Personal finances are in a crisis mode for the majority of Americans. Nearly half spend more than they make, and two thirds are living paycheck to paycheck. No doubt, many of your clients are in this situation. They consider you their most trusted advisor. However, the CPA profession has not figured out a way to profitably provide personal financial consulting. Until now! As a member of SASBA, you will now have the ability to solve this issue by introducing your clients to our personal finance program. We call it the TakeCharge Solution.
SASBA believes that saving money, though instrumental in the overall process, isn’t the first step to financial independence. Instead, the client must first understand how they got into this mess in the first place – and what steps are necessary to start improving their financial situation.
There are three steps to the SASBA TakeCharge Solution:
- Gain control of your finances by setting up a TakeCharge account and eliminate all future borrowing
- Eliminate unnecessary, high interest debt.
- Save and invest
The TakeCharge Account – This is the secret weapon to SASBA’s unique program. Most people don’t realize it, but one of the biggest obstacles to gaining control of their finances is the lack of planning for non-monthly expenditures. People tend to account only for recurring expenses they know will come each month – the utility bill, car payment, mortgage payment, etc. When a non-monthly expense occurs, they consider it an “emergency” or a “surprise”! These expenses include things such as:
- Christmas, birthday and other gifts
- Home or auto repairs/maintenance
- Vacation expenses
- Insurance payments
- Back to school clothes and supplies
- Doctor and dental visits
We can just about guarantee that some or all of the above expenses will occur in 100% of the households in America in the next 12 – 24 months. But if the individual (or family) is spending 100% (or more) of their monthly take-home pay on recurring expenses, where does the money come from to pay the non-recurring items? We have found that these recurring items most often are either put on a credit card or paid by a withdrawal from their company-sponsored retirement account (a 401(k) or other plan).
Have you ever heard someone say, “As soon as I get my pay raise, everything will be OK”? But most of the time, the pay raise comes and people find they are no better off financially; in fact, their situation may be worse. Why? For most, it is due to confusion and poor planning.
The TakeCharge Solution helps individuals plan for expenses like this – the non-recurring expenses that will happen eventually – in a businesslike manner. The TakeCharge account works like a typical savings account. The individual transfers an amount of money each month into the account – the money is then available to be used when these expenses occur. This way, they aren’t forced to charge these expenses to a high interest rate credit card when those “emergency” or “surprise” expenses come around.
You may be asking, “How does a client fund this account if there is no discretionary income?” Many people are transferring money unknowingly and unnecessarily for goods and services that they think they need but, in reality, they have been “sold” on the idea by excellent salespeople. The SASBA program assists individual members in reviewing expenses to find these unnecessary items and eliminate or reduce them. In addition, we help them find less costly auto, home and life insurance alternatives, introduce little known tax deductions, and discuss other concepts and introduce common sense decisions that will help them save extra money on a monthly basis. This savings will allow the individual to start funding their TakeCharge account and begin to gain control over their finances. Most importantly, this will also eliminate the need for future borrowing.
Once the TakeCharge account has been fully funded, the next step in the process is to analyze the client’s debt situation. Many Americans have in excess of $10,000 of unsecured credit card debt. The interest rate on these cards is all over the map but statistics have showed the more credit card debt you have, the higher your rate of interest. The SASBA program will help the individual to set small, attainable goals to reduce and eventually eliminate debt. They will also be introduced to programs that will increase their credit score which will reduce the interest rate on these debts.
Once Step One (properly funded and maintained TakeCharge account) and Step Two (repayment of high interest debt) have been completed, the final step of the TakeCharge Solution – saving and investing – can begin.
The SASBA philosophy is simple – no one should be looking at savings and investment programs when they are out of control financially and have significant high interest rate debt. They must master steps 1 and 2 before moving on to step 3.
The SASBA TakeCharge Solution is a web-based program that will immediately begin to improve your client’s understanding of personal finances and make a positive impact on their financial condition. An individual can join the SASBA membership network by clicking on the “click here to join” button. Membership is free – we want your clients to begin their journey of attaining financial independence with no obligation or expense.