COLUMN: A financial lesson from Mr. Miyagi – Rome Sentinel

Many will remember the 1984 hit movie “The Karate Kid” – the story of a New Jersey teenager who moves to California and gets bullied by a group of kids well versed in karate.

The main character, Daniel, befriends an older Japanese man, Mr. Miyagi, who teaches him not only karate but also balance, patience, humility and more.

And of course, because it’s Hollywood, in the end, Daniel beats the bully in the big tournament and gets the girl.

As a 13-year old junior high student when it came out, I loved this movie. Admittedly, I had a crush on Elizabeth Shue who played opposite Ralph Macchio, but even more

so, how could you not love Mr. Miyagi, played by the late Pat Morita?

His lessons were timeless and delivered with the perfect blend of wisdom and humor. It all came down to the basics for Mr. Miyagi. Balance. Breath. Character. Principle. Truth. When you keep these things at the forefront, life has a way of being simpler and clearer.

Financial planning is very similar. It is easy to get caught up in the noise when you are under a constant media assault as we all are in 2022. Turn on the news and all you hear is what’s wrong with the economy and the market.

Look at social media and all you see is beautiful, monied people living better lives than you. But are they?

When feeling overwhelmed by all this, it is helpful to inhale and exhale deeply and return to the basics.

As Mr. Miyagi teaches us, “First learn to stand, then learn to fly. Nature’s rules, not mine.”

So in that spirit, let’s look at some basics for your own financial planning.

First, your spending/debt. Is it within a reasonable realm? Compare your spending to best practices and see where you come out. For housing expenses (mortgage principle, interest, property taxes and homeowners’ insurance) the amount being paid should be equal to or preferably less than 28% of your gross income. So, if your gross income is $100,000 per year, your monthly mortgage payment, (inclusive of principal, interest, escrow of taxes and insurance) should be no more than $2,333.33.

So yes, the McMansion makes for great Instagram posts but is it within your means? Is it coming at the expense of properly saving for retirement or your children’s education? Is it making you so house poor that you are ill equipped to handle a large, unexpected expense?

Which leads to the emergency fund, a crucial building block for financial planning. If you are single with only one source of income, best practice is to have 6 months of current expenses set aside in a readily accessible savings account. If you are married but only one spouse works – same deal, 6 months. If you are married and both spouses work and have similar wages, this amount can be 3 months of expenses.

The idea here is that if an emergency arises such as needing a new furnace when it’s zero degrees outside or a serious medical occurrence where you first have to meet your high deductible before health insurance kicks in – then you have the funds readily available to cover it and you aren’t forced to put it on a credit card at 20+% interest rates.

These things aren’t complicated but they are essential. It’s amazing how many younger investors want to talk about crypto or shorting stocks when they are carrying high credit card debt and aren’t maxing out their retirement plan deferrals.

Stand before fly. And when scrolling through the ‘gram and seeing all these people “living their best lives”, take a breath and return to the basics.

As Mr. Miyagi teaches us, “not everything is as looks, you know.”

NOTE: Original content provided by Gregory Mattacola, Esq., financial advisor at Strategic Financial Services. Content is provided for educational purposes only and should not be used as the basis upon which to make investment or financial decisions.