The importance of wealth management planning: How much is enough?
Are you worried you may outlive your resources? Do you want to provide for your children as much as you can and not be a financial burden to them? Do you want your family to inherit your wealth? Six out of 10 people die without a will. This is true across the board, not simply among those with the fewest assets. Estates valued at $1 million or more comprise approximately 2% of the final estates (estates with no surviving spouse). Of those who have finalized an estate plan, many spent less time developing objectives and considering their alternatives than they did planning their last vacation.
In establishing goals and objectives for the use and transfer of wealth, you probably prioritize them in this order: self and spouse, heirs (children and grandchildren), and community needs and opportunities. It is important to develop a wealth management plan that matches your priorities.
Lifestyle Maintenance
Your most important planning objective is to maintain your current lifestyle and ensure your financial independence. One of the major obstacles to effective planning is the gap between the perception of wealth and reality of wealth. Thus, you should clearly define what is required to maintain your current lifestyle. In other words, the annual income needed for personal consumption and material assets (house, car, vacation home) to maintain your lifestyle and adequate liquidity.
The most important step in the planning process is to establish clear and concise objectives for your wealth management plan. You should then design a plan that is responsive to your core interests, needs and concerns. It should acknowledge and address the desired level of involvement you want to retain in “managing” philanthropic activities and should incorporate the interests, expertise and desires of heirs. Additionally, it should take into account your total estate plan in a manner that is timely, effective and tax efficient.
In establishing goals and objectives for the use and transfer of wealth, you probably prioritize them in this order: self and spouse, heirs (children and grandchildren), and community needs and opportunities. It is important to develop a wealth management plan that matches your priorities.
Lifestyle Maintenance
Your most important planning objective is to maintain your current lifestyle and ensure your financial independence. One of the major obstacles to effective planning is the gap between the perception of wealth and reality of wealth. Thus, you should clearly define what is required to maintain your current lifestyle. In other words, the annual income needed for personal consumption and material assets (house, car, vacation home) to maintain your lifestyle and adequate liquidity.
The most important step in the planning process is to establish clear and concise objectives for your wealth management plan. You should then design a plan that is responsive to your core interests, needs and concerns. It should acknowledge and address the desired level of involvement you want to retain in “managing” philanthropic activities and should incorporate the interests, expertise and desires of heirs. Additionally, it should take into account your total estate plan in a manner that is timely, effective and tax efficient.
How Much Is Enough?
When starting an emergency fund, you’ll want to set a target amount. But how much is enough? Unfortunately, there is no “one-size-fits-all” answer. The ideal amount for your emergency fund may depend on your financial situation and lifestyle. For example, if you own your home or provide for a number of dependents, you may be more likely to face financial emergencies. And if the crisis you face is a job loss or injury that affects your income, you may need to depend on your emergency fund for an extended period of time.
Try to budget and prepare separately for bigger expenses you know are coming. Keep your emergency money separate from your checking account so that it’s harder to dip into.
Here’s a look at how Americans are doing when it comes to emergency savings:
(Bankrate.com, June 23, 2014)
Article provided by Robert W. Baird & Co. for Lori B. Gervais, CFP(R), Senior Vice President and Roger G. Gervais, Senior Investment Consultant, manage their practice out of the North Shore office of Robert W. Baird & Co., member SIPC.
Financial success is a choice. It results from the many small decisions you make each and every day. Without a plan and goals to achieve wealth your life is like a sailboat without a rudder: it just spins in circles without definite direction.
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