In My Perfect Financial Planning World
My job as a financial advisor is tricky, because not one family is the same. There are an infinite number of circumstances, personalities, and complexities I could come across. That’s why the advice I give one family might be very different from advice I give to another family. I give the advice I believe to be in that family’s best interest.
That said, I certainly have financial planning ideals that I generally go by. I’ll call it my baseline from which I pivot in numerous different ways based upon a family’s needs.
Here is an order of events I would like a family to focus their financial attention on in general. I will disclaim again – what works for some might not work for you.
Prioritize Long-Term Financial Plans in This Order:
Accumulation Phase:
- Get a 3 – 6 month emergency savings account
- Save in their 401(k) up to their employer match
- Pay off high interest debt (not their mortgage or a low rate car loan)
- Begin saving in an extra savings account or brokerage account for short and midterm goals (think roof replacement, next car, etc.)
- Check in on family education savings goals and needs
- Max out 401(k) savings
- Pay extra towards the mortgage
- Increase savings in the brokerage account but for long term/retirement use
Decumulation Phase:
- Nearing retirement, restructure investment accounts using bucket strategies for funding near term living expenses
- Determine how family, friends, and endeared charities will be treated in the future
- Monitor portfolio withdrawals using a guardrails philosophy
- Manage and max out those low tax brackets via gains harvest and conversions
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Have you done these things yourself yet? Do you think any of them should be done in a different order? If you are wondering what else you should be doing in your perfect financial plan that you may have overlooked, check out my Financial Planning Checklist.
