The Importance of Financial Planning Goals
Tonight we’re talking about financial planning goals. What are they? What are some of the most common ones, and how can you apply them to your life? I’m planning to talk about is a list of financial planning goals. So it’s such a gray and nebulous idea, I think to most people, what are your financial planning goals? And I can confidently say that over decades of experience in the financial planning industry that probably no one has ever come to us with a specific list of goals that they wanted to achieve with their money? Most people come to us with ideas of what they would like to accomplish and some general thoughts around that, but I don’t think at any time, has anyone ever come in say I want to accomplish a, b, c and d, and I want to do it by age 30-45, 62, and 70. You know, no one is that specific with their financial goals. And that’s okay. That’s all right. That’s normal. I would say that people don’t have real, burning, specific financial goals when it comes to trying to craft a thoughtful, workable financial planning arrangement. So I thought it would come to the show tonight and throw out some ideas, some food for thought, if you will, to people to get you get the wheels turning, and to get you thinking about how some of these goals that we do coax out of our clients and we do implement into their financial planning, engagement, how that might apply to your life, and how some of the things might be able to be achieved at least you start acting on them in in a meaningful way to hopefully get the to achieve them, you know?
Defining the Purpose Of Your Wealth Accumulation
So what I have found through the years is most people make money without a clearly defined purpose, especially in America. You know, we work despite what it might feel like. Sometimes this nation works more than almost harder, almost and longer than almost any other nation on the planet, for good or bad. That’s kind of the way it is. We are one of the most efficient, industrious countries on the planet, and we we go, go to work, we do our job, we make our money. Most of us are trying to achieve something with a career, get promoted, get more responsibility, get more self-fulfillment and earn more money in the process. But what that doesn’t allow for, that that drive, that determination, doesn’t allow for is sort of the quiet time to sit and think about life’s big philosophical questions, like, what am I doing this for anyway? Like what’s, what’s the purpose? Does my work give me purpose, or am I working to earn money to fulfill my purpose? And there’s a big distinction between those two ideas. So being able to just work think through on your own, what is the big the use of the money that you’re earning through employment? Because money is a means. It’s not an end in and of itself, right? It’s not like no one has ever said, Well, I’m going to work as hard as I can spend, as little as I can, amass as much money as I possibly can, and then die with a big pile of it. Because there’s one thing we have not figured out how to do at Wealthway, and that’s to allow people to transition that money to the great beyond that money stays here on planet Earth in some form or fashion. So making money for money’s sake is really not a goal. Money is a tool that can be used to help achieve goals, but you have to do it with thought, and you have to do it with purpose in order to do to ultimately achieve the goal hopefully, and to do so efficiently, you want to be intentional, to try and design the life that makes you happiest. That’s what the money can be used for. An intentionality to design the life that makes you happy, to maximize your quality of life. And I’ll jump into some of these goals, and we’ll talk about some of the main ones that we see throughout our practice.
Broad Categories Of Financial Planning Goals
But tonight, I’m going to talk about financial planning goals. What are they? What are some of the common ones, and what are the ways that you may start working towards achieving some of these goals? So largely speaking, they fall into some broad categories. Retirement goals are, are a big one, of course, because that’s the period of time when our working income stops, and then we have to rely on ourselves or other programs to help replace that income. So retirement goals, then we have family goals, self-development and professional goals. We got asset and debt goals, lifestyle goals, tax planning goals, healthcare goals, and estate planning goals, just kind of what I was talking there about with Alan. So those are the broad categories of goals that most, that most goals fall into.
General Purposes For Earning An Income
And like I was saying at the top of the show, it’s rare that any of us really have thought through specific goals that we want to achieve by certain dates with certain dollar amounts, and that’s okay. You don’t have to have that. Most of us know that we have a general direction that we want to go towards, and that’s why we get up and go to work. We earn a paycheck. We work hard to try to get promoted, to earn more money, gives us more opportunity. And then our lifestyle, if nothing, in the absence of nothing, our lifestyle typically expands as we go along. The houses get bigger, the furniture gets nicer, the cars get more flashier, the vacations get more lavish, the clothes get nicer. All those things happen as we continue to make more money, but those in themselves, are things and while nice to have, aren’t really big goals that we would try to achieve through the financial planning process. So what would some of these be?
