It takes as much energy to wish as it does to plan.-Eleanor Roosevelt
Financial Advisors: Your Partners in Building Wealth
In the area of finance, there are many aspects of your home that you need to consider. The first step would be in knowing your financial resources and whether you can afford the house you own and still save for retirement, take vacations, and live the lifestyle you’d like to live. Conversely, are you under-housed? Along with your house not having features that your desired lifestyle requires, do you have the income, liquid assets, and future funds that would allow you to live in and maintain a larger or more expensive home?
Once you have talked with a financial advisor, and a lender if appropriate, to review your net worth and financial qualifications, you can then see what financial resources you have for your home. A team of specialized financial advisors will be instrumental in preparing this analysis. Other advisors to consider in addition to a lender and a wealth manager are a CPA, a knowledgeable insurance agent, and your experienced local or secondary market real estate agent.
Does your Home Match Your Financial Resources?
Some examples of a home that does not fit your financial needs and desires are:
- A home that is too big or too small for your current lifestyle
- Too many maintenance costs or high HOA fees
- Property taxes are too high
- An impending decrease in the value of your home
- The current interest rate on your mortgage
- Receiving an inheritance that affords you more of your “Dream Home”
- Living in a home that does not provide enough room for an office, home gym, entertaining, hobby, storage, or other space that you currently outsource at your expense
- Needed repairs or renovations
- An investment property that is not grossing enough income to cover carrying costs
- A vacation home in which you’ve lost interest and don’t often visit
- A primary home that you don’t live in for most of the year
- Lower income taxes in a different state
- Increasing insurance costs, including any flood or disaster risk
- The equity in your home is high and you need those funds for living expenses
- Debt vs income, affordability
- You are “in the red” in your current monthly budget
- Other investment opportunities vs equity in your home
- Mortgage vs rent, expense vs equity
- The amount of down payment needed to purchase a home
Your Home as a Financial Foundation
While it is a great first step to building personal wealth, from the time that you buy your first home, the work of financial planning is just beginning. Keep the momentum going to build a firm financial foundation for your future.
The first step to knowing your financial status and then planning for the future is to create both a net worth statement and a monthly budget that summarizes your monthly income and expenses. These two financial documents are a snapshot of your financial health and should be revised and reviewed on at least a yearly basis. For your personal Lifestyle Foundations copy of these documents click here.
From these documents, you can then move on to financial planning and retirement planning with help of your advisors. According to the U.S. Census Bureau, about half of Americans ages 55-66 have no retirement savings at all. You don’t want to be one of those people who retire with no money. Being frugal doesn’t have to mean you’re not living your best life. It just means that you must prioritize and better allocate your spending to take advantage of full and early retirement.
Because your home is the biggest living expense at 35% of your take-the average American’s home pay (that’s after taxes), it is wise to evaluate if your home is meeting both your lifestyle and financial needs on a regular basis. We will delve deeper into the financial condition of your Lifestyle Foundation, your home. The WheelHouse process will help you live purposefully and with the security that your financial future is safe in a home that best suits you.