Financial planning
Financial Planning & Financial Agility for Individuals
Financial planning can mean a lot of different things, just like Financial Advisor can mean a lot of different things. We generally think of Financial Planning when someone is in the wealth accumulation phase of their life and building assets. This contrasts to the Income Planning phase of life when one is primarily relying on their assets, social security, or income streams other than earned income.
Many people and advisors may also think of Financial Planning as Retirement Planning, or building up assets in order to be able to retire.
We think a little different. When we think of financial planning, we think of financial peace of mind. And financial peace of mind is a result of knowing that you can handle any financial curve ball that comes your way: tomorrow, a year from now, or a year into retirement. Retirement planning is just one small piece.
FINANCIAL AGILITY
That’s why we created Calder’s proprietary Financial Agility Planning Platform. Our platform gives you three key financial metrics so you know your financial situation at a glance: Financial Independent Age, Financial Agility Score, and Net Worth. Our Financial Agility Score looks at all the major financial risks and evaluates your financial strength or vulnerability against each. We then work with you to create a comprehensive financial plan to mitigate and/or overcome those risks, giving you the financial peace of mind you deserve.
Our Financial Agility Score is comprised for four key risk areas: Asset Accumulation, Debt, Liquidity, Income Protection.
Asset accumulation
Key questions or risks: Am I saving enough money? Am I on track to retire at a specific age? Will I have money to pay for interim goals like college, vacations, home improvements, or vehicles? Am I putting money in the right accounts, like my 401(k), HSA, IRA, 529, savings account, or checking account?
Consider these two quotes from Warren Buffet: “…nobody likes to get rich slow” and “…the biggest mistake is not learning the habits of saving properly early, because saving is a habit”
Our role in the asset accumulation area of financial planning is to help you build and set aside wealth in the most optimized and tax efficient manner possible. We help you understand the differences between all the tax-favored accounts listed above, and how to best allocate your resources across them in order to meet both your short-term (college, vacations, home improvements, vehicles) and long-term (retirement / financial independence) financial goals.
Or concisely, we will help you get rich slowly by building your savings habits in the most efficient way possible.
Debt
Key questions or risks: How do I best get out of the debt I have? Are my debt payments too big relative to my income? Is there an appropriate balance between maintaining debt and saving? Is it okay if I take on additional debt?
Your Financial Agility and debt levels have a simple relationship with each other. The more debt you have, the more your current income is used to pay that debt, the less money you have for short-term expenses or long-term saving, the less financially agile you are.
Our role is to help you understand where an appropriate balance of debt and savings exists. We will help you prioritize debt payments over savings or visa versa based on relevant and personalized factors.
Liquidity
Key questions or risks: Do I have the ability to weather a short-term storm of lost or reduced income? Do I have the ability to pay for near-term financial emergencies? Is my current budget running at a surplus or deficit against by current income?
Our role is to ensure that you have the resources for short-term emergencies, while also ensuring your money is working for you to build long-term wealth on a tax-efficient manner. The general rule of thumb is to have six months of liquidity, or six months of pay available to you. Most people assume that means having six months of pay sitting in cash in your checking account. Our belief is that you should have six months of income available to you both penalty-free and tax-free at any time, but only two months of expenses, or two months of cash flow, sitting in your checking or savings account. The rest should be working for you!
Income Protection
Key Questions or Risks: is our lifestyle sustainable if my earned stream disappears due to death or disability? Will my earned income be replaced and available to my children, spouse, or other dependents if something happens to me?
Most people don’t realize that their biggest asset is their ability to earn income. It’s not their house. Our role is to ensure that your ability to earn income is protected at an appropriate level if someone else depends on it.