Dawn is a Certified Financial Planner, the country’s first Behavioral Financial Advisor, the Founder and President of Relevé Financial Group, a multi-million-dollar advisory firm, and the creator of the Live WELLlthy education and financial planning platform. As a fiduciary with over 20 years of experience providing financial advice, she teaches people to save for tomorrow without having to sacrifice living today. Dawn’s proprietary process helps people identify what they want out of life, and she provides proven tools so people can get the money to make it happen. Her unique approach seamlessly merges the most effective teachings of self-help and finance, alleviating financial anxiety by ensuring people have spending freedom today and tomorrow.
I help people achieve their financial freedom, but I found many times people weren't able to enjoy it. People weren't able to enjoy their financial freedom, because one thing was missing. I wasn't teaching people how to build their emotional security, their internal security. Not just their external financial security, but their internal security of what they thought about themselves and how they thought about their money and how they thought about their life. I realized, through my own personal experience and through helping hundreds of clients, is that living life at this intersection of personal security and meeting what I would call your emotional needs, that wasn't part of the financial planning process. But meeting those emotional needs and that emotional security that we all need to feel comfortable being who we are, and feeling comfortable in our own skin to help us earn more and live more, that was a missing link.
Let's go into really what we're talking about today. We're talking about building security and freedom. If you go talk to a financial advisor, they're just going to tell you how to build financial freedom.
In my experience, you need security and freedom at the same time. So we need to build not just your wealth plan, but your worth plan. And it's this alignment. It's meeting these emotional needs. It's really taking a step back before you talk about retiring earlier or looking at buying another property. It's really about how do you think and how do you react emotionally to yourself and your wealth and your life? Then at the same time, creating this wealth plan, because we all want an elevated life.
So we want to take a look at how is how we create security so that we can experience freedom in our life for today and tomorrow. If you're in debt, if you have multimillion dollar portfolio, I will tell you, you can experience freedom, financial freedom today and for tomorrow if you plan accordingly to your worth and your wealth. So it's about this alignment. Let's talk about this. I want to start with your worth plan. And the worth plan about this internal personal security starts with our beliefs and our emotions.
Let's take a step back and talk about what are your beliefs? How do you think about yourself? I don't want you to put this in the chat, but I want to ask you a couple of questions:
· What is your earliest childhood memory about money? Because that's where your beliefs start from.
· And how did your parents think about money? Do you remember that?
· Did they have a scarcity mindset or an abundant mindset where they were thinking freely about money?
· And did you inherit any of your parents' beliefs or thoughts about money? Because I know I sure did.
That's why I'm a financial advisor today, because I had to retrain my beliefs. I want to ask you this:
· What are your beliefs today about your wealth?
· Are you stressed?
· Are you focusing on the wrong things?
· Is the root of your stress coming from maybe a belief that we need to re-examine and figure out how to change that belief?
· But what about your spouse?
· Do you and your spouse think differently about money?
I know my spouse, and I've been married for 26 years. And I've got to tell you. We value completely different things with money. So our belief system and how we were raised is very different and how we think and believe about money.
What about your kids? Anybody have kids? I have two teenage daughters, and I'm going to tell you, they think I'm an ATM machine. And our belief system, their belief systems and my belief system, about how money works is also very different. So all joking aside, if you start really peeling this back, we all need to change or update our beliefs and what we think about ourself and our wealth. Because our self and our wealth are combined and impacts how we relate to our money and how we relate to life.
I'm going to tell you a belief about mine is that, yes, I lived in a scarcity, a household that talked about scarcity and how limiting money was to me growing up, and I've had to work through that as a human being. But I've got to tell you too, as a career woman and growing as a financial advisor, I remember sitting down with a leader in my industry that said this to me, and I'm not kidding, this is an exact conversation that we had. This leader said, Dawn, why would you ever need to make X amount of dollars, which was more than what I was making. And myself, being the sole breadwinner of a family of four, I'm the only one bringing in income, and this person said to me, why would you ever need X more money to live? And this person was living and supporting one other person. This person was making more than double of what I was making. So I started believing that I wasn't worthy of making or having more money. And it wasn't until I did some personal development myself that I'm like, wait a second, I deserve to have that same lifestyle if that's what I want. And I really had to check my beliefs. So I'm going to ask you too. Is there anything that's happening today, maybe not even from childhood, but is there anything that's happening in your life today where you need to recheck, that someone put in your head that you're not worthy of this or you're not worthy of that. We really need to check our beliefs and what we think about money to really elevate our worth plan.
