Turn Hope Into Reality With a Financial Strategy

Joe Brunello | Director of Training & Development, Leap Systems


You’ve probably heard people say, “I hope we can afford to send our daughter to college,” or, “I hope I don’t run out of money in retirement,” or, “I hope I can expand my business.” While we all hope for good things in life, the fact is that hope won’t get you there. It takes a well-constructed financial strategy.


Create a strategy unique to you

A financial strategy is critical to give you and your family — or your business — a high level of confidence that you’ll meet your goals in life. But ditch the cookie-cutter approach. Everyone is unique. We all have different situations and needs in life, so one method won’t work for everyone. You deserve a financial strategy of your own, and it’s not as difficult as you might think to create one.


Get started early

Many people think creating a financial strategy is a daunting task, so they procrastinate. In reality, there’s never really a good time to get started, because you can always find a reason not to. But a trusted financial professional can help ease your uncertainty and get you on the right track.


Remember, a financial strategy can have a massive positive impact on your life, so it makes sense to get started early. If you start too late, your opportunities become more limited. One thing we all have in common that we’ll never get back is time. The earlier you get started with your financial strategy, the better it will be for you, your family or your business. The more time you have, the more time works in your favor with saving and investing.


Use a comprehensive approach

Many people take a siloed approach when planning their futures. While it’s good to have a strategy for your child’s education and your retirement, it’s not good if you approach these plans in a siloed or compartmentalized way. The fact is that every single financial decision we make is interrelated to our other financial decisions.


For example, the money you’re putting away to pay for your child’s college education may impact how much you’re saving for retirement. In other words, how are you limiting your individual goals?


This way of planning can lead to what I call “decision-making disorganization.” It’s focusing on specific needs instead of looking at the big picture. A financial professional can help you organize your financial decisions in a way that works best for you in your current situation. The same comprehensive approach should be taken within your marriage and your business. For a typical marriage, it’s better to have one shared financial strategy for the family, with common goals. If you own a business, your business plan must be integrated with your personal financial strategy, because at the end of the day, you’re using your money to build the business.


Think protection first

The best financial strategy can go off the rails quickly if something unforeseen happens. Life doesn’t follow a straight path, so the protection components of your financial strategy must be maximized, or you could be subject to a significant loss. Life insurance, disability insurance and liability insurance are examples of the kind of protection that need to be considered as you begin saving and investing. They should also be monitored and reviewed like other aspects of your financial life.


Life insurance is a foundational piece of any financial strategy. When most people fail with their strategy, it’s not because of a down market or a missed opportunity. It’s because of an unforeseen event, like premature death. We can always have a negative year in the market, typically we can recover from that. The market always comes back. But if you die, you’re not coming back. You need to account for the contingencies in life and have protections in place, so your loved ones or business can go on without you.


Save for rainy and sunny days

After your protection elements are set, you can now begin saving. Saving 15% of your earned income is a good starting point to help you stay ahead of wealth-eroding factors like taxes and inflation. Consider setting 50% of your gross annual income aside in cash. This may seem like a lot, but this liquid emergency fund is a ready reserve for if and when you need it. It’s there for you so you don’t have to withdraw money from your retirement or long-term savings, which can result in penalties and tax consequences.


Having cash on hand before thinking about your investments and long-term savings is very important. I know many people who have a good amount of money in their retirement account, but they’re cash poor in their emergency accounts. In an emergency, they have to tap into their retirement savings, which isn’t designed for short-term purposes. Some people also equate emergency savings with negative events, like a job loss. But these funds can also be used for positive things, like an opportunity you want to take advantage of without going into debt or dipping into your long-term savings. Your emergency savings is money at the ready for you.


Stay the course

Now that your protection and emergency funds are in place, you can confidently build the other components of your financial strategy and know that your financial life will be under control. But the key to long-term success is staying the course. For instance, when the market is up, don’t be greedy. When the market goes down, don’t panic. Balance and consistency are key.


Another great way to stay the course is to maintain your life insurance coverage, even when your children have grown and started families of their own. During your working years, you bought life insurance to protect your family. When you retire, life insurance can be considered “asset insurance”, which can allow you to spend and enjoy your assets that you worked so hard to build. Life insurance can play a critical role in retirement distribution strategies. For example, another way having life insurance in retirement can help is that you can use income tax-free cash value from your permanent life insurance policy during market as a source of income which allows other assets to remain in their accounts, giving them the ability to recover from losses.


Review and review again

Your financial strategy will give you confidence and assurance of your future plans. But don’t be complacent. Life changes. Marriage, babies, new homes and promotions all come into play — and as they do, your financial strategy will need tweaking. A good rule of thumb is to touch base with your financial professional once a year for a review. It doesn’t have to take long, just a quick touchpoint to make sure that changes in your life are reflected in your financial strategy. On the flip side, don’t over-review, because most plans are long-term, maybe 20 to 30 years out. You will need to find a balance that works for you.


Find the right financial professional

You want to start building your financial strategy now, but how do you find the right person to help with this important undertaking? The best way is to talk with your family, friends and trusted peers and ask them who they use. Get several names and do your due diligence on them. Research and interview them so you’ll increase your likelihood of finding the right financial professional for you.


It’s important to choose a financial professional that you have confidence in and are comfortable with because they’ll be acting as the quarterback for your financial team if you need one. They can even find the right attorneys or CPAs if you need them to execute parts of your strategy. Creating the best financial strategy for you starts with the right financial professional.

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