought, you know, Bitcoin or cryptocurrency, or the, you know, the greatest things now, depends when you look at it, right? Like, what's that timeline? That's why I, personally and professionally always say to the clients, like, what is your timeline? How much time do you have? Because if you don't have whole lot of time, then we probably need to think about what you know, how your life will change if things don't work out the way you planned, right? Maybe you are going to get more return for that investment, right, for that risk, but what if you don't? And how do we, you know, how do we work around that?

So it it's such a balancing, balancing act of a conversation that's like, not just the first time you meet someone, it's all the time, right? Things shift every day, yeah, and it can't just be a questionnaire. I love that you're using a conversation. And can I share with you one of my favorite questions to ask, yeah, please, particularly because a lot of people have a hard time thinking long term. Right the here and now is right in front of us. Want to, like, make really good decisions. What's going to impact me in the next month or the next three to six months? Like, and to think about long term and risk is really difficult for folks, so I'm a little bit of a nerd. You'll be able to tell I love to use this as a framing question. So let's say you're walking along your financial journey, and you come to a fork in the road, and there's Gandalf, the gray from part of the rank, that's my nerd part. And he knows your future, right? He knows the journey that you're on, you know as your photo back ends or something. And he says, if you go to the left, you're going to reach your goals faster, but you're not going to be as secure when you're in your 80s, and you're going to be very scared to, like, spend money right, like, live it like, just on the edge, but you reach your temporary goals, or, like, your shorter term goals within the next three to five years, just like you want. If you go to the right, it actually takes you more, like, four to six years, maybe even seven years or.

Reach your goals, takes a little longer, but you build more stability. So in your in your 80s, you're very comfortable, and you don't have to worry as much you can. You know, you have a greater degree of financial freedom. Which way do you go?

And the Some people choose left, because they're like, I gotta reach my goals. I'll let 80. Worry about 80. And those are the higher risk people and other people say, Oh, no, I need to make sure my long term financial future is secure and I'm okay if it takes me a little extra time to reach my goal, because security is important to me. I know like they're much lower risk profile, and we need to make sure that, as they're building their wealth, they're building a way that they can sleep all at night, all throughout, right? And they know they're not worried about, well, what's going on? 80, right?

Yeah, I love that you use the words, see, I don't know if it's because I'm just a visual learner. I love to like, I need tactile like, where I can picture things, but a lot of people are that way, right? We're trained, actually, through watching television, to be more visible thinkers, right? That's how, that's how a lot of people learn. And so I actually love to invite people, I call it set your sights. If you're standing at this point on your journey and you look forward, what do you see? What kinds of stages along your journey do you see happening? Right? Like you can picture the day that you put in your retirement notice, or you put in your two week notice because you're about to start a business. You can visualize that in your head. And how do you want to feel in that moment? What do you want to have with you in that moment, in terms of what's in your bank account that allows to take that leap, but, right? You know, maybe not your bank account.

And then, yeah, and you know, like, what, what do you want to feel like or see when you're, you know, at your kids graduation, right? Like, in visualizing those things, and oftentimes, as we then start to move forward, we see differently, like, if I'm if I'm going on a hike, and I'm going to hike this mountain, as I approach the mountain, I can see things differently as I walk up the mountain. I see the mountain in different ways. I might see a different mountain that was like, Oh, I would actually go over there. And that also allows the adjustment and the change. If you kind of see it that way, it's like, you're just you enjoy the process the walking. But as your as your visuals change, as your sights change, you can also change how you're walking. And people can like you can feel that, like our imaginations are so powerful, like everybody listening to me right now, if you just imagine you're in a plane flying over your head, you're instantly there, right like you can picture that in your mind's eye super easily. That's what I love. Inviting people to do. When I'm doing goal setting, it's like, okay, visualize this. What do you see around you? How do you feel? What what's included with you? And then as we walk, like, Okay, what's changed? What do you how do we need to recalibrate and reset your sites? Yeah, no. I love that. I love the goals. Like, one of the favorite parts in the financial planning process is the goals discussion and building of you know, helping clients visualize. So I really love your analogy. Now, you mentioned to me, before we hit the official recording, that you actually created a journal that's called five smooth stones. I am really curious to see how you use it, what it's for, and how our listeners can get their hands on it. So again, another way that I'm a nerd. I love paper like, if you take me into like Target, I'm in the paper section looking at what new journals do they have, you know, things like that.