When you start thinking about your beliefs and your thinking, just know that no matter how you grew up, if you grew up in a scarcity household, which many of us did, you can change the way you think. That's one thing that we can control. The other thing that we cannot control is our reaction to life and our emotions. We cannot control the way we get emotionally tied to ourself, our wealth and our life. Any women out there, let me ask you this. Are there any control freaks in the Zoom call today. I am a huge control freak and realized that I was trying to control my money. I was trying to control my life so much because fear was dictating my decisions around my wealth and my money. Anxiety and fear had a hold of me through many, many years, early on in my career. And it was changing the way I believed about what I could do with my wealth in my life. There's an emotional connection to life. And there's an emotional connection to your money. But I want you to be really cognizant of making sure that when you're making money decisions, whether it be your taxes, whether it be your financial plan, whether it be your investments, paying down debt, doesn't matter.
When you're thinking about money, you cannot have an emotional connection to money. You've got to try to limit that. We can't make decisions based on emotions when we're talking about money. So working on this worth plan. Again, it's all about how you think. It's all about how you manage your reaction to your emotions with money into the life challenges that you know we all deal with on a day to day basis. Like 90% of our life is all based on how we react to the things that happen in our life. So I'm here to tell you that again, you want to build the technical part of wealth, which we're going to get into in a minute.
Saving.
Building your worth, internal security, is super, super important to building wealth. Now, you're going to continue on personal growth, personal development, internal personal security. And now we want to move on to the external financial security, so we can experience financial freedom. This is a wealth plan. Every single one of you, it doesn't matter where you are in your career or in your development of your financial life, saving for your future is non-negotiable. And what I would ask you to do if you already haven't, is to commit to saving a percent of your gross income. I'm going to tell you this. Throughout my career, I have found when people commit at least 15% of their gross income to saving for their future is when they're going to be able to be financially independent at some time, sooner than later. Sitting in tons of client meetings, I have also found recently that, I saw people in the chat saying I want to retire early. But the opposite of that has happened in my financial planning practice, where people are like, yeah, I want to retire, but I want to make some part time income, or I want to consult, or I still have more to give at the age of 60 or 65. And I still want this opportunity to work part time. If that resonates with you, and you're going to work maybe part time in the future, then know that maybe you don't have to save quite 15% of your gross income if you're planning on having some type of supplemental retirement income in the future. I will tell you this. My clients that have gone from, like I said earlier, $30,000 to over $3 million in their portfolio, they have not every single year, but they have saved sometimes, many times, 30% of their gross income. 30% because they might get a big bonus. And they would take a big chunk of that bonus and put it away on an annual basis. But just so you know that if you want to retire early, and you want to be able to be financially free and not have to work, that 15% is going to be your minimum to start with.
Tax alignment.
Where you save your money matters. Where you save matters, because you can see right here on the screen that taxes will likely be one of your largest expenses in life, even if you have two daughters; they're freaking expensive. But taxes are going to likely be your biggest expense and you need to know how to either play the tax game, or hire a professional so you can minimize that biggest expense. Because when you minimize your biggest expense, which is probably going to be taxes, you're able to apply that to be able to, like I said earlier, live financially free today and financially free tomorrow. So let's talk about this saving in taxes. We all have to pay taxes, and many of us pay too much in taxes because we're not able to think about tax planning from an income perspective and from an investment perspective. It's better to owe then it is to get a refund by the way because then you're giving the government an interest free tax. I always owe too because I'm never going to prepay my taxes. But here's the thing. We need tax balance. And once you get to retirement, I like you to have tax balance. don't care how much wealth you have. There's only three buckets to save in. On the bottom left hand of your screen is the taxable bucket. This is your brokerage accounts, your savings accounts, we call them non-qualified accounts. I want you to have the goal of achieving 30% of your portfolio, your investable portfolio wealth, in that taxable bucket. The bottom right-hand side is called your tax deferred bucket. And this is where you save in your retirement plans through work, your 401ks, 403B's. Some of you that are entrepreneurs have SIMPLE IRAs and SEP IRAs and just traditional IRAs. I want you to have the goal of having 40% of your investable net worth in this tax deferred bucket. And then finally, at the top is the tax-free bucket. This is your Roth IRA, sometimes life insurance, municipal bonds. And I want you to have a goal of having 30% of your savings, whatever amount you committed to your savings by the time you retire, in the tax free bucket. I know the screen can be completely confusing for people. There's a lot of stuff. Some of you are not numbers people.
