7 Key Steps To Financial Security

Wealth planning is a comprehensive approach to managing financial affairs to build, preserve, and transfer wealth.  Businesses do it all the time. However, their owners, managers, and staff are less inclined to do anything until they have come into a large sum of money.

Becoming financially secure involves setting specific financial goals, creating a strategy to achieve those goals, and implementing various financial planning tools and techniques.

The primary objective of wealth planning is to optimize the use of financial resources to meet both short-term and long-term goals while considering factors such as risk tolerance, tax implications, and estate planning.

However wealth planning is not in our DNA, so it does not come to us naturally. We need to learn and practice good spending, saving and investing habits.

We happily secure all our assets, including our homes, cars, and boats. Use banks and safes to protect our valuables. Ensure our personal possessions are insured against contingencies such as fire, damage and theft. We’re not planning for our financial security.

Personal Financial Risks

Through ineffective wealth planning, we constantly subject our entire estate and family’s security to various risks. These risks include destructive taxes, mismanagement and downright neglect.

However, the most significant threat to our financial security is our resignation and neglect of wealth planning.

Our fundamental freedoms – to live, love, learn and leave a legacy, which is so much part of our way of life, can all come to nothing if we’re not leaving our family and preferred charities and interests better off. Let’s not overlook “the art of living and dying orderly”.

Did you know most people work 80,000 to 90,000 hours between 20 and 60? We work to live, and while we need to accumulate wealth during these forty years, we not doing it purposely.

Most of us will spend less than ten hours in a lifetime structuring a personalised wealth plan. A plan designed to secure, protect and preserve our wealth. Add to this a lack of awareness and understanding of what needs to be done, why and how. It is a lethal combination of neglect!

Why Wealth Planning

What can wealth planning do for us? At the most rudimentary level, you can achieve the following:

• You and your family are not left as “hostages to fate”
• The security of your family home
• Your assets are protected during your lifetime
• Your assets are transferred to your ultimate beneficiaries
• A continuing standard of living to meet your family’s requirement
• To eliminate family turmoil and disputes
• To minimise the destructive effect of taxes and unnecessary expenditures such as penalties, duties and probate costs
• Educational opportunities for your most precious asset – your children
• A support structure for your spouse, children and others you care about.

Successful wealth planning also ensures adequate funding to meet the cash demands against your Estate. It also provides security for your loved ones.

A simple, essential will is the cement that holds your wealth plan together. We are constantly amazed that 80 to 85% of the business people we contact either do not have wills or the wills they have won’t do what they want them to. This leaves the way open to potential disputes and distress. Simple yet careful analysis and planning can avoid ambiguity and provide peace of mind for all concerned.

7 key phases in effective Wealth Planning

1. Mental Commitment

You first need to decide whether you’re serious about your wealth planning. If you are serious, ensure you’ll see it through to completion. Starting and stopping halfway through or short of the mark won’t achieve anything. It will only cost you time and money!

2. Selection of advisors

Make sure you have the right advisors for the job and that they are “on your team”. You’ll need advisors that have your best interests paramount, not those of any suppliers they may have! You’ll want to ensure your advisors look at the whole picture and that each part of your planning fits together.

3. Factual analysis

Get the facts clear about where your wealth planning is up to now and where you want (or need) it to be. This could entail a complete audit of your current situation. You’ll also need to be clear about your desired outcomes.

4. Problem identification

Ensure all existing problems and potential problems are discovered. You’ll already know what some of the issues are. You may even know what some of the potential issues are. But sometimes, the most dangerous situations are the ones you don’t know about.

5. Solutions and strategies

Find solutions to existing and potential problems and identify strategies to deal with each and every issue. The complex world of solutions and strategies can be daunting. It’s helpful to have clear and straightforward steps to follow. In this way, you can move forward confidently.

6. Implementation

The solutions and strategies you have identified must be put in place.
This could be as simple as signing your will or a more complicated and extensive strategy (which is where the simple steps come in handy!).

One thing is sure – your planning will amount to nothing if it’s not implemented!

7. Regular reviews

Ensuring you review your wealth planning structures regularly or whenever your circumstances change.

Summing Up

You’re taking control of your money by thinking about your financial security and creating a wealth plan.

Individuals can go about their lives knowing they are securing their financial future, adapt to changing circumstances, and navigate economic uncertainties more effectively.

Regular review and plan adjustments are essential to align with evolving financial goals and market conditions, just like you do in your business with risk management.

Consulting with financial professionals, such as financial advisors, tax specialists, and estate planners, can also enhance the effectiveness of wealth planning efforts.