Even if you’re generating a high level of income, securing your family’s future requires careful financial planning and comprehensive wealth management strategies.
Taking a close look at your family’s financial situation helps you to account for risk and make sure you’re generating more income than you’re spending. It also helps you plan ways to achieve your unique financial goals.
Strategic wealth management starts with the basics. Use these four quick wealth management strategies to put your family on track for long-term financial success.
1. Start Your Financial Planning Sooner Rather Than Later
Getting started early is the simplest wealth management strategy, but it’s also the most important.
Too many people only begin considering how much money they’ll need for retirement when it’s just a few years away. Some parents don’t start saving for their children’s college educations until their kids enter high school. Others only consider purchasing long-term care or life insurance when a loved one gets sick.
Starting late and expecting good results isn’t reasonable and is unlikely to be successful. It takes more money and assets than most people realize to achieve their financial goals. Achieving long-term success requires sustained effort. It’s a marathon, not a sprint. Starting late and frantically trying to catch up could lead to collapse.
2. Focus On Your Financial Goals, Not Specific Investments
It’s a mistake to focus on the individual stocks, bonds or commodities you should invest in, rather than how those investments relate to what you’re trying to achieve.
If you sit down and summarize your financial goals and needs, then you have a better idea of how much you should be investing now and what mix of investments you should have.
Start by thinking about significant expenses you know you’ll have in the future, such as a child’s college education or a vacation home you’ve always planned to buy. Then, think about how much income you’ll need to support the lifestyle you want at age 55, 65 and 75.
When you have a clear picture of your goals, you’ll have a good foundation for allocating your funds now.
3. Understand Your Family’s Cash Flow
Do you know how much income your family generates every month? Do you know how much money your family spends every month? Do you know what your family spends its money on?
Many families don’t take the time to put together a monthly budget and understand their cash flow. This is a mistake.
Taking the time to understand your family’s cash flow can be an eye-opening experience. It may alert you to the fact that you’re spending more than you’re making or outside of your means. Looking at your list of expenses, evaluate what is a real need and what is a want. Can the wants be reduced or eliminated to make room for future financial security? Be aware and true to yourself about this.
Looking at your monthly budget and cash flow allows you to identify areas where you can cut back. You can then reallocate those cuts toward investments that help secure your financial future.
4. Have An Annual Financial Review
It’s important that you take the time every year to sit down with your financial advisor or wealth manager for a financial review. This review gives you the chance to take a close look at your wealth and investments to determine if you’re on track to reach your goals.
People who successfully grow their assets and reach their goals tend to know their net worth. You need to know the value of what you own and all the liabilities against it. Take a closer look at your liabilities. Are your interest rates reasonable? Are you borrowing to make a good investment, such as property? Be sure to eliminate short-term credit card debt as quickly as possible. Start with the highest interest accounts and pay them off.
In addition, take a look at your cash flow trends. Are you making more income each year and keeping up with inflation? Do you have excess cash flow to invest this year compared to last year? The best way to measure wealth management success is to determine if your net worth is increasing every year. If it’s not, you need to examine what’s working and what isn’t.
Achieving a comfortable financial future for your family requires you to match different financial goals to different investments and strategies. Start your wealth management journey with the four strategies above to create the future success you and your family have always dreamed about.
Are you ready to leave one-size-fits-all money management behind? Schedule a free consultation with a Richard Brothers financial professional to talk about your financial future.
