It seems that all around me there are people excited about the upcoming summer season and all the weddings that will go with it.
I spoke with someone in the wedding venue industry the other day and on some Saturdays there will be 3 weddings every Saturday for the summer, some on Sundays and also Friday nights. Obviously there are a lot of excited families out there with frenetic activity going on.
Before the groom even asks and before the bride says “Yes”, we would hope that there is some serious thought put into the decision.
It is often helpful for the couple to consult an independent advisor who will guide them through the decision making process. This would be wise if the couple is planning on a long and happy life together.
Why would that be any different for for College and Financial Planning?
The 10 main questions that every Financial Advisor should be able to answer for their clients
Whether we are looking at our savings plan or retirement plan or our college plan, there are some main questions that need to be answered first before we should be spending money on any major purchases or expenses. If we are not aware of the answers to some of the crucial questions, how would we know how much we could spend on things like weddings, college, a house, vehicle or any other major expenses?
1. At what age am I hoping to retire?
2. How much do I need to have saved up at that date to be able to retire?
3. How much do I need to be putting into my retirement savings account between now and then to make that happen?
4. What is the rate of return that I need to get to be able to retire with the lifestyle that I would like, taking inflation into account?
5. How long will my money last after retirement and is it sufficient for me to maintain the lifestyle that I would like?
6. What is my Exit Strategy after retirement that would give me the most efficient use of my savings and give me the kind of standard of living I am hoping for?
7. What will the impact of my kid’s college costs be on my retirement and are there options to maximize both?
8. Do I have the correct protection for my spouse if I die before him/her and what kind of legacy do I want to leave to my kids when I go? [Not necessarily all financial]
9. Do I have protection from current unknown factors such as possible tax increases, interest rate changes and inflation?
10. What is my financial strategy? Do all my various account reflect proper planning according to my strategy or are some accounts working against each other?
Many families have various accounts as we compartmentalize our finances into different categories:
– Emergency Fund
– College Fund
– Savings account
– Retirement accounts
– Wedding fund
– Checking account
– Custodial accounts
Although all of these could be good in their own right as they stand alone, the question should be “How do each of these fit in with my unique strategy for my family and what impact do they have on my total Financial Plan?”
Dave Coen is the CEO of College Planning America and could be reached at 714-813-1703 dave@collegeplanningamerica.com
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