Are you Developing a Wealth Plan? So, where do I start or make adjustments?


Bill’s Blog | September 14, 2023

When I was a kid and teenager, I played many team sports. Looking back, I usually ended up on the defensive side of the game, where I excelled (hockey, football, soccer and baseball). Think of offence and defensive strategies when building a wealth plan. There are significant risks in the markets, and as I have warned many times, severe inflation persists in housing costs (rent or ownership) and fuel costs (expect oil to be over $100 a barrel during the 4th quarter), which impacts everything (food production & grocery prices, shipping, etc.). So, for this Blog, let’s talk defence. 

In talking with well over a thousand people over my career, I have heard many stories, and they have shared significant setbacks they have experienced. It did not matter what career they chose or their pay scale. The critical thing is having a plan (be prepared) when life throws you a financial curve ball. 

When starting a wealth plan, we first evaluate spending, create a