Transitioning on from the early years that we discussed in a recent post, most of us get to that stage where wealth accumulation becomes important. There comes a time in our lives when financial planning takes on a whole new meaning of responsibility, commitment, priorities and goals. From what used to be an individual’s need for financial independence you find yourself becoming the integral and pivotal source of funds for your dependent loved ones. With the growing financial obligations comes, no doubt, a feeling of satisfaction in being able to fulfil these demands. With some thought about sound investment options and a proven financial planning system, you can achieve a healthy financial balance and be stress free.
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What are some common financial requirements of individuals and families in this stage of life?
- A good home - so think: financing required for a down payment, mortgage, homeowner’s insurance, property taxes, and the ongoing maintenance and upkeep of your home and surroundings
- Children and family - aside from daily and basic necessities you have other expenses to think of such as daycare costs, education (especially putting aside funds for college / university fees), family vacations, etc.
- Travel - daily commutes to work and school are not getting any cheaper with the rising gas prices. In addition, you want to be able to travel as a family every few months to get away from the rigors of routine life
- Insurance - for your car, home, property and life—no matter how inflated the premiums seem to get every year, you know that failing to protect your assets and your life with adequate insurance coverage means risking your peace of mind
- Emergencies - you need to always be prepared to handle the financial pressures of a medical, personal, natural disaster, or any other kind of emergency you are faced with
In spite of all these financial obligations you want to also make sure you have a certain desirable and satisfying lifestyle where comfort does not have to take a back seat. Over the years you have made some investments; some wise choices and perhaps some not so wise. Nevertheless, now is the stage when you want to ensure that your assets grow and your investments are optimized for the best pay off when they mature or when you need them to fund important events in the future.
So how can you do this? There are a few fundamental criteria you can aim to fulfil in this wealth accumulation phase of life:
- Try to ensure that your net worth exceeds 3 times your annual income
- Upon the solid financial foundation that you created in the early years, start diversifying your investment and asset management strategy by looking at bonds and equities
- Acknowledge that as your wealth grows, so does your risk bearing capacity and it is possible to get a little more aggressive in your asset allocation
- You may start seeing that your interest earnings are slowly getting to be on-par or equal to your equities; so start saving more
So what are you waiting for? Get started today with no cost or obligation a FREE Financial Assessment from Plan & Act. Then, when you’re ready, we can work with you to create a personalized (and affordable) financial plan that maximizes your investments and assets in the wealth accumulation stage so you have a financially secure future and a comfortable, stress-free retirement.
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As children, when we are completely dependent on our parents, concepts such as financial planning, money management and financial security don’t mean much. Yet most of our beliefs about money are fairly established by the time we are approximately 12 years old. These beliefs are based on a number of factors, including the financial status of our family, the economic climate in which we have grown up, and our parents’ way of dealing with finances.
Our first practical encounter with money often begins when parents provide us with an allowance. Along with that allowance, most of us will usually receive a piggy bank, or even better, a savings account in the family’s bank. We are encouraged to “save” our money. At this point, money has an actual value, and the words “money management” begin to take on some meaning. Add a simultaneous increase in personal freedom to the equation, and the possibilities can seem endless. It is at this time that our future attitude towards money matters becomes more clearly defined.
Some of us revel in the money-equals-freedom formula. We live for the day. Adults of a certain vintage may recall arcade game marathons followed by fast-food feasts. Perhaps some of our friends were more frugal with their money. They likely didn’t use the words “financial planning” or “money management”, but that’s precisely what they were doing. Maybe they were saving up for a special purchase. Others may have simply enjoyed watching their money add up, admiring the potential value of their growing funds. Merely having a piggy bank or savings account gave them a sense of financial security.
Teaching Your Children About The Importance of Financial Planning
Our attitude towards “financial planning” changes during adolescence, usually as a result of getting our first job. Going to the movies involves a financial sacrifice. We begin to put our money belief system into action, and this requires some small-scale financial planning. This is where parents can help. Many parents, however, are hesitant to discuss financial planning with their children. Studies reveal that:
- A majority of parents feel less prepared to talk to their children about money than they are to explain “the birds and the bees”.
- Only a small percentage of parents have explained to their teenagers how credit card interest and fees work.
- Very few parents are cognizant of the fact that learning about money management should be a priority for their adolescent children.
If you are a parent, look for opportunities that allow you to explain financial concepts using real-life situations. Try to lead by example. Encourage your children to help out with the planning process so they understand the value of money and the importance of having a sound financial plan to achieve their goals. They’ll be indebted to you and it will become an enjoyable experience for all!
Financial planning is essential for every individual and family. How much or how little we know about money directly affects our quality of life, now and in the future. If you’re a recent graduate or have just started your career, Plan & Act can start you on the road to financial independence. Regardless of your current financial status, you can get started with one of Plan & Act’s Free Financial Assessments and then continue on with a personalized financial plan down the road to help you reach your goal of financial security and stability.
* Plan & Act is a registered Fiduciary Financial Advisor. This ensures the financial advice you receive from us is objective, unbiased, and protects your financial interests.