Begin with the end in mind …

In The 7 Habits of Highly Effective People by Stephen Covey, one of the habits of effective people is to begin with the end in mind. In personal finances, we believe that begins with a clear understanding of what your future income and spending will look like when you get to your goal. If your goal is to pay for a child’s college education, we will spend time understanding if your family is eligible for need-based financial aid. That process sets you apart from many families who learn about financial aid when their child is a high school senior and the family clicks “submit” on the FAFSA web site. By taking the time to learn about methods to pay for an ideal college or university, the family can structure their savings methods, income, tax returns and overall net worth in a strategic manner WHEN THERE’S STILL TIME to make a difference.

For families who want to structure their retirement in a way that supports surviving AND thriving, beginning with the end in mind involves a virtual time machine. We ask our clients to do a little research on what they spend to heat/cool their homes. We look at Medicare costs and projected Social Security payments. These families look at intermittent goals like replacing the shingles on a roof or buying a new car every few years in retirement. By understanding the ongoing costs that continue even after the mortgage is gone, the family can articulate what they need as part of a meaningful retirement lifestyle. The beautiful outcome to this type of analysis is a clear vision of how to allocate a family’s income in the decade(s) leading up to retirement. It’s often exciting for future retirees to consider the following options:

• Hitting the “mute button” when the guilty, inner voice doubts something is affordable. With a defined plan, clients can feel confident spending money on adventures, home improvements and private education since they know their plan supports retiring on time and in a meaningful way

• Setting stretch goals to retire or semi-retire earlier if their nest egg gets to a certain amount by a younger retirement age

• Whether the potential pension is as valuable or necessary as once believed. An informed client may choose to leave a company they no longer enjoy if the benefit from the future pension isn’t as important for their future retirement

• The freedom to take the teenagers on more expensive trips since the parents know their college expenses and retirement plans are on the right track

In essence, beginning with the end in mind takes a weight off your shoulders since you have set reasonable goals powered by specific and achievable actions.