Fiduciary Financial PlanningThe 5 Ws in Planning Your Financial Future

Planning your financial future is intimidating. And, the coronavirus has people rethinking everything about work. And not just work from home. People are resigning in record numbers, shifting careers, or just walking away from work altogether.

So, how much thought have you given to walking away or retiring?

Maybe you’re an executive, committed to the business, but also looking forward to the day you can walk away. Maybe you’re a serial entrepreneur, with a lineup of ideas stretching ahead on the horizon, so you may never truly retire. Or maybe you’re a business owner, with a succession plan that could use an update.

Maybe you’ve read or heard someone say you need X dollars to retire. We all wish there were an Easy button we could push to plan for retirement or for the future. But the simple fact is: Our needs are different. There is no one-size-fits-all financial plan. Planning for your retirement is a tax-management issue. It’s a resource issue. It’s a cash-flow issue. It may be an estate planning issue.

“One thing I impress on every client is to start the planning process sooner rather than later because the sooner you chart the course, the more forward progress you will make. If you start moving in a mindful, thoughtful, and intentional way, executing your financial plan, you will progress.” – Miaciah Manuel, CFP®

 

Whatever your situation, whether for you walking away means retiring in the traditional sense or simply slowing down, or facilitating some sort of transition, we suggest you take time to think about the 5 Ws – Who, What, When, Where and Why – and how they apply to planning your financial future. Regardless of where you are in your journey, answering these questions is important.

 

Who?

Who does your money need to care for? Yourself? Your spouse? Aging parents? Children? Pets? A disabled or special-needs family member? A cause that’s near and dear to your heart?

 

What?

If you are “walking away,” what are you walking toward? What are your financial goals? Retirement? Semi-retirement? College for your child/children? A second home? Travel?

 

When?

When do you want this to happen? You can always change the date, but how will that affect your goals? Will you still be working when your kids graduate from college? Does your financial obligation end when your child has a bachelor’s degree?

Where?

Where you live or work or have a business – or a second home – impacts your financial plans. Do you hope to retire where you live now or somewhere else?

One couple we work with wants to retire to Jackson Hole, Wyoming, where a home comparable to their home in Chicago will cost about four times as much.

Another couple we work with was feeling frustrated by their harried commutes and long hours. They were considering leaving an established medical practice in Chicago to join a startup practice in Montana. Yes, they would get the beautiful outdoor environment they craved (and often chose for vacations), but they would be entering an entrepreneurial endeavor with even longer hours and no near-term ability to take a vacation.

By asking probing questions, we were able, not to change their minds, but to help them make their choice with eyes wide open to the personal, financial, and tax ramifications of their decision.

Don’t forget to factor “Where” into your plans.

 

Why?

Actually, when you are planning your financial future we encourage you to start with Why.

Why are you doing what you do? What really matters to you? What are your values? For most people, it’s not entirely about money. You may seek security, independence, or freedom. Maybe faith is key.

For many of us, COVID-19 caused us to rethink our values. Does the corner office matter anymore, if you are working from home? Why are you really getting up in the morning? (And it’s the answer that comes after coffee.)

This is about tapping into your individual psychology. How is your Why reflected in your goals?

We really enjoyed Simon Sinek’s book, Start with Why, and recommend you consider reading it, especially if you own are invested in a business endeavor. Or, if you don’t have time for the book, you might at least catch part of his TED talk.

People with children tend to be focused on providing for themselves. But will that focus continue in your retirement, after they are “launched” into their adult lives? Do you or your spouse have a medical condition you need to plan for? Do you want to leave money to someone? Are you hoping to leave a legacy of support for a cause that moves you? Or are you hoping to spend your last dollar on travel and entertainment? There are no right or wrong answers, just your answers, and your answers need to drive your financial plans.

 

4 Steps to start planning for your walk-away day:

 

  1. Clarify your values. Know what’s important to you. Working through the Five Ws will help you with this.
  2. Identify all the things you would like to accomplish. Brainstorm your bucket list, and then prioritize it.
  3. Get strategic about your goals. Make sure they are SMART (specific, measurable, actionable, reasonable and timely). How will you apply your resources to reach your most important goals?
  4. Know your current financial reality – how much you are spending and where your money is going. Be aware of cash flow, compensation and benefits beyond money.

Internally, we joke sometimes about the “30-year overnight success.” We all want to be successful, and for some people, their success appears to come easily. Yet in our years of working with financially successful people, we have seen that success is seldom accidental. Occasionally, a person may encounter a fortuitous or serendipitous combination of circumstances, but invariably planning and effort are also involved.

“The biggest asset we have is time. Don’t say, ‘I’ll start planning when I have more money.’ Start planning how you will get more money. Start now.” – Nick Economos, CRPS®

Surprisingly, many people don’t actually have a good sense of their own finances or financial worth.

 

We can help.

As you establish your goals, you will want to figure out how much money you will need to reach them. Again, there is no magic number needed for retirement, no Easy button to help you get there. You can, however, “phone a friend.” At Fiduciary Financial Partners, we can help you review your current finances, clarify your values, identify your goals, and work with you to establish a plan to reach your goals.

More than that, we can help keep you on task. We remind our clients of their stated priorities – what got done and what still needs to be done – because ongoing execution can be the difference between reaching your goals or not.

One of the most rewarding things we do is to review a client’s “balance sheet” from 10 years prior so they can see that through consistent, diligent effort toward their goals, they have made great progress.

The longest journey begins with the first step when planning your financial future.

Whether or not you call us, we encourage you to start working on your answers to Who, What, When, Where, and Why, so you can begin – or adjust – plans for your walk-away day, because no journey starts until you take that first step.

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