Getting Organized

2 Mar 2022

Getting Organized

In January we introduced to you our 2022 theme – Planning with Purpose.

The bottom line of planning is to use the resources you have (where you are now) to move down the correct path (the plan or strategy) to your end goal (where you want to go). Your life changes all the time, and your financial plan should recognize and allow for future-focused adjustments rather than referencing only the past.

Wherever you are, our Purpose is to simplify the complicated aspects of your financial life. We believe that organizing your financial life – having a picture of where you are now – is a critical component of getting where you want to go.  In this blog we want to highlight four areas where just a little bit of organization can yield significant dividends for you.

Your Net Worth

Successful families regularly review their net worth statement and keep track of how it changes over time. Organizing your assets and debts into a net worth statement does not have to be time consuming, but it potentially provides some large benefits. Here are some questions to ask yourself:

  1. What’s the big picture for my family? Does our current net worth make it easier or harder for me to track towards the future I imagine for us?
  2. How balanced is our net worth? Are most of our assets tied up in illiquid real estate or a family business? Do I keep large amounts of cash in the bank, relative to our other assets? Are all our investment dollars in pre-tax retirement accounts? Is my current situation intentional or did it “just happen”?
  3. Is my net worth improving over time? Do I know why?

You may have filled out a personal financial statement for your bank when getting a loan. Perhaps you’re the spreadsheet type who knows what you have to the dollar. Maybe you’ve never even thought about organizing your life in this way, or why you would want to. No matter which type of person you are, BentOak Capital’s financial planning portal includes an easy-to-understand, real-time net worth statement that can help you be able to answer all of those questions.

Your Cash Flow

In addition to the big picture of net worth, successful families keep an eye on their cash flow. For some, this may mean an itemized budget that matches income with expenses. For others it may be a less regimented, envelope-type system. For many families, there may not be a desire or need to maintain a written budget, per se, but it is extremely valuable to have an awareness of how much money is coming in and going out, as well as the general character of that income and spending. High level cash flow measurements can help you plan for the future. Here are some questions to ask yourself:

  1. What is my current savings rate? Is it sufficient to help me meet my short and long-term goals?
  2. What is an appropriate amount for us to keep in cash for emergencies?
  3. What is our current debt load (monthly debt payments relative to income)? How has it changed over time?
  4. What are my probable future spending needs? If I decide to stop or am forced to stop working full time, will I be able to cover the cost of my normal lifestyle?

BentOak Capital’s financial planning portal can help you track your income and expenses over multiple time periods through account aggregation. This will help you spot trends, watch for danger signs, improve your savings rate, plan an effective debt paydown strategy, and keep you on the path towards a future lived on your own terms.

Your Investments

A typical investor has between four and seven different investment and retirement accounts. It is not unusual for some people to have 10 or more. But many families come to us without a true idea of what their big investment picture looks like, how each of their accounts correlates with the others, and what potential icebergs may lie ahead. Questions you could ask yourself are:

  1. Do I have a comprehensive strategy for my investments as a whole?
  2. Do I have the right mix of investment types for me? Do I know if or how it should change?
  3. Are my investments in the best location to support both my future goals and my approach to risk?
  4. What opportunities for improvement do I have? Am I willing to take action to achieve such improvements?

BentOak Capital is a planning first firm. We believe that a family’s investments are only one part – albeit an important part – of the family financial plan. We understand that not everyone loves digging into the details of finance and investing like we do. That’s okay! Our financial planning portal can help you aggregate everything in one place – even the accounts we don’t manage. It is a tool that families we work with can use to gain a birds’ eye view of all their investments, with additional detail available for those who want it.

Your Legacy

Planning with a purpose means looking forward to the future. Taken to its logical conclusion, that also means looking forward to a day you are no longer here to care for your loved ones. Successful families have thought about this and take action to put their desired legacy down in writing. Here are three questions you should yourself:

  1. Do I have a financial plan – the way I want to grow and protect my assets, and provide for myself and my loved ones?
  2. Do I have an estate plan – the way I want to pass my assets on to my heirs or favored charities?
  3. Do I have a legacy plan – the way I want to pass my values to the next generation and the generations beyond?

If you are a BentOak Capital client, you have hopefully seen how much we value a good financial plan. It’s the cornerstone of what we do. We also talk regularly about your estate plan. At the most basic level that means we may ask if you have completed the appropriate documents (wills, powers of attorney, etc) and asking for copies of those to review.

Through the Vault section of our financial planning portal, you can securely provide those sensitive documents to us without having to rely on insecure email or the cost of regular mail. We will help review those documents and make note of any potential issues to address given what you have shared with us about your legacy goals. You will also have 24/7 access to digital copies of any documents you upload to our portal should you need them in the future.

Estate planning (with purpose, of course) is such an important idea to us that we created The Legacy Letter as a way to help our friends and clients organize their thoughts and documents to make the transition from one generation to the next just a little bit easier. We would be more than happy to provide a copy of The Legacy Letter to you. By the way – we realize the idea of a “legacy plan” may be new to you. For certain families, we have found it to be extremely helpful and timely. If this idea intrigues you, please call or email us.

Next Steps

If you are interested in taking the next step in organizing your life, please talk to a BentOak Capital advisor. We would love to help you get set up on your own personal portal. You can invest as much or as little time into this as you like (though we tend to think a little more is time is better for the long run). In return, you can gain a real time net worth statement, a better understanding of your cash flow, a top-down view of your entire investment portfolio, and a secure way to store estate planning and other sensitive documents.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly

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More about the author: Chris Sargent