Financial fitness for immigrant families also requires practice
By Vincent Heys
Financial fitness is your ability to create, protect and preserve your family wealth. It is taking practical steps to ensure you meet your goals and achieve financial wellness as a family.
For immigrant families who are constantly juggling their budgets, such financial planning is rarely a set-it and forget-it exercise.
Life seldom unfolds precisely as you’ve planned. Unforeseen family pressures or economic challenges have the potential to derail the best intentions. However, with a good family financial plan in place, you can still focus on your goals.
Through years of conversations with clients, we’ve observed key areas of concern or recurring themes that families face when they are mapping out their financial plans.
What should guide your family financial plan.
Vision and values
When families determine what underpins their long-term goals, implementing a plan and correcting course in the face of a challenge becomes less cumbersome.
Optimizing investment portfolios Whether you’re a young family starting out or a family transitioning to a new stage of life, reviewing your investment portfolio’s suitability and performance is essential.
Reviewing your insurance portfolio Your insurance needs adapt as your family moves through different stages, so it’s essential to ensure that you have the coverage that suits your unique context. This is wealth protection.
Efficient tax structuring
Ensuring that taxation is correctly and efficiently structured can contribute toward achieving financial goals.
Leaving a financial legacy
Preserving capital for your heirs in the long term is part of setting the next generation up for success.
The 6 practical steps to financial wellness
Farber Wealth has developed a helpful needs-based framework that illustrates six practical steps family members can take to structure their financial goals.
Steps 1, 2 and 3:
Protect your health, wealth and lifestyle
The foundation of any family financial plan should be the protection of your greatest asset—your health. Consider what the unintended consequences could be for the family of overlooking this vital area. What would the financial impact and resulting stress be if one of the family members contracted a major disease.
Secondly, have you made provision for protecting the family’s monthly income in case of short-term or long-term disability? In the case of death, what measures need to be in place to meet the family’s financial needs and maintain their lifestyle.
Step 4: Plan for your retirement
The optimal time for senior family members to retire differs from family to family. Some may choose to scale down completely, go part-time or continue to work. By planning for this decision early on, families can have the financial freedom to make the decision.
Step 5: Grow your investments
What are the investment goals that you as a family want to save towards? Perhaps contributing to a university fund or a family vacation are long-term investment goals that your family prioritized. By defining your goal, determining investment strategies, and celebrating milestones, you keep that goal top of mind.
Step 6: Estate planning and philanthropy
The last aspect of the process is preserving a legacy, including examining wills and estates and considering what the family needs to have in place from a tax perspective.
Ultimately it’s about how the family’s wealth may be impacted and what protective measures need to be in place.
Throughout the six steps, we encourage families to think clearly about both the intended and unintended consequences that may occur if they don’t have a robust financial plan in place. The objective is always to use the family’s goals as a starting point and empowering them with the knowledge and tools to track and achieve those goals.
Vincent Heys is a Managing Director and co-leader of the Wealth Management practice of Farber. His practice focuses on personal financial planning, investment management, estate & fiduciary solutions, and corporate benefits.