Financial advice can help you design your blueprint and start establishing the foundation.
When you’re building a new home, a blueprint enables your construction team to make sure the finished house is well-built, beautiful and meets your expectations.
Similarly, you also need a blueprint when it comes to building your financial house. Whether you’re just starting out or you’re already well on your way, your personalized master plan can help make sure your financial house withstands the ups and downs of life.
“It’s the starting point that comes out of conversations you’ll have with your financial advisor,” says Michael Witkowski, field vice president at Thrivent. “During the design phase, it’s normal for there to be more than one draft and for it to change as the design is developed, your goals become clearer and, later, as your life evolves.”
For Joshua and Annie Brown, the design phase guided them toward creating a master plan that gave them a feeling of confidence about opening a new family-owned business and taking action on emergency savings, disability income and life insurance.
For Brent and Elissa Ogren, their financial framework is helping make their money work for them while Brent pursues a Christian ministry degree part-time and works part-time as a youth pastor.
And for Dennis and Michelle Erickson, updating their blueprint has enabled them to streamline their accounts. They wanted to ensure that if something should happen to one or both of them, their children would be able to manage the situation with less stress.
While each of their financial strategies is unique, and they started at different points along their financial journey, the process they followed to get to where they are now is similar.
During the design phase, it’s normal for there to be more than one draft and for it to change as the design is developed, your goals become clearer and, later, as your life evolves.
How to start building your financial house
When you begin building or updating a home, you likely have a good idea of your needs, wants and wishes for the physical structure. But you may not know how to make it come to life. This is where talking to someone who knows the technical requirements to bring it to life can make a difference. Someone who can point out things you may not have thought about or ask questions about special features. A qualified professional will want lots of detail to put an architectural plan together to build a house that meets your needs but also stays within your budget.
The same holds true when building your financial house. Your financial advisor starts by gaining an understanding of your personal needs and vision for the future. You’ll talk about what’s most important to you, and together you’ll align on how to prioritize your goals. You’ll discuss what’s meaningful to you today and where you want to be in five years and 20 years. All while being mindful of your income, budget and plans for generosity, including the legacy you want to leave.
“Most people will stay in a building phase of their financial house for 30 to 40 years, so it’s important that we start on solid ground and take the time to really understand you before we start building,” says Bobby Seda, market director in Thrivent’s South Central Advisor Group in Nashville, Tennessee.
Joshua and Annie Brown of Nashville, Tennessee, started their partnership with Seda more than a year ago. Their early conversations uncovered their dream to open a pharmacy, which they recently did. Joshua is the full-time pharmacist, and Annie provides part-time marketing and business management support.
Married 12 years with three daughters, ages 7, 5 and 3, Joshua and Annie have strived to make smart decisions with their money. But they were struggling to see the big picture of their finances.
“I needed to know we were secure for the long-term,” Annie says. “After meeting with Bobby, for the first time we could see where we were headed, knew what it was going to take to get to where we wanted to be, and that we were doing well.”
With the financial expertise and Thrivent tools Seda made available, the couple defined their monthly budget, refined their emergency funds and created a giving strategy. When combined with reviewing their insurance and 401(k), Joshua says, it really developed the financial picture they were seeking.
“The reality of us being able to open our own business didn’t hinge completely on developing a complete plan with our finances, but it greatly affected our confidence to be able to move forward with our plans to open,” he says.
Start with the groundwork
When building a house, it seems everyone wants to jump right into decisions about the rooms—colors, flooring, cabinets, window treatments. But that misses one of the most important components, Witkowski says, and that’s the foundation.
“It’s generally understood that a home requires a strong foundation to withstand the test of time,” he says. “In building a strong financial strategy, we, too, want each client’s financial house to have a solid footing.”
And sometimes it may mean doing some trade-offs in your blueprint, as well as consulting with your attorney and/or tax professional in addition to your financial advisor, to make sure the foundation is strong for the long-term.
The financial house foundation focuses on:
- Your financial position: This includes having an emergency fund, a saving/spending plan and a debt management strategy. It also includes your generosity goals.
- Income/asset protection. Help ensure your insurance—life, disability, property/casualty—is adequate. Identify important documents like a will, trust and powers of attorney are in place.
- Health protection. Review your insurance and health savings account needs and your health care directives.
The loss of a job, accident or illness, or the death of a loved one can happen. And if preparation isn’t done, says Matt Dendinger, market vice president in Thrivent’s Midwest Rockies Advisor Group in Ponca, Nebraska, they can cause your house to crumble. “We don’t want to see 20 years of planning unravel in 20 days because we didn’t protect against these things,” he says.
The Ogrens, of Selby, South Dakota, partnering with their Thrivent financial advisor, Dave DeVries, are working toward creating a solid foundation early. Brent and Elissa have no debt or large payments and say they are in a good place financially. Brent had started investing on his own, then reached out to DeVries for guidance.
“I didn’t have the time to manage it and look at it as I wanted to,” says Brent. “There’s a lot of moving parts for a 23-year-old with a wife and new baby, and I didn’t want to mess it up.”
DeVries, of Sioux Falls, South Dakota, started by asking Brent and Elissa questions about their short-term and long-term goals, as well as reviewing what the couple already was doing.
“When I’m talking with a client, I need to have the full picture,” DeVries says. “We don’t want to put a window in a certain spot of the house and then realize it could structurally cause issues.”
The Ogrens improved their foundation by adding term life insurance for both of them. With a new baby, they wanted to make sure if something happened to one of them, the other would be able to manage expenses, Brent says.
“At our last meeting, we talked about putting together our will, and we’re working toward that [with our attorney],” he adds. “The stability of having everything in place and knowing where our money is at is reassuring.”
While a builder makes sure the foundation is strong, sometimes a crack occurs. That can happen with the financial house, too.
“This is why we get together with our clients and review their financial framework at least once a year,” Dendinger says, “so we’ll be able to talk about things that pop up and make sure we’re planning with them.”
It’s generally understood that a home requires a strong foundation to withstand the test of time. In building a strong financial strategy, we, too, want each client’s financial house to have a solid footing.
Making it a home
This is where the building process gets more fun. With the foundation in place, studs turn into rooms. Flooring goes in. Color is added to walls. Cabinets are built. And the list goes on.
The same holds true for your financial house.
“After the foundation, you move into the accumulation phase,” Seda says. “Our rooms are going to be focused around saving for retirement, saving for college and saving for other large purchases. And you’re going to want to do that in the most tax-efficient manner, tailored to you.”
You’ll spend many years in the accumulation phase—and you may make many changes as your goals evolve or your circumstances change. As retirement approaches, you may be looking at another remodel of your financial house, in anticipation of that switch from saving to spending.
“This is where you may write out the checks for your children’s college education, the boat or house you’ve saved for, the trips you want to take,” Seda says.
You’ll work alongside your financial advisor to create a tax-efficient distribution plan for your retirement savings, turning your savings into income, Seda says. You’ll navigate Social Security decisions and pensions. This conversation also may include your legacy plans—what you want to share today as well as after you die.
“This is where you get to decide what to do with your surplus, who you want to give back to,” says Dendinger. “We can work together on creative strategies to bless the people and the organizations you care about most, today and in the future.”
The Ericksons, from Sioux Falls, South Dakota, have recognized a desire for simplicity with their investments and are working strategically toward that goal, Dennis says. Working in partnership with DeVries, they’ve combined numerous portfolios into one basket and moved their life insurance from basically three policies into one, increasing the coverage and decreasing the premium.
They chose to do this after having dealt with numerous, scattered policies and accounts when their parents died. They didn’t want to leave the same scenario to their children, so they consolidated and eliminated, making it possible for their children to only have to make one call in the event of a tragedy.
“We are only in our 50s, but we felt the need to get our basket in order,” Dennis says. “No matter the size of the basket, it needed to be cleaned up. Now we find it easier to keep an eye on our nest egg.”
In reality, the design of a home is never finished. Oftentimes, changes are made mid-construction. And even when the home is finalized, you may want to repaint walls, replace floors, cabinets or counters, or even add on for a previously unforeseen need.
“The financial house, too, requires change along the way,” says Witkowski. “But your financial advisor understands you, knows what’s important to you, and can work with you to update your framework and provide the customized advice you need as you work toward your goals.”
One of the important things Joshua and Annie Brown learned through the process of opening their business is that there are things that they are going to be experts in, and others that they are not.
“It’s important to find the people who have the knowledge and can educate and partner with you,” Joshua says. “For us, Thrivent has provided us with education on our finances and showed us how we can work together to form a complete picture of our finances."
Thrivent financial advisors have a variety of advice tools that can help you understand your current financial situation and identify strategies and solutions as together you create the framework for your financial house. To learn more,
Donna Hein is editor of Thrivent Magazine.