Like most 16 year olds I wanted a car. I visited Grandma Mae (the family banker) and she loaned me $600.00. My education began as she pulled open the top dresser drawer to get the cash. Inside was a cigar box for church, a box for rent, a box for new drapes, a box for taxes, emergencies, vacation…You get the idea. My Grandmother would divide up her retirement checks into various boxes based on her needs and wants. Grandma Mae was a Financial Planner and didn’t know it!
If you want to achieve your financial goals, organization is the key. We need to itemize and prioritize. I like to use buckets in place of cigar boxes. The concept is the same. Here is how it works.
1) Decide how many buckets you NEED (pretty easy).
2) Decide how many buckets you WANT (quite fun).
3) Prioritize each bucket (very hard).
4) Allocate current or future resources to each bucket (not so easy).
5) Manage each bucket based on…GOALS, RISK, & TIMING (your advisor should help you with this)
Your retirement bucket may include your 401k from work, your spouse’s 403b, a Roth IRA that you have been contributing to and maybe (with emphasis on MAYBE) Social Security. All of these retirement buckets must be coordinated.
It is also probable that buckets will be added, subtracted or changed throughout your lifetime…marriage, children (college, YIKES), change in priorities, etc.
Your Financial Advisor should be helping you with each step of this process. He or she is an excellent resource at your disposal to help you with the planning, implementation and management of your financial plan. The saying is old and a bit corny, but, “Plan the Work and Work the Plan.”
Kent Snyder is a Financial Advisor and “bucket master” at The Kent Financial Group in Clarkston, Michigan. He also educates his adult students in Micro and Macro Economics as a Professor at Northwood University (Adult Degree Program).
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC