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The Educated Heir - The roads we travel together

The Educated Heir - The roads we travel together

| July 01, 2019

The roads that we travel with our families are filled with twists and turns. The distance from one milepost to another can seem endless when we are going through challenging times and pass by in a flash when things are going smoothly.

While these journeys include our immediate families – spouse and children, those riding in the car with us – we must consider those who are caravanning with us, as well, if there is a chance that we may, one day, be responsible for caring for them both physically and financially. Aging parents, aunts and uncles, brothers and sisters, even close friends may need us one day and we must understand what is going on in their lives as well as the impact that this could have on our immediate family and our finances.

Thinking of this journey together, there are 3 travel modes that we need to be aware of as they relate to financial planning:

1.  Coasting

Most of our days are normal and predictable. Things go as planned, not many surprises; we are on cruise control. Flat straight roads, no traffic. The horizon is visible, the weather is perfect. We feel in control. This is a good time to plan because there are no emergencies, no drama. Financial and emotional extremes are rare on this part of the road.

2.  Dangerous curves ahead

Eventually, every family sees this sign. Things are changing quickly. Plans here are more of the urgent nature. Not much time for thoughtful introspection. When we are here, decisions need to be made quickly and may not be optimal. Examples of this are the sudden death of a loved one, an unexpected medical event, divorce, the unforeseen loss of a business partner. When we are facing extreme changes, emotions tend to run high within ourselves and with those involved. While decisions must be made, enlisting the help of a trusted advisor or friend provides us with the much needed voice of reason.

3.  Downhill

This part of life is exhilarating. Things are going even better than expected. You received a big bonus and a raise, 3 new clients decided to work with you at the same time, you received an unexpected windfall. Planning around these events is fun because the skies ahead are bright blue, the sun is shining, you are full of confidence and are optimistic about the future. Use these opportunities to add to your retirement savings, invest in areas that will provide additional streams of income, update your estate plan.

Take the time to identify your financial team when you are coasting. This team will be able to add perspective to your current situation and help you create a roadmap designed to most efficiently reach your destination. Think of your team as your GPS, professionals who are able to help you see what is ahead of you and offer alternative routes around the delays on the road ahead.

Safe travels!