Paint Me A Picture

All our dreams can come true, if we have the courage to pursue them.” – Walt Disney

 

 

When each of my children graduated high school and headed out into the world, I gave all of them the same piece of advice; “Figure out what you want out of life, then grab that bull by the horns and make it a reality.”. It’s not just idle chatter. I really mean it. Notice that the very first thing I advised them to do is “Figure out what you want out of life, …”. Knowing what you want, what your goals are, is the first step towards success.

 

Think about it. If you don’t know what your goals are, how can you best manage your resources? How will you know what to do? How would you know when to do it? How would you choose between competing options? The answer to all of those questions is, “You can’t.”.

 

Now ask yourself how your financial advisor, accountant, attorney, or anyone else can help you if you can’t even tell them what it is you want. They can’t. They may be able to do some busy work, something that makes it appear as though they are helping, but they’re really not. How could they? They don’t even know what it is they’re supposed to be doing.

 

If you don’t know where you’re going, any road will take you there. The problem is, you may not like the destination.

 

So the starting point of financial success is knowing what your prioritized goals are. Prioritized, because sooner or later you or one of your advisors is going to have to make a choice between 2 competing goals and how can either of you make a good decision if you don’t know which goal is more important?

 

GOAL IDENTIFICATION

Identifying your goals is not difficult. We’ve all daydreamed about one thing or another. We all hold out hope that we’ll eventually be able to do this or that. So what are those things you hope and dream will happen in your life?

 

The #1 Financial Goal of most Americans is “Retirement”. The #2 Financial Goal is “Paying for a Child’s Education”. So what are your goals;

 

  • Retirement,
  • Paying for a Child’s Education,
  • Building a Family Legacy,
  • Supporting Charitable Causes,
  • Other?

 

Think at a high level and write down a 30,000’ view of what it is you want.

 

Now take the first goal on your list and start filling in some of the details; paint me a picture. Where are you at? What are you doing? When are you doing this? Who are you with? Everyone can do this. Just describe your daydream.

 

  • I’m about 60 years old in a cabin at the lake with my wife, spending our days fishing, hiking, and exploring the forest.
  • I’m watching my daughter walk across the stage to receive a degree from an Ivy League college.
  • I’m dead and gone, but I can envision my children, grandchildren, and great-grandchildren running my business. It’s a large and profitable enterprise. My descendants are all skilled business people without a financial worry in the world.
  • My husband and I are about 65 years old. We live in the same home we own now, but instead of going to work every day, we’re financially independent. We’re able to spend our free time pursuing hobbies, being more involved with our church, and volunteering a few days each week at the homeless shelter.

 

Now you know what your goals are and you’re able to describe them to your advisors. Everyone now knows what it is they are trying to accomplish.

 

Now it’s up to your advisors to ask the probing questions needed to focus your dream into crystal clear clarity. You may know most of the answers off the top of your head, while other answers will have to be focused with the help of your advisors.

 

  • What lake are you wanting to live at? Center Hill Lake in Middle Tennessee. How much will it cost to buy/build your cabin? I’m not sure, but it seems like a good cabin goes for $300,000+. Do you want a boat to go fishing or will you shore fish? I saw a fishing boat at Cabela’s that I’d like to have. It sells for $25, Etc …
  • Which Ivy League school are you thinking about? What degree is she receiving; bachelor’s, master’s, doctoral, J.D., M.D., D.D.S.? Etc …
  • Who owns the business; children, grandchildren, great-grandchildren? Do they own it equally? Did they inherit it or did they buy it from you? Etc …
  • What are your hobbies? How much will you spend on those hobbies? Do you want to make financial gifts to the church or homeless shelter? How much and how often do you want to make those gifts? Etc …

 

By delving deeper into your dream, your advisors help clarify your goal even farther and can begin creating a financial plan to get you there. Your professional team can begin calculating how much to save, what type of accounts to utilize, target growth rates, and all the other sharp focus details needed to help make your dream a reality.

 

GOAL PRIORITIZATION

It’s also easy to prioritize your goals. We all make choices every single day, thousands of them.  What time do you get up each morning? What did you have for breakfast? Did you have coffee? Do you drink water or soda? Is that soda Coke or Pepsi? Do you drive a car, suv, or truck? What brand? What color?

 

Think about. Most of us make a conscious choice every few minutes every single day of our lives. Now look at your goals. If you could only accomplish 1 goal, what would it be? If you could only accomplish 2, what would they be? And so forth.

 

  • Retirement
  • Put My Daughter Through College
  • Charitable Activities
  • Family Business Legacy

 

It really is that simple to identify and prioritize your goals. All you have to know is the big picture. Your advisors will help you fill-in all of the details.

 

Now that everyone knows what you want and what is most important, details can be calculated, your financial plan can be finalized, questions can be answered, and your goals effectively pursued.

 

Why does any of this really matter? Let’s take a look at real life questions I’m asked on a regular basis:

  • I received a promotion at work and it comes with a big raise. Should I use the extra money to pay-off my house early or use it for something else?
  • I just received my quarterly bonus check and I’d like to give some of it to the church. How much can I safely afford to give away?
  • I’d like to start transferring my business to the kids. Do I just give it to them, sell it to them, wait for them to inherit it? How do I do this?
  • My son was accepted to Stanford University and The University of Tennessee. Stanford is my alma mater and I’ve always wanted my kids to graduate from there too, but it is really expensive. Even with financial aid, I’ll have to pay $20,000/year out of pocket, which means I’ll have to temporarily stop my 401(k) contributions. On the other hand, Tennessee has offered him a full-ride scholarship. What should I do?
  • We have some extra money that’s built-up in our savings account. My wife wants to remodel the kitchen & bathrooms, but I think we should set the money aside for retirement. What’s the smartest thing for us to do?

 

Had I not known each customers prioritized goals, there would have been no way for me to provide the correct answer. Knowing their prioritized goals meant that I could gather a few details, perform some calculations, and make the best recommendation possible.

 

There is no end to the questions we all have about how we should utilize our resources; income, savings, time, and so forth. If we know what our goals are and which are most important to us, it become relatively easy to figure out how to use each. But, if we aren’t clear on what it is we want to accomplish in life  and which goals are most important, it becomes a guessing game. Will we or won’t we get what we want out of life?

 

Sapiat Asset Management is an independent, fee only, fiduciary, registered investment advisor specializing in Individuals & Families, the businesses they own, and the trusts that benefit them, with a niche focus on Generation X (b. 1982-1967) & Millennials (b. 1983-1998).

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