My guilty pleasure is buying shoes and clothes; my husband’s is buying fancy coffee and expensive beer.

While we don’t always agree on each other’s vices, we know that for us to be financially successful, we need to be respectful of each other’s spending habits and mindful of our own so we can build a savings plan for our future together.

It’s easy to assume that once we start saving, the rest will take care of itself.  I recently called my husband in a panic about a ‘low’ account balance only to have him point out that we’d repositioned funds into a different investment. It was a reminder of how communication is essential among our family and financial partners. Throughout our lives there will be times of uncertainty, volatility, and unplanned expenses. By having a strong banking relationship and open communication, we can ensure that we remain on track with our saving goals despite the challenges.

The earlier you create behaviors to benefit your financial life - the better off you’ll be. Life stages will greatly impact how you’ll want to curate a plan for your wealth, which can be broken into three phases that build upon each other.

3 Phases of Wealth:

• Accumulation: The 1st phase is the working years, generally between the ages of 25-50.  This is where you’ll start, and eventually find yourselves at the peak of your career, position, and earnings. Within this phase exists hustle, hard-work, and prudence.  My husband and I have been in this phase for the last 16 years. Our finances have wavered between a modest disposable income to a rigid budget with two kids in daycare.  We could have stopped our investment contributions for a few years to help with cash flow but agreed that our long-term financial goals were more valuable. It wasn’t easy, but this is a prime example of delayed gratification. Looking back, I’m grateful for the behaviors and discipline we created around saving.
• Preparation: The 2nd phase is the transition from saving to spending. You’ll see retirement on the horizon and the once delayed gratification is impending. This is a good time to review succession planning (personal and business), tax planning strategies, and diversify or limit risk.  You’ll also begin to think about creating streams of income to replace your paycheck. The age range in this phase will vary but can range from 45-65. Having a wealth plan and a strong financial partner can help you determine the appropriate timeline for your family’s lifestyle and might be a good mediator for differing opinions. 
• Distribution: The 3rd phase is retirement - where discipline and prudence pay off with greater freedom after the paycheck stops. The accumulation and preparation stage got you to this point. While the distribution phase is less structured, you still need to be equally as cognizant in your spending habits. The greatest financial risk for most people is longevity risk or outliving your money.  Working with a wealth management advisor and living within the bounds of your wealth plan can help alleviate some of your worry.

The reality is that our financial lives should grow more complex as we age. We may purchase real estate, have increasing incomes, grow our families, and utilize different investment vehicles. This came to relevance in my own life when I took a new job, and I had the option to roll over my 401K.  My husband and I are entering our peak years of the accumulation stage, and it’s pivotal that the dimensions of our wealth are blended. By having a comprehensive plan, we can evaluate our previously siloed retirement plans, and create a global vision that allows us to articulate what we value most. 

We all have a different relationship with money and developing a wealth plan allows you to honor your relationship with money. The stories tied to your finances are intimate, emotional, and deeply personal and won’t always beat to the same cadence. This is why it’s important to have a strong financial partner to be objective and discerning, especially in moments of uncertainty. At Cedar Rapids Bank & Trust, we believe your comprehensive plan should be disciplined enough to reach your goals and nimble enough to enjoy what keeps you happy. The wealth management team at CRBT welcomes you to share your story with us, and curate a plan for your life and legacy. 

Kara Sabo is Vice President, Wealth Relationship Manager at Cedar Rapids Bank & Trust. Her direct line is 319.743.7078.

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