If it seems like there are a lot of things to do with my finances and it feels overwhelming, where do I start?
Julie is the daughter of a couple that have been our clients for many years, and she is married to Nick. They are in their early 40’s and are focused on building successful careers. They began to build wealth and realized that they would benefit from financial planning. This would ensure they are making smart decisions with their money. When talking with their parents, they mentioned that they would like to start creating their financial plan. Their parents recommended they talk with us.
While Julie and Nick were busy building wealth, they lacked a financial plan that clarified their financial goals. We worked with them to create their financial plan. It included all the important elements to help them achieve their goals, including setting their daughter up for a secure future. There were plenty of things to discuss when we got started.
As we started implementing their financial plan, they rolled over their old 401(k) to a Rollover IRA. They also had a significant amount of money sitting in a checking account. This was much more than was needed for emergency reserves, and it was making very little interest. This money was moved to a brokerage account with diversified investments. This decision was consistent with their risk preferences, to allow their money to grow over time.
We provided Julie and Nick with access to a client portal, which is a secure website that allows them to see all their financial information, such as bank accounts, credit cards, investment accounts, and retirement accounts at work, all in one place. The budgeting tool allows them to classify all their checking and credit card accounts by category. It also allows them to track their spending. This enables them to track their progress towards their goals.
Julie recently started working at her first company that awards her stock grants. We discussed the options for this stock. Next, we created a plan to monitor the stock price and sell it to diversify some of the stock when appropriate.
They started a 529 college savings plan for their young daughter, Emily. This college savings account provides the benefit of tax-free growth, if the money is used for qualifying education expenses. It also provides an account that grandparents can use to contribute to their granddaughter’s education.
Both Julie and Nick have life insurance through their employers. They liked the idea of starting a permanent life insurance policy for Emily, while she is still young. The policy selected allows for the cash value to grow inside the policy over Emily’s lifetime. When certain conditions are met, some of the cash value inside the policy can be taken out tax free when needed. The policy they selected also allows the death benefit to be increased seven times over their daughter’s lifetime, if her insurance needs grow.
Next, they decided to simplify their charitable donations by opening a Donor Advised Fund. This allows them to make one contribution into the fund and take a tax deduction for the full amount in the current year. This eliminates the need to keep track of each individual small donation. Then over the next few years they can make donations to non-profit organizations of their choice. These donations can be done as one-time donations, or they can schedule regular donations, monthly or annually.
There is still more work to be done. They plan to work with an estate attorney that will create their estate plan. Their next step is to select an attorney that will also update the estate plan for their parents, so that the estate planning for multiple generations in their family is well coordinated.
Looking back at this experience, Julie told us, “Prior to creating our financial plan, we had felt overwhelmed with the number of different tasks and ways to track money in a variety of places. It felt impossible to know our real net worth and what were the highest leverage actions we could take. Creating our plan and executing on different phases of it in smaller pieces has made everything much more manageable and noticeably beneficial to both our bottom line and our peace of mind.”
As Nick looked back at this financial planning process he said, “It has provided us a holistic picture of our finances, as well as a clear path forward for the future.” His biggest benefit was, “A path forward toward retirement and financial stability for our family.” Julie added that this planning helped them “feel secure with the choices we were making about spending, to enjoy life now, while also prepping for eventual (and hopefully early) retirement.”
We asked Nick what he would recommend for other people at this similar point in their life. “If you are fortunate enough to be able to save money, it is well worth your time to have a professional team guiding you to make the right decisions with those savings. Additionally, it takes some of the worry out of how things look in the future.”
To others going through a similar stage in their lives, Julie said, “We really can't recommend enough to just getting started. Don't worry about if you have enough money to start thinking about it, or how hard it might be to corral everything. Working with Financial Journey Partners has made all that easy -- and they do it all without any judgement about what you've done previously or anywhere you might not be knowledgeable. They take time and care to make sure you feel comfortable with and understand any changes that they are recommending, and we can't recommend them enough!”
