Financial Planning & Investing

Growing and preserving your wealth

Regardless of your stage in life, growing and preserving your wealth should be an ongoing priority. The following six steps can help you navigate your financial future.

Step 1: Manage your money well

Whether you live paycheck to paycheck or earn more than you spend, budgeting can be an effective tool to get you where you want to go. Though it might feel restrictive, a budget is simply a spending plan for a specific time period. First, we’ll need to know how much you’re bringing in and how much you’re sending out. Start by listing your income sources and how much you expect to earn. For example, Job #1: $1,300 every two weeks. Next, list all your expenses and how often you pay them. This includes all your needs, such as rent/mortgage, utilities, food, entertainment, vehicle expenses, etc. Finally, compare your income to your expenses.

If you don’t have an emergency fund set up, now is the time to get going on it! We’ve put together some handy resources to help you with short- and long-term savings, calculating your savings goals, finding the right type of savings account for you, automated savings, and more.

Did you know your own home is a powerful financial tool that you can leverage? It’s true! Building equity in your home is important for a variety of reasons, one being you can borrow against it. Many savvy homeowners use the equity in their home for a number of life’s necessities (and luxuries) — educational expenses, vacations, and home improvements, to name a few. One of the ways to do this is through a home equity line of credit, or HELOC. Check out this article to learn more.

Step 2: Increase your income

Once you’ve identified and trimmed some excess fixed and variable expenses in Step 1, take a minute to think about how you can increase your income at the same time. After all, doing both will really help your financial standing. Are you in a position to negotiate a pay increase at your primary job? That’s a great place to start. Also consider your unique talents — would people be willing to pay you for your skills or a product you make? You could turn a hobby into a business that generates some much-needed extra income. Put a different way, in addition to your normal job or source of income, can you also make money while you sleep? This is called passive income and yes, you have to do the work first, then let orders, downloads, and sales of whatever-you-built kick in and beef up your income.

Step 3: Invest your money wisely

Once you have a handle on your budget and extra income sources, you can start to turn an eye to the future. And even if the difference between income and expenses isn’t as great as you might like, starting investing as early as possible is one of the best financial decisions you could ever make. The difference in waiting even a few years can be huge! You may have some debt that’s really bugging you and preventing you from investing, so which should you do, pay down debt or invest? This article will help you decide. And you may be wondering, “What do I invest in — stocks, mutual funds, bonds?” The answer is quite likely “yes” to all of those. Depending on your age, goals, and timeline, here’s a look at how and why to diversify your nest egg. If you’d like to crunch some numbers and see how powerful investing can be in growing your wealth, check out these calculators: How much could I save over time? and What will my investment be worth in the future?

Step 4: Bring all the pieces together

In order to ensure your overall financial “big picture” is achievable, the individual pieces must fit — and work — together. If you’re at this place in life, it might be time to consider working with a Private Banker. To some, that may sound intimidating, but it’s quite the opposite (read the article to see why). And it may be even more comforting knowing they’re close by when you need them. Simply put, your Private Banker acts as your single point of contact and orchestrates with other UBT experts to bring you the best in banking, investments, trust and estate considerations, financial planning, and more. The benefit? You don’t have to think about all those things and remember to contact all the professionals at the right time — we’ll do it for you.

When you first meet with your Private Banker, and then again in your subsequent meetings, you’ll stay in touch with the answers to your questions like: What deposit account products am I in? Are my liquid assets earning the highest possible rate of return? Are my tax liabilities minimized? Is my debt leveraged appropriately? Meeting with your Private Banker annually to review all your accounts will help you maximize your rate of return and benefits.

Step 5: Preserve your wealth

To protect your wealth, you need to manage day-to-day and long-term risk. To help manage short-term risk, one of the best things you can do is build an emergency fund to cover three to six months of your family’s expenses in case you lose your job or are unable to work. Tapping your retirement dollars for emergencies can be extremely costly and could derail your future retirement, so try to find other solutions.

Another risk to your wealth is investment risk. Investing too aggressively or failing to diversify your investments can expose your portfolio to unnecessary volatility. Check out this handy article on diversifying your investments. In addition, moving all of your dollars at one time can be dangerous to your investment account. Making incremental changes over a longer period of time will help protect your portfolio from the large-scale risk of mistiming the move.

Finally, make sure you’re adequately insured against risk. Protect your property through home, auto, and, if appropriate, an umbrella policy. Consider purchasing adequate life and disability insurance to protect your dependents from lost income. And don’t allow your health insurance needs to be put on the back burner, or your wealth could be devastated by a medical emergency. In addition, you may want to think about purchasing long-term care insurance to protect your estate against the ever-rising cost of home health care or an extended nursing home stay.

Step 6: Estate and trust considerations

You’re working hard to build wealth for your family, save for retirement, and eventually, to leave a legacy or make a charitable impact. And no matter what stage of life you’re in, there are some general guidelines about estate management and trust considerations that you may find helpful.

For many people, the first thing they think of when they hear the words “estate plan” is a will — and for good reason, as it’s the cornerstone of any estate plan. But do you know what provisions should be included in a will and what are best to leave out? You may want to consider talking with your family to avoid hurt feelings and confusion regarding your will. And before you venture online to draft your will on the cheap, check out this article about the potential downside of doing so. Finally, find out how your will actually needs to appear in order to be legal and reliable.

When it comes to wills, trusts, and estate planning considerations, clear communication is key. Be sure your documents clearly explain your intentions. Plenty of others have made mistakes with their estates — you can benefit and learn from them! Check out these common estate planning mistakes here. 

If you’re a business owner or partner, it’s important to consider your business succession plan and buy-sell agreements as part of your estate plans.

Remember to review your estate plan regularly — preferably annually — and think about any life changes that may affect your future plans. Keeping things current will help you in the event of something unexpected happening, and will help you and your family communicate your wishes clearly. 

Following all these steps will not guarantee you’ll retire a multi-millionaire and leave a kingdom to your future generations, but they will definitely improve your odds. To secure your family’s financial future, assess your progress at least annually, put away as much as you can, protect your assets by insuring against risk, and create a will and estate documents that ensure your wishes are carried out the way you intend.

Simply put, these steps can help you control the things you can and minimize the impact of the things you can’t.

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Learning Center articles, guides, blogs, podcasts, and videos are for informational purposes only and are not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.

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