The Longest Vacation

By Nathan Green
Contributing Writer

[Writer’s Note: In the coming weeks I hope to bring HPR’s readers a five part series focusing on personal finance. Feel free to email with your personal finance questions to .(JavaScript must be enabled to view this email address) and we may respond to your questions in HPR’s pages.]

What does a 401(k) have in common with flight delays? How about a family budget and hotel pool hours? Insurance options and sight seeing?

Recently, my wife and I took a much-needed vacation. It may be that taking a vacation and personal finance are two of my favorite things (I can be nerdy, I’ll admit it), but more than once it occurred to me that financial planning is quite similar to planning a vacation.

You have to save for the cost, research each option, and plan your days to have any assurance you will enjoy it. Very seldom do you wake up one day, get in the car, and head off to an unknown destination without any idea of what you will be doing or how to pay for it. You wouldn’t do this for a two-week vacation, why would you for any other aspect of your future?

The travel industry reports that average Americans spend more than 25 hours planning and preparing for an annual two-week vacation. Yet, in a study by the Financial Planning Association which surveyed more than 1,000 Americans, found that “nearly 20 percent had spent “no time” in the past year actively planning for retirement”, and even more amazing, “31 percent of pre-retirees would rather clean their bathroom…than plan for retirement”.

This is in stark contrast to a recent study by banking giant HSBC, which found that people who planned for retirement had five times the assets of those who did not plan. Stop. Read that again. From this study it is easy to extrapolate that if you allocate even half the time you spend planning your next vacation on financial planning (for the longest vacation of your life - retirement), you will make a significant impact on your financial future.

There are many reasons to think about your financial future; the country is struggling with over nine percent unemployment, home values have been falling, recent college grads are struggling to enter the workforce, Baby Boomers are not able to exit the workforce, taxes in all likelihood will be going up, Social Security benefits will be going down, a bi-polar stock market is amplified by an overzealous media-fueled fear, and the list goes on and on.

It has recently become crystal clear that the conventional wisdom of our parent’s generation regarding financial planning has proven to be massively flawed. It is also obvious that we are living a lifestyle that is not only unfulfilling but also unsustainable.

In the coming weeks I will work through the missteps of this “conventional wisdom”. We will walk through the new options that will help you and your family not only be more protected against life’s potholes and navigate through the new wisdom of our current world, but actually get you excited about the longest vacation you will take in your life.

I encourage you to follow along the next four weeks and work on your own finances. In week one we will talk about the importance of determining your financial goals and priorities - you cannot reach a goal if you do not have one. Week two will bring an honest discussion about your debt, income, and budgeting that will get you closer to financial security. Our third installment will delve into the risks that derail your progress and how to protect yourself from life’s unknowns. In our final article, an approach to investing and retirement planning that will empower you by letting you maintain control of your future, give you piece of mind, and let you enjoy the important things in your life. Along the way I will provide resources and actionable tasks to get you moving.

Thanks for reading and I welcome your questions. I will get back to everyone who needs clarification or has a question. Some questions may even be used in the future here in this column (with your approval, of course) where I can give a more detailed answer on a particular topic that will hopefully help all who are reading.

Please follow along the next few weeks and start planning for a more secure future and the longest vacation of your life!

Questions and comment: .(JavaScript must be enabled to view this email address)

[Editor’s Note: Nathan Green is a Registered Investment Adviser and owner of BestLife Financial Planning, a fee-only financial planning service in the Fargo-Moorhead area. Check out BestLifeFP.com for resources and worksheets pertaining to this article.]

References -
Travel Industry - http://tiny.cc/ustravelresearch
FPA - http://tiny.cc/planforretirement
HSBC – I have the white paper pdf