There are only three buckets. 30% taxable, 40%, tax deferred, and 30%. tax free. My clients have always thought that once they achieved retirement that they'd be in a lower tax bracket. And what we found is that many times, they're not. Lower tax bracket meaning, well, I'm going to put all of my money in the bottom right hand bucket. That tax deferred. I'm only going to save in my retirement plan because I want to be able to minimize my taxes today. And then when I'm in retirement, I'm going to be in a lower tax bracket, which means that I will pay less in taxes. So when I pull money out of my IRA, in 401k, it's going to be at a lower tax bracket. But guess what, that's not how it works.
Here's what has happened. If you only save in that lower bucket, if you're only saving into your retirement plan, when you retire and you start to pull money out of these IRA and 401k accounts, it's taxable income to you. And then what happens many times is that taxable income then causes more of your Social Security. Yes, you will have social security would be my guess. It just might start later, it might be a less amount of money. But it creates more of your Social Security to be taxable. And then when you pull money out of your taxable account, then that's taxed at a higher rate. In fact, I have had clients that have been in retirement, and in a 40% almost 50% tax bracket with some of their money, some of their income, because they only saved in their 401K in the retirement plan. Do not just save for your retirement in your 401K, or your retirement plans through work.
Investment Diversification.
And finally on the screen is that as advisors, we talk about investment diversification all the time. This is no different, but it impacts your bottom line so much more. Having a diversified portfolio is so important. You've got to have the right type of risk profile and the right type of diversified investments. That's 101. We've all heard that before, but so many of us get caught up in how do I diversify this portfolio, or how much large company or Apple should I have, or Facebook or Tesla or now Twitter? Figuring all that out is important, but it's almost like splitting your hair. Versus if you haven't done this type of diversification first, because this is going to put the most money back in your pocket. And then how to invest your money and the diversification of your investments comes second. And I find a lot of times people have in the taxable bucket, though that's money that is tax on every single year, they have mutual funds or investments that pay a dividend. So you're almost double tax there. You have to be so cognizant of not only where you're investing, from a tax diversification perspective, but the investments inside of each bucket matter as well. So that's a savings plan.
Spending Plans
Let’s get into a spending plan. I'm an advisor that is completely different than, I would say, most advisors where they're just trying to create financial freedom and just trying to get you to save. I'm trying to get you to have alignment between your spending and your saving. It's about proper alignment. You can live today in financial freedom. Spending plan.
The number one driver to a healthy spending plan is understanding what your top five core values are. Many of us go, okay, what do I value? We know, right? But when I say, your top five core values? These are the things that you would not want to do life without. What do you really value? For women, a lot of us, its health, its relationships, its family, its security, its spirituality.
We value similar things. Bu, your significant other might not value the same exact top five as you do.. if you haven't in the recent year gone and done a core value exercise, I want you to go and do a core value exercise. In fact, I have one free right on my website, you can see it there. It's Dawndahlby.com\resources. There's a free digital core value exercise there. And I want you to go take it. I want you to figure out what your top five core values are. And then if you have a significant other or a spouse, I want you to have them do it as well.Now, if your significant other or spouse happens to be a man, sometimes men don't like to go do core value exercises because they just think differently than us women. But with my clients, I force the guys. I forced the male counterparts in my firm to do these core value exercises because it prevents a ton of arguments that you're going to have with your spouse or significant other about money. It's going to prevent, not totally prevent, but it's going to have them take a step back and understand where they're coming from with their money, and how they think about their wealth, how they think about life. It's so vitally important.
