According to the National Retail Federation, Americans will spend an estimated $19.6 billion on Valentine’s Day this year. With a little more than half of the American population participating in Valentine’s Day giving, that breaks down to about $143 per person.
While chocolates, candied hearts or a night out on the town can be great ways to express your love, I would argue that financial planning may be the ultimate act that says, “I love you and I care about you”.
Shared goals. A while back I was daydreaming about what I wanted to do with the rest of my life. When talking to my wife, I used phrases like, “When I retire…” or “Someday I want to…”.
It was all about me, myself and I.
My wife, wisely and gently, reminded me that the future isn’t about me, or what I want. It’s about us, and what we want to do with our lives.
I had assumed that we wanted the same things, and most of the time we do. But our financial plan is an ongoing conversation about what do we want to do with the rest of our lives together. For example, where do we want to live in retirement? What kind of education do we want for our kids? What shared goals and interests do we have?
When a couple comes to my office to create or update their financial plan we discuss the hard, financial numbers like how much money is needed to meet expenses in retirement, how long will your retirement savings last, and how to produce consistent, reliable income in retirement.
Ultimately, however, financial planning is a conversation about what do you want to do with your life. Do you and your partner share the same goals? If not, where can you close the gap and where do you compromise?
Creating and maintaining a financial plan helps a couple define what they want to do with the rest of their life. It helps them define their shared goals, stay on the same page, and forge their path together.
This way, there is more “we” and less “me” in your financial decision making.
Taking care of loved ones after you are gone. Eventually even the best financial plans come to an end. That’s a euphemistic way of saying, “Someday your going to die”. I hate to put it that bluntly, but it’s true.
Perhaps the worst part is that none of us knows when the end will come. But when it does, what happens then?
Death is never a pleasant topic, but it may be the most important one that your financial plan will help you address.
If you die suddenly, what does your family’s financial future look like? What resources and strategies are in place to ensure that your kids get the education they need or that your spouse has enough money to meet his or her needs even without your income?
A financial plan helps to make sure your loved ones’ financial needs are met, even if you are not there to meet them.
Conversely, if you are blessed with a long, healthy life and die with some money in your pocket, what happens to those resources? Have you taken steps to ensure the smooth transition of your estate to your family and the charities that you love? Or will they be forced to sort it out for themselves without your guidance or insight?
Money changes everything, even (and perhaps especially) after you die. You may view your assets as a simple IRA or mutual fund account. To your family, however, these assets represent your love for them. To paraphrase, Harley Gordon, an elder care attorney that frequently speaks to the financial planning industry on these matters, one of the surest ways to destroy your family is to die with money, but without an estate plan.
The estate planning component of a good financial plan spares your family from the burden of having to make difficult decisions that can tear them apart and inflict emotional wounds that will never completely heal.
Take steps now to make sure this doesn’t happen to your family after you die.
Make difficult decisions when you are in the best position to do so. Part of the reason why a financial plan is an act of love is that it requires you to consider, discuss and deal with difficult issues that you would prefer to ignore but have huge consequences for your loved ones.
Declining cognitive abilities, long-term health care issues, a sudden change in your ability to make decisions on your behalf, these are just a few examples.
Your financial plan should include contingencies for if and when these situations occur. A health care directive helps your loved ones help you in the event that you require medical care and are unable to speak for yourself. A power-of-attorney designates a trusted loved one to help you make important financial decisions. Long-term care insurance helps provide the financial resources necessary to meet your personal care needs, if you are unable to do so.
These simple, but important financial planning documents free your spouse and adult children from the burden of having to make difficult decisions in a crisis, and let’s them know in clear terms what you want done in various situations, if you are unable to act or make decisions for yourself.
It’s been said that life is like a box of chocolates: you never know what you are going to get. But your financial life doesn’t have to be so uncertain.
Show your family the love this Valentine’s Day by creating a detailed financial plan or updating the one you already have.