Every time I present at a local high school on paying for college, I always start by asking parents a question: “How would you define the term ‘financial planning’?” The usual responses are budgeting, investing or retirement. These answers are true in the sense that each are pieces of financial planning. But, if you look at each piece separately it’s impossible to see how they fit together to solve the puzzle. Understanding how the pieces fit together is what allows you to make wise decisions with your money and reach your goals.
Many people lose sight of their overall financial picture when they break up retirement, college, investing, budgeting and taxes into separate categories. While this may simplify the planning process, it ignores how the financial pieces can affect one another. One misplaced piece can create a ripple effect that prevents you from solving the puzzle. For example, college and retirement have been viewed as separate objectives by many people, including some financial advisors. But, these two pieces always fit together. If college is a tollbooth on the road to retirement, then whatever we spend in college tolls we won’t have for retirement. You don’t want to unnecessarily delay your retirement to pay for your child’s college if you don’t have to – no one does.
So, if you’re looking at paying for college, you need to understand how college admissions, financial aid, taxes, investing and personal finance pieces come together to determine which colleges you can afford while still staying up to speed for retirement. There are many other pieces beyond college that if not put together correctly could negatively impact your retirement goals. There’s the obvious ones like not saving enough or investing wisely. But, think about all of the transitions and events you will encounter throughout your life. What about a new baby or grandchild, death or illness, marriage, divorce, career change, job loss or moving cities? Will these pieces not shift your situation, goals and priorities? Of course! This is why financial planning is an ongoing process and not just a one-time event. Not only will you need to fit all of the pieces together, but you will also need to adjust the pieces of your financial plan as your life evolves.
It takes a lot of time, effort and variety of expertise to put together a sound financial plan. If you desire a financial partner that can help you simplify the process and put all the pieces together with purpose and meaning, Contact Us to schedule a call or introductory meeting.