Once you know your core values, then guess what? I want you to go to create a spending plan around what those core values look like as a couple. Your real net income is after not just taxes but after you're saving for your future and your taxes. It's after you've committed that percentage, whether it's 5%, 10%, 15%, 30%, I don't care what the number is that you're committing today. And I want you to commit if you already haven't. But after you've committed the percentage of saving and you figured out what you owe in taxes, we have high power women in this room so you can use 30% tax bracket, is that after you've committed your savings and understand approximately what you're going to owe in taxes, which if you don't you're going to know next week, you get your real net income. What I did is I took a household income of $200,000 here and took out savings of 15% minus some taxes, and we got the real net income of $190,000 or $9,900 a month. And there's four different buckets. We don't have a budget, we have buckets, and we have a plan within each bucket.
Let me talk about bucket number one, which is on the upper right hand side, which is your debt. I am an advisor that believes that most of us, I mean it's really cool if you don't have debt, more power to you, I have debt. I think there's a lot of people out there that have debt and we don't have to feel guilty or shameful about the debt we have. 35% of your real, what's the real net income after taxes and savings, 35% of your real net income should go to your debt. All your debt. Whether it's a mortgage, I consider rent as debt, whether it's a car payment, or a lease payment. 35% of that real net income should go to paying all your debt. Now here's the thing with debt. I like good debt. I don't like bad debt.
What is good and bad debt?
Bad debt is credit cards. If you have credit card debt, no guilt, no shame. It is what it is because sometimes, some of us have credit card debt for medical expenses. There's things that we can't control in life. It's okay. But if you have it, and you need to figure out how to turn that bad debt, that credit card debt, into something a little bit more healthy, which is good debt, we can help you out with that. Or have a plan in place to turn your bad debt into zero debt and give you the freedom and the flexibility to have good debt. 35%. In this example, $3470 a month goes to debt. All right. Core values number two is between your spouse and yourself, significant and yourself or just yourself, 25% of your real net income should be spent on your core values.
Core values are the things you can't live without. So if you value health and you want a gym membership, go for it. Don't worry about the cost so much of your gym membership because that's the thing you don't want to do life without. If health to you means eating organic foods and being healthy, then why are we concerned? Sometimes we limit our spending on the things that matter most. And I will tell you, core value spending, when you take that combined and you and your spouse or yourself, significant other whomever it is, if you go we have $2,500 a month that we can spend on whatever, maybe it's travel, whatever it is, whatever you value the most. And you put that in your spending plan, I'm going to tell you, you're going to start to have a better relationship, a better emotional relationship with yourself, your wealth, and you're going to see life differently.
Then on the left side is all the other stuff to run a household. 35% of your real net income into household expenses. This means raising kids, your utilities, your target runs, your hair, your gas, so expensive right now. All the other stuff goes in this household bucket. The household bucket is where we tend to waste money. This is the part of the pie that I want you to be super obsessed with negotiating and cleaning up and getting really tight with your money on. Looking at where are some areas that you might be wasting money in your household budget so you can spend more on your values. Hope that makes sense.
Lastly, financial gifts. Financial gifts are huge. I am an advisor that believes in living and giving. I mean, that's what living wealthy is. When we feel good about our strengths, our weaknesses, our values, our purpose, our goals, our vision. And when we feel good about that, we start to think differently. And when we think differently, our beliefs change. And when our beliefs change, our reaction to all of the crap that happens to us on a daily basis changes. And then we're able to be the best version of ourselves. And then we're able to give more. And I say 5%, to financial gifts. Some of you might be thinking charity, some of you might be thinking, these aren't your kids. They are not your financial gifting, or your grandchildren, but giving away and you know, my husband and I, years ago, made a deal that if we were out to dinner, and we got great service, or we were somewhere, we're going to give a little bit more. So many of us get tied up in, why are we tipping and that kind of stuff. It's like, just give an extra couple of dollars, make someone's day with your gift. And when you're living wealthy and you're the best version of yourself and you're able to give, which gets missed in so many of our spending plans because we're thinking wrong. We're thinking with a scarcity mindset. And we're thinking about enough, never enough. And the more money you make, and some of you realize this. Some of you have great incomes. The more money you make, the more you feel like you don't have enough. If you're like me, I did that. I never felt I had enough. I made five times the amount of money I thought I would ever make in my life. And this was even 10 years ago. I was like, I don't feel like I have enough. And it was because my thinking, my emotions, and my self worth was wrong. I lived in fear and anxiety. And when I stripped that away from me, I was able to open up and give. And that is the key to financial success too. It's about living and giving.
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