Financial Planning is Personal
Financial planning is powerful but when it’s absent, it can be hugely problematic. Sadly, many of my own family needlessly struggle or struggled because they failed to plan financially. That’s why it's personal for me. It is incredibly heartbreaking to see what is and to think about what could have been. Below are just a few examples…
Vision without action is a day dream. Action without vision is a nightmare.
Japanese proverb
First, I need to say that how much wealth a person accumulates is not an index by which we measure success; however, planning done right can provide a much better life - one with less stress, more choices, and better experiences regardless of income. Marriages are stronger, retirement is better, you can visit more of this beautiful world, and most importantly you are in control of your destiny. Life turns out way better when you have a plan. That being said, here’s some family financial dirt!
My Grandpa West owned a ranch in Mountain View, Alberta, Canada. As you can gather from the name it’s a stunning place to live, at least in the summer. He ran a cattle ranch and it was a difficult way to make a living and they never had much. Decades later when he passed away my father inherited some of the land. After a disagreement with his brother, he ended up selling his share for the sum of approximately $100,000 in the early ’80s. So what did my father do with this windfall? Sadly, he just parked it in the bank. He liked the security and overtime used the money to pay for various expenses (I have four other siblings, and my father was a school teacher). We had a lower-middle-class life, but if my father would have paid the mortgage off (our house was $30,000), saved another $40,000 in the bank (for security), and invested $30,000 in the stock market he would have had a lot more options in the future. My father was a great man and provided service to many people throughout his lifetime. He was a fine example to me of what a man and father should be, but he could have made much better decisions regarding his finances if he had a plan or worked with a Certified Financial Planner™ (CFP®). Had he invested the $30,000 in the S&P500 in 1985 he would have earned an annual rate of return of 10.9%, and his $30,000 would have turned into $1.01 million!
My maternal Grandpa is also a great man. You would love him. He was an OB/GYN doctor and is doing pretty well for a 97-year-old. As a doctor, my grandfather earned a really good salary but sadly spent all of it. He didn’t decide to start saving for retirement until he was 58, and because he was so far behind, he invested aggressively and lost out during a stock market crash. Had my grandfather instead saved just 10% of his income starting at 30 years of age, and earned a 7% rate of return, he would have had approximately $3.7 million in retirement by the time he was 65. Instead, he worked until age 73 and now lives on a small pension. If my Grandpa implemented a financial plan or worked with a CFP® he would have had a lot more options in retirement.
My parents got divorced after 25 years of marriage. Money was the primary cause. My father was a child of the depression which may explain why he kept all that money in the bank. My mother, on the other hand, was taught by her father’s example (see above). They came into the marriage with two very different philosophies about money and sadly were unable to communicate correctly about these differences. I’m not claiming that if they had a plan or worked with a CFP® they’d still be married, but for many couples having an independent party to discuss goals and investments with like a CFP® can be very beneficial, and not just financially.
Before I got in the financial services industry a close relative at the age of 44 was diagnosed with stage 4 cancer and ended up passing away 22 months later. To make matters worse, he didn’t have life insurance. Had he purchased simple term life insurance for $50/month his family would have been taken care of financially. Instead, the last ten years have been really tough for his wife and kids. My relative’s family would have benefited greatly from having a plan or working with a CFP® to ensure they had life insurance in place.
Sadly, there are more family stories I could share regarding mistakes with money, but I know that my family is not much different from any other. I share this information with you to demonstrate that having a plan or working with a Certified Financial Planner™ can make a significant difference. This is one of the major reasons I became one.
Many don’t have a plan or use a CFP® but the examples of my father, grandfather, and others show what can happen when you don’t.
Finally, to share additional verification Charles Schwab conducted a survey that showed having written financial plans can lead to better daily money behaviors, and that these so-called “Planners” are more likely to have a higher overall Modern Wealth Index score, be regular savers, and effectively manage their debt. Here’s the link to the article: https://pressroom.aboutschwab.com/press-release/schwab-investor-services-news/most-americans-dont-have-financial-plan-and-many-think-t
If you would like to schedule a free introductory call to discuss your plans, please go to the "Contact" section to inquire about scheduling a meeting.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The hypothetical examples listed above are not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing. Investing involves risk including loss of principal. No strategy assures success or protects against loss.
