Over the past twenty-five years, we have worked with families across all generations, from the Greatest, to the Silent, to the Boomers, to Gen-X, Millennials, and even Gen-Z. During this time, we have walked side by side as our client families have moved through each phase of their financial life. Here is what we have learned, and why we are so excited to continue our mission to serve multi-generational families with passion and purpose throughout all the phases of their life journey.
There are three distinct phases in everyone's life, each with their own specific financial goal:
1. Financial Foundation
2. Financial Freedom
3. Financial Footprint
Financial Foundation
Once you are no longer on your parent’s payroll, and you are responsible for what you do, where you live, and how you spend, building a financial foundation under your feet is critical to reaching long term success in building wealth for yourself, your family, and your community now and in the future.
To build a solid foundation, you must understand a few key concepts:
1. Equity vs. Debt – this is what you own vs. what you owe. When you buy a house, you put money down as a down payment (equity), and then borrow the rest from a bank (debt). When you sell the house, you must pay the bank the outstanding balance (pay off the debt), and then you keep the rest (equity)
2. What you spend vs. what you earn – as an example, if you make $5K per month, but spend $7K per month, you must borrow the difference ($2K) plus interest. Next month not only do you need to borrow another $2K which includes new interest, but you also must pay interest on last month’s debt. This is a compounding spiral month over month and can be difficult to pay off until you either make more, spend less, or some combination. This is true for people, companies, and countries.
3. Consistent contribution – this is the pay yourself first concept. Every paycheck, you should view yourself as an expense that must be paid, no different than your rent, mortgage, or car payment. The easiest way to do this is to invest a certain percentage of what you make automatically and allow it to grow and compound over time.
When you work with our team, we will help you develop a wealth strategy to help you build a solid foundation upon which you can grow. We will help you setup automatic investment strategies, understand the value of equity and debt, as well as create a budget to help you spend less than you make and set financial goals as you launch your career and your life.
Financial Freedom
Here’s a secret. The ultimate financial goal is not retirement. It is financial freedom. Financial freedom means you have the time, resources, and confidence to do what you want, when you want, and with whom you want. Everyone’s definition may mean something different, but the ultimate goal remains the same. For some, it is having the confidence to leave a good paying career and depend on your own savings to pay for your lifestyle the rest of your life. For others, it may be to walk away from a steady salary to start your own business based on a life-long passion.
Regardless of what freedom means to you, we are here to help make it happen. Our job is to understand your specific definition of what financial freedom means to you, and to help you achieve it, which also includes proactively planning for the unexpected obstacles that can derail your goal.
There are three main fears that can put your financial freedom in jeopardy:
1. Loss of money – this can happen a few ways. Two of the more common ones are investment/market losses, or losing your job and thus having to spend down your savings to pay bills
2. Loss of health – As we age, it becomes more likely that the body and/or mind may become sick or diseased. This can happen to you, your spouse, your parents, or your child. When this happens, new financial costs that were not part of your plan will be needed to help restore health, or even help manage someone’s unavoidable declining health.
3. Loss of life – When we first embark on adulthood, the probability of life expectancy is that people will age out of life, oldest first, youngest last. While this is statistically accurate, life happens, and exceptions occur. We have seen this over the past few days, weeks, and years. You probably know someone who left this earth too soon, and unexpectedly.
When you work with our team, we will build your wealth plan based on your specific goals, but we don't stop there. We will also run scenarios that "blows it up" to understand what catastrophic events could cause your plan fail. By proactively planning for the unexpected, we can help eliminate, mitigate, and manage risk and thus help you gain confidence in your future financial freedom.
Financial Footprint
Legacy is a word often reserved for the ultra-wealthy. However, someone’s legacy is simply the footprint left behind once you leave this earth. Your legacy footprint includes not only your monetary possessions, but also your values and relationships developed across your entire life journey.
We are not promised tomorrow, regardless of how young and healthy we are today. An estate plan is a set of documents that list your wishes should something happen to you. Therefore, having your wishes documented is extremely important, either in a Last Will and Testament, or a Revocable Living Trust. We will discuss the differences in these documents in a future session.These document should address three important areas to help ensure your wishes are followed:
1. Transfer of property - Beneficiaries are the people and or entities (charities) that you want to inherit your “stuff” once you are gone (money, assets, collectibles, etc.)
2. Transfer of power - Power of Attorneys are the people (agents) you authorize to speak for you if you cannot speak for yourself while you are still alive (Medical and/or Financial)
3. Fiduciary facilitation – Executor / Trustee are the people/entities (facilitators) that you name to make sure that your documented wishes are legally followed after you are gone
When you work with our team, we will regularly review your legacy intentions, confirming that your accounts are titled correctly, your beneficiaries and power of attorneys are kept updated, as well as help you transfer not only your monetary wealth to the next generation, but also your values.
Our purpose is clear: We will impact the world, one family at a time.
Therefore, our mission is simple:
Help people build a financial foundation so they can achieve financial freedom, which ultimately leads to the financial footprint that will define their legacy impact.
No matter which phase you are currently in today, we can help.
Come join our PSO family!
We are impacting lives.