Financial Planning Goals for Retirement
Well, let’s take the retirement goals division, because that’s a big one. Needing help when you want to retire. So just picking an age or picking a date. Rarely is it that somebody comes in is I am going to retire at age 63 no matter what, tell me what I need to do to get there. Tell me how much I can live on. Rare is that happen? Usually it’s, well, I think I’m going to retire. I’d like to retire at least at age 60, but I would be willing to go to age 70 if conditions at my workplace is right? Or I don’t have anything that I want to retire to, or I don’t have enough money to live the lifestyle I want. So usually it’s just a range. So there’s one right there helping decide when you want to retire. Do you want to retire early? Do you want to maybe slow down and work part time. We’re seeing that more and more. Companies allow employees to go from full time status to part time status. We think it’s a win- win for both parties there. The employer gets a long, tenured, experienced employee moved to part time status. So more cost effective for the employer, the employee gets to remain engaged in the workforce, but in a part time status typically doesn’t have as much responsibility and stress in their daily work life, and so they can stay active and engaged and relevant and have a purpose through their employment.
Financial Planning Goals for a Sabbatical
Do you want to take a sabbatical during your career? Some employers allow sabbaticals, those are usually lengthy unpaid leaves of absence. So anywhere from one to six months is common for a sabbatical, but rare are those ever paid. So number so, number one, how are you going to afford to take all that time from work, even if you know your employers graciously offered you this time, holding your position for you until you return. It’s a massively huge benefit, generous benefit, from an employer, but you’re going to have to figure out how to come up with, you know, replace the income that you’re not going to earn from your employer. It offers a great refresh, too to the employees to take a sort of a extended vacation from the work environment.
The Benefit of Working With A Financial Planner In Planning Goals
Do you so some other retirement planning goals? Do you feel confident about the plans that you have for retirement? Good professional can help you clarify those? Do you want to feel confident about your current and future financial situation? Well, of course, most everyone does. I. Um, when those feelings become uncomfortable enough, that’s often when a professional can help guide you towards the proper destination and help you get clarity over your financial situation. You know, we’ve had a we had a client describe us once as a warm, fuzzy blanket. And I thought that was a I was really proud of that. Descriptors, Kevin, you know your company helped make me feel like a you’re like a warm, fuzzy blanket make me feel comfortable about everything. That’s what a good financial advisor should do.
Financial Planning Goals for Family Planning
Do you want to have or adopt a child? Obviously, a major financial commitment. You know, I think I looked this up not too long ago. I think the cost to raise a child in the US now, and I’m not sure if this includes higher education or not, but it’s around $300,000 for about three 300 to $350,000 to have a child until about the age of 18 or let’s call it the age of majority, When they leave the house. So obviously, big financial consideration.
Financial Planning Goals for Education
Might want to plan for that and the child’s financial educational future as well. How about, how about just that? Do you want to save for a child or relatives higher education? You want to do? You want to help the child pay for the expenses of higher education, which continues to outpace the current rate of inflation, which is unsustainable at some point, but we’re not there yet. And so private college a year at private colleges, at the most expensive ones, 80 to $85,000 a year, all in with tuition, room and board, and then public schools in State Public Schools ranging anywhere from about $20,000 a year to 30, $35,000 a year, depending on the state school here in Virginia, so the. Is there something you might want to consider as well.
Financial Planning Goals for Family Milestones / Needs
How about saving for family milestones, like big events, graduations, weddings, birthdays, bar mitzvahs, Bat Mitzvahs, any, any sort of milestone like that, that might come at a greater cost.
Do you want to support family members who may require special needs planning. And if you do have a special needs child, that is a sub-specialty of some financial advisors, and they can help you, in conjunction with an attorney, to help set up certain trusts and accounts and arrangements in such a way that a special needs child will be cared for even after mom and dad pass on.
Also, do you have any parents or other family members that you want to care for? It is becoming more and more common as the baby boom generation ages and starts moving into assisted living facilities, or nursing home facilities that their adult children are being called on to help with the very high Cost of nursing home care. right now in Hampton Roads, for in this kind of the most expensive but the most conservative look at it finance the most expensive nursing home facilities, or the type of care that costs the most nursing home facilities, we’re looking at about $10,000 a month, $10,000 a month for nursing home care. So it’s something that we plan for all our clients in our practice, beginning at about age 60. We put that on our and their radar and factor those potential costs into their financial planning, and it is one of the hardest things to plan for, because while it’s the last biggest expense we all may face, it also could be zero, right? Might not spend a single dollar on nursing home assisted living care in home care or anything, or you could end up spending hundreds of 1000s of dollars. So it’s something to be mindful of, and something that we plan for.