And that I wanted something really high quality, not just something, you know, that had been printed, you know, mass produced or whatever, and that people could, like, feel in their hands, that they're like, recording their journey in a way. So I made this journal. It's vegan leather. It's got thick paper, like you can write in it with all kinds of markers and pens, and really, like, make it your own kind of people that, like a bullet journaling, right? It's got a lot of dot pages in there, but walks people through studying their sites. Or, like, what? What goals do they want? What is it actually developed a method. I call it the still method.

Yeah, I love that. Yeah. No, we definitely would love to get our hands on it, because, and I am, I'm right with you. I love the journal part. I do that, you know, I do. I have a journal that I, you know, do spend time in in the morning and before I go to bed. So I'm definitely, I'm still probably old fashioned, because I take a lot of notes. I mean, we have a fancy, AI powered tool that's recording for, like, the show notes and stuff and client meetings, which is great. Thank you. But I still take notes. Yes, there's, there's something to that, and just a second note. No, it you cannot run a marathon just on a day one, I just had the privilege and awesome opportunity to train for one, and so it took a long time, and it was so it was more than repeat 12 times. But, you know, it's, it's right in there as we close for for our conversation today, like, I want everyone listening to kind of like, you know, take this in their head that you know, risk is, is out there in all kinds of directions, right? I mean, we have a risk getting in our car and driving to work or, you know, picking up our kids from from school, you know, everywhere, or eating food, you know, that may not, you know, agree well with us. How do we how do we go in life and and be in tune? Because I see so many clients that perhaps could have taken a little bit more risk, could have, you know, gotten a little bit more reward, if they understood where they were and what it really means.What are your thoughts on that?

Yeah, I feel like a lot of times what people do, because there's so much out there, right? 450 different financial products. We talked about maybe five of them in our conversation. There's so many more, and people get confused and stressed and they're not sure what to do, and so they actually just avoid and that's actually a different kind of risk. And so we have to talk about not just the active risk, right? The things that you're doing that, you know, put your money on the table to gamble with, right? You know, the active risk, but also the passive risk, by not making a decision, by not doing anything that these are the things you could lose out on right, or these are the risks that you're you're taking right. Inflation is real. It's happening that gives people right a little bit more they Oh, of course. Now I know inflation is real, but you know, and so they're more likely to be open to seeing the passive side of the risk that by making no decision, you're still making a decision, and there's a consequences of that.

Yeah, I love that, and I think, and I also think the more we practice and it's never too late to start like just because you you're a certain age, you can always make change your mind about it, right? You can always get a little bit more educated. And I know it's like we got to deal with our emotions, and money is emotional, we know that, but, but there's definitely tools and ideas. So as we close, how can our listeners connect with you?

Amanda and my firm has called the wealth wisdom financial firm. We're at wealth wisdom SP, as in financial podcast.com, wherever you listen to this podcast, you can check us out there as well, and if you would like to check out five Smith Jones, it's available on our website. And we created a special coupon code, money boss, all caps, no spaces, just money. Boss, to give you $10 off the journal,

Awesome. Yes, and I'll be happy to include all of this in the show notes. Any last minute thoughts before we part

the I guess maybe the one thing we didn't cover was a lot of parents, they have their risk profile and their partner, the other parents in the relationship has a different risk profile, and this is where working with a certified financial planner like Anna or myself can really come in to help Find the not compromise, but the both and of both people's risk profiles and making sure that they're working in harmony and that there's a lot less arguing. Let's come full circle to my parents arguing right wasn't just about their credit card debt. It was because they disagreed of what their money should be doing with them, and they needed a third party to come in and help but say, like there is a plan right there. There's a way to make sure that things are moving forward and we're not going backwards. That is one of the best things a couple can do. Not, you know, money counseling is a different thing. You might be at that place. Recommend that highly. But also having the financial planner commit we love like you're talking about setting goals. There's probably compete goals in the couple. We have to figure out, like which ones come when, and how do we make sure everybody's happy?

Yes, I agree that I love that it's a risk mitigator, right? Yes, we've been in that role many times. Awesome. Well, thank you so much. I appreciate your joining us today. Yeah, thanks for having me. It's been a pleasure.

You.