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The Value of Margin

From Principal Josh Manifold & Advisor Evan Hewitt

Consider this: when it comes to measuring financial health, which is more important–revenue or margin?

It’s true in business and personal finance. The challenge is that margin is a receding trend in our hyper-consumeristic culture. A few examples:

  • High-income millennials reported the highest increased intent to “splurge”–tied to income increases. (McKinsey)
  • Spending has been growing faster than income for high-earning families since 2020. (Pew)
  • Almost 20% of those making $100K+ are living paycheck to paycheck. (Investopedia)

How do these trends in our financial habits affect our relationship with money? What about our families? What are we potentially sacrificing in our pursuit of more?

A few benefits we re-gain when the margin is re-installed as a priority:

  • Far less stress + strain when the unexpected happens
  • More intentionality with what we do spend
  • A healthier relationship with discipline
  • More contentment with “having,” not just “getting”

If your margin has steadily narrowed over the past few years, it may be time to revisit this priority.

Mid-year Cash Review: The extremes of too much cash or too little cash can cause anxiety and financial hardships. Schedule a strategy session with your advisor to consider:

  • Any large, planned expenses over the next 1-12+ month
  • Compare current rates at your bank to cash management strategies
  • Review cash flow (income-expenses) to note current monthly savings or burn rate
  • How much cash is truly needed in your cash reserves?

We regularly meet families and entrepreneurs who are living in the extremes of “too much cash” that is not paying competitive rates or “too little cash.” Adequacy is unique to each family’s situation, their goals, and their needs.

Donor-Advised Funds: Donor-advised funds (DAFs) now hold nearly $230 billion in 2 million accounts. DAFs are relevant to more and more retirees, investors, families, and entrepreneurs. They are valuable strategies in the tax planning and financial planning process.  If you have never given to a charity, are already giving, or interested in exploring an increased appetite for generosity, consider the following benefits of DAFs:

  • Simplified & consolidating reporting
  • No credit card fees
  • Avoid unnecessary capital gains taxes by gifting appreciated stocks/funds/ETFs
  • Anonymity

A current report from the National Philanthropic Trust revealed some interesting data. For example, grants from DAFs increased 9 percent to $52.16 billion:

The steady increase is encouraging, in part, because it reveals the increased commitment to giving. Grantmaking has doubled in the past five years. DAF donors consistently demonstrate their commitment to supporting nonprofits operating in challenging economic environments.

If you have questions about your DAF or would like to explore one, we can help.

July 1 History: So much has happened on July 1 over the years …

  • The Battle of Gettysburg began in 1863
  • The Dominion of Canada was established in 1867
  • The first Tour de France began in 1903
  • The Post Office instituted zip codes in 1963
  • Sony began selling its Walkman in 1979 (remember those?!)
  • Hong Kong reverted to Chinese sovereignty, ending 156 years of British rule in 1997

We remain grateful for each of you and your continued trust in all we do on your behalf. Have a terrific week!

 

 

 

 

*The views expressed are those of the author as of the date noted, are subject to change based on market and other various conditions. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results.