Financial Planning Goals for Change in Marital Status
And then how about any plans to change your marital status, getting married, getting divorced, or were you recently widowed, that will have financial implications and impacts that you might want to plan for.
Financial Planning Goals for Self Development & Professional Advancement
Okay, how about some self development and professional goals that your financial advisor could help you clarify, crystallize and plan for.
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Financial Planning Goals for Financial Independence Or Financial Health
Do you want to achieve financial independence or improve your overall financial health? Well, we all pretty much want to improve our financial health. But what about financial independence? What is financial independence? I did a whole show on that about a year ago. Basically, you are beholden to no one for your financial means. You live off your own money, your own sources of income you do not have to depend on an employer or a business for a paycheck in order to make ends meet, in order to live a lifestyle that you’re content with. So getting to financial independence is that something that is important to you? If so, that’s that usually means saving a whole bunch early on and working really hard to build up that nest egg as fast as you can.
Financial Planning Goals for Higher Education
How about do you want to pursue some more education or certifications for personal or professional reasons? Usually comes at a cost, right? Sometimes your employer will pay all or part of higher education. I have a MBA Masters in Business Administration from ODU that I got back in the 90s, about five years after I graduated from college. Two and a half years it took me to get me that MBA, and my employer, at the time, paid for the bulk of those costs, so that was helpful, but not every employer will be that generous, and you might have to pay for that out of pocket. That can be a good investment in your future, though having that additional degree or certification opens up more job opportunities. Can open up higher job opportunities that get you more responsibility as well as more pay. And then how about, how about just some
Financial Planning Goals Navigating Your Company Benefits Package
Do you want to optimize your employee benefits and compensation package like you? Like sometimes those are one of the most complicated aspects of people’s jobs are finding are trying to navigate their company benefits package. So we will often sit with clients and help them work through that choose the benefits that we think are appropriate and best for them, so that they optimize the coverages that they have, the insurance coverage they have, and do so for as low cost as possible.
Financial Planning Goals for Starting A Business
And then one more in self-development, professional goals, how about those you want to start your own business? Sounds great, doesn’t it? Be your own boss. Make your own hours living is easy, man, when you and you’re your own boss. No, not always the case, but it is a fantastic, good long term goal for some people who have an entrepreneurial bent. Almost every single business startup, though, requires a fair amount of upfront cash capital to in order to get started until the money starts rolling in from customers or clients
Financial Planning for Asset Accumulation & Debt Reduction Goals
So how about some that relate to asset and debt goals, like such as, do you want to increase the rate of return on your investments? Well, who doesn’t all of us want to increase the rate of return on our investment, but not everyone knows how not everyone knows how to invest appropriately. In order to do that, in fact, I will say that most people do not know how to invest appropriately.
The Benefit of Using A Financial Planner
Most people think they know how to invest appropriately, but they don’t because they don’t know what they don’t know. And that ignorance eventually catches up with them, and if they figure out that they don’t know what they don’t know, then that usually leads them to a professional. So increasing your rate return, if you’re not satisfied with that, that usually goes to investment selection, a good, competent professional can help you improve your rate of return? Do you want to improve your cash flow, increase income or reduce expenses? Of course, you do. We all do again. You might not know what you don’t know. In order to do those types of things, we have a sort of expression at Wealthway is wherever money touches our clients’ lives, we’re there to help them make the best decision. So you don’t have to know everything about money, right? That we are not really taught in this country in any meaningful degree how to maximize all our financial resources. Hence, the financial advisory industry, good financial professionals do know what you should know and can impart that knowledge to you and help guide you through a process and should be analyzing all aspects of your financial life, such as insurance needs and issues, taxes, estate planning, mortgage, everything I say the beginning of the show, like mortgages, retirement plans. Uh. IRAs Roth. IRAs investments within them, like most people, know how to make money through their occupation, their craft, their career, building a business, making widgets, providing services, whatever, but they don’t know how to make money with money. That’s what a good financial advisor will do you make the money align yourself with a good financial advisor. The financial advisor, in consultation with you, will help you maximize all your financial resources to then ultimately give you more options to use to enhance your quality of life.
The Financial Goal Of Building An Emergency Fund
Do you want to increase the amount that you have in your emergency fund? Or maybe you want to start an emergency fund? Okay, how to go about doing that, especially when you have competing priorities. Financial advisors can help you work through that. Do you want to protect your real and personal property from risk? Almost no. Well, exactly zero people have ever asked me that question. It’s like, Kevin, I’d like to protect my real and personal property from risk. No. No one really thinks about that, but a good financial advisor will through the analysis of your insurance coverage, they can let you know whether you have enough coverage, whether you have the appropriate type of coverage. And while we don’t sell insurance at wealth way, once we do a high level analysis, then we would refer out to an insurance company or insurance agent, or if you enjoy working with your own give you some direction on the conversation to have with a insurance professional to purchase the right type for you or change the amount of the types of and amounts of insurance that you currently have in place.
The Financial Goal Of Reducing Debt
Do you want to refinance or pay off any loans such as mortgages, student loans or credit cards? Yes, you want to do that as quickly as possible. Typically, not all debt is bad, debt, though, so that’s a very key differentiator, which most people don’t think of. Not all debt is inherently bad. The cost of borrowing is what determines whether the debt is helpful or harmful to your financial situation. So having that analyzed properly can help accelerate that process.
The Financial Goal Of Purchasing A Second Home or Vacation Home
Do you have plans for a second home or vacation home? That’s a that’s a big, big one that we usually work through with a lot of our clients at some point or another. And one thing that we’ve learned along the way is that before you commit to the financial and social aspects of having a second home, make sure it is your ultimate happy place. I mean, the place that you want to get away to almost every weekend, and that you’d be happy doing that for years, right? Because if it’s not your happy place, and there’s other things you’d like to do or see with your time and your money, then all of a sudden that vacation home that you used to enjoy going to becomes more of an obligation than it does an escape. And then once it becomes an obligation, as I Well, well, we’d like to go, you know, to Colorado this weekend to go skiing. We haven’t been out to the lake house in a couple weeks, and we got to go check on the, you know, on the on the on the decking. We got a loose board. I got to go fix that. I got to, you know, a lock. I got a repair. You got work to do with the second house. Look, if that’s what you love to do, then by all means, a second home can be a great retreat to help you refresh and recharge. But be careful that doesn’t become an obligation. And that’s some wisdom that many people don’t think through unless they work with a financial advisor.
Financial Planning To Meet Lifestyle Goals
How about some lifestyle goals? Planning to move a sale, sell of a sale of a house, purchase of a new one. Those are big financial decisions to make. You want to make any significant home improvement projects. You know nowadays, bathrooms, you’re looking at about $25,000 kitchens, about $50,000 if you’re doing them, and with moderate to high end furniture, furniture and fixtures in those types of rooms. So almost any remodel now is a significant financial investment. Do you want to buy or lease a vehicle? There’s a good question or goal to consider when you’re purchasing your next vehicle. Generally, we have learned. That if you are going to turn over your vehicles rather quickly in one to three years, then it probably is more beneficial to lease than to buy. If you’re going to hold them for longer than three years, then buying is typically the best option and and no matter what leasing is a luxury, not a necessity. So it’s really only applicable for those people who really want to turn over cars every two to three years. You don’t really have to do that, but those that are going to do that anyway, then yes, you’re better off leasing than purchasing and trading in every two or three years.
Financial Planning To Meet Tax Planning Goals
How about some tax planning goals, reducing tax liability in the present, redact reducing tax liability in the future. Almost everybody thinks about, how can I lower my tax bill this tax year. Rare are the people who think about, how can I lower my overall tax contribution throughout my lifetime. That takes very forward looking, rather sophisticated planning analysis that we do in our practice for all our clients, so that our clients live as tax efficiently a life that they can and redirect that excess money into more productive pursuits.
Financial Planning To Meet Charitable Giving Goals
About you have charitable goals. You want to give impactful gifts to a charity of your choice that’s near and dear to your heart. I’m not talking about the $50 the $100 here or there. I’m talking about, you know, maybe $100,000 maybe 500,000 maybe a million dollars, to get you know your name on a building or on a plaque, or have something of real consequence, and change potential with that money for a charity that’s so close to your heart.
Financial Planning To Meet Healthcare Expense & Estate Planning Goals
Then a couple healthcare goals, need to plan for a disability, long term care expenses, I talked about that earlier. That’s something we plan for all our clients. And then estate planning or wealth transfer goals, do you want to provide gifts to your children and loved ones during your lifetime, how much when those are those are huge decisions that have big impacts on the relationships with the people that you want to give those gifts to. Is not always about the money. It’s about what is that money going to do to them and for them?