Financial Well-being

As we kick off the new year, we believe that financial well-being is about making choices that resonate with your values and long-term aspirations. In this New Year edition of Positive Pulse, our goal is to equip you with the knowledge to make informed financial decisions, nurture positive money habits, and ultimately reach your financial objectives. Whether you're embarking on a new financial journey or fine-tuning existing strategies, we've crafted this edition to cater to all. Dive in, learn, and take tangible steps toward a more secure and rewarding financial future.

The financial landscape is undergoing a digital transformation marked by mobile finance app prominence, the rise of RIAs, loyalty program adoption, cloud banking momentum, overdraft fee reassessment, and the mainstreaming of cryptocurrencies.

1. App Boom: Personal finance app downloads surged by 90% during the pandemic. With 7.7 billion smartphone users, apps are quickly reshaping how people manage and invest money on the go.

2. Overdraft Fee Reevaluation: Banks are rethinking overdraft fees, introducing features like Bank of America's Balance Connect and PNC's Low Cash Mode. This responds to consumer demand for fee avoidance and regulatory scrutiny.

3. Financial Loyalty Programs: Loyalty programs are now a staple in the financial sector, with banks using rewards to enhance customer loyalty. CitiBank's "thank you" rewards program exemplifies this trend.

4. Rise of RIAs: Registered Investment Advisers (RIAs) are gaining traction, managing $110 trillion for over 60 million clients. Their fiduciary duty and personalized service make them a preferred choice for wealth management.

5. Cloud Banking Momentum: Banks are swiftly adopting cloud services, with giants like JPMorgan Chase and Arvest Bank transitioning core systems. The cloud is seen as a vital tool for providing digital services and scalability.

6. Cryptocurrency Mainstreaming: Cryptocurrency market cap exceeds $2.79 trillion. Venture capital firms invested $27.4 billion in 2021. Regulatory actions, like the U.S. requiring crypto exchanges to report to the IRS, reflect increasing mainstream acceptance.

7. Blockchain Evolution: Blockchain is transitioning beyond cryptocurrencies, integrating into traditional finance. Banks like HSBC and Wells Fargo use blockchain for secure and efficient transactions. Even insurers will employ blockchain for automated processes.

A 2022 Bankrate survey revealed that only 44% of Americans could cover a $1,000 emergency from their savings, citing rising inflation as a hindrance to saving for unforeseen costs.

Regardless of your financial standing, having a separate emergency fund is essential. Even if you maintain a high balance in your checking account or own a credit card with a substantial limit, a dedicated emergency fund ensures you're prepared when needed. Borrowing to cover unexpected expenses can lead to financial challenges.

1. Choose the Right Account: Use a basic savings or money market account, ideally linked to your checking account for accessibility. Ensure it's not subject to market risks by avoiding stocks or bonds.

2. Seek Yield: Look for an account with a small annual yield, but be mindful of minimum deposit or balance requirements. Shop around to find the best option with no annual fees.

3. Calculate Your Needs: Save enough to cover three to six months of expenses, adjusting based on factors like dependents, spousal income, or external financial support.

4. Start Small: If funds are limited, set up an automatic monthly transfer (e.g., $100) until you reach your target amount.

5. Use Only for Emergencies: Reserve the fund for genuine emergencies such as car repairs, job loss, medical bills, or home repairs.

6. Replenish as Needed: After utilizing the fund, replenish it promptly, recognizing that unplanned expenses may recur.

A Stanford Medicine-led study published in the Journal of the American Medical Association (JAMA) in November 2023 compared the health of 22 pairs of identical twins. The study found that twins who ate a vegan diet for two months had better cholesterol, insulin, and body weight than their siblings who ate a meat and vegetable diet, suggesting that a plant-based diet may lead to better heart health and slower aging.

The community has made its choice, and "The Power of Now" received the highest number of votes. I'll be sending an email to those who registered this month with details on how to proceed in the Book Club. Don't worry— you'll have until the end of March to read and share feedback before an optional virtual meeting to discuss the significance of the book. If you haven't signed up yet but are still interested, please complete the registration process below.

• Participants will be responsible for purchasing their book (The author reads the Audiobook and I compare his voice to David Attenborough, which makes for a fantastic listening experience)
  
• If you'd still like to register, do so through the original questionnaire with book rankings, understanding that the book has already been selected
  
• Through the Positive Pulse, interested participants will vote from a selection of books on a specific well-being topic, quarterly
• The book with the highest weighted score will be selected and participants will have about 3 months to complete the book
• Participants will receive an Introspective Questionnaire designed to encourage thoughtful contemplation and meaningful discussions as the book is being read
• Smola will work with the registered participants to schedule one Virtual Feedback Session at the end of each quarter
• Everyone who submits the Questionnaire or attends the Virtual Feedback Session will be entered into a raffle for a $25 Barnes & Noble gift card

"The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind." — T.T. Munger