Four Aspects Of Your Financial Life

Four Aspects Of Your Financial Life

Do you ever notice how one part of your body affects every other part? 


For example, I’m sure so many people deal with back pain. I’ve had it for myself and when your back goes out,  it affects everything. You feel like you can’t move. 


But often, when your back goes out, it’s often a result of something else.


Every part of our body is connected. My hip goes out of place because my knee is out of place, which pushes my back out. 


Do you see what I mean? It’s all connected. Everything we do is connected and intertwined in our body and one area affects another. The same is true with your financial life. 



Tax Planning Quote - Michelle Bertram WisconsinTax planning, cash flow management, investment positioning, and estate preservation are four aspects of your financial life. 


And while in some ways they are separate, they are all together. Everything needs to be coordinated in your financial life to really get you to where you want to go to make sure you have the financial security you’re looking for because each one of these things affects the other. 


So while we do a lot in investment positioning, if we don’t look at everything else and how it interacts and relates, we’re really doing you a disservice. 


So I wanted to take some time today and really explain and walk through each of these categories, each of these four aspects of your financial life, and why it’s so important that they’re coordinated. 


Tax Planning

Tax planning has two parts, now and lifetime taxes. 


We want to pay fewer taxes and I don’t care who you are, everybody thinks that they pay too much taxes! 

So yes, we want to look at tax planning now and ways to be tax efficient to pay less in tax now…But we can’t stop there. 


The second part of this is lifetime taxes. 


What happens sometimes is people do everything they can to reduce their tax right now and then later on in their retirement years, they end up paying more tax. 


There is often a misconception that your tax rate will be lower in retirement. Well, that means you’re making lower in retirement. Not everybody wants to take a huge pay cut at retirement. 


Plus, you don’t know what the tax rates are going to be at that point in time. If you ask most people where we’re sitting today they think tax rates are going to go up. So when we look at tax planning, it’s not just tax planning for now, but it’s tax planning for the future for our lifetime. How do we pay the least lifetime taxes? 


Cash Flow Management

Cash flow management also has two sides; budgeting and saving during working years and then creating income in retirement. 


This is the retirement shift.  Now, instead of getting that paycheck from work, we have to generate that paycheck from everything we have saved. 


Knowing where your retirement income is coming from is important. Most people want to have guaranteed retirement income.


Investment Positioning

There’s a couple of keys here. One, it has to be coordinated with everything else. I know, I’m kind of sounding redundant here, but it’s so important. 


Whatever you do in investments can affect everything else.  we make a trade in your investment portfolio, it could very much have a consequence on your taxes. 


If you don’t make that retirement shift right, you don’t shift gears in your investing strategy when you’re entering or into your retirement, it could very much have a negative effect on your retirement income later. 


If people are worried about running out of money in retirement, how their investments are positioned has a big role to play in this. 


Are they going to be able to generate the income they need? 


In retirement, is it going to be sustainable? 


Those are just some reasons why everything we do in investments affects everything else. 


Quote about investments - bertram financial wisconsin investingThe real key here to investment success is avoiding the big losses. Now this is true for everybody, but the closer you are in retirement or when you are in retirement, this becomes even more key because if we can avoid the big loss you can create better retirement income and it’s more sustainable. 


You don’t have to get these huge gains to offset it, because if you lose 30% you have to make 43% to get back to even, so avoiding the big loss is key. 


There are a couple of ways we can do this. We’ve talked about it in some of our investing secrets and we really go into more in-depth with this in our Dream Retirement 101 Webinar


Take a look at that if you want to go more in-depth than any of these topics, but especially with investments.


Estate Preservation

Estate preservation is not just like planning on who you’re going to pass things to. That is one key part for sure, but there’s the other part of making sure that everything is here for us and protected when we need it. 


That’s why we have certain types of insurance. That’s why we suggest having umbrella liability insurance. Those are the types of things to protect our estate. 


We also talk about having the right legal documents here, like a power of attorney form, to give you access when you need it. 


But it goes on to having the right estate documents, making sure it’s going to go to who you want it to with paying the least tax because everyone really has three beneficiaries. 


Whether you know it or not, there are at least three categories of beneficiaries. 


You have the IRS, you have your kids, and you have charity. 


If I ask you how you’d want to do that, most people are going to say their kids or their family are who they want to be the number one beneficiary. 


See why estate planning and tax planning are so important? They can work together. 


If you look at each one of them in a box by themselves and you don’t coordinate it and if you’re not planning specifically to make sure each area is coordinated, the investment person is doing something over here and not paying any attention to taxes and vice versa. You’re going to end up with a financial mess instead of having financial security. 


So take a listen to our Dream Retirement 101 Webinar if you want to go into more detail in some of the keys in each of these areas or just schedule a call with us


We’d be happy to walk through it and do a review. We always say if what you have is good, it’ll be obvious, and if it’s not then you need to understand why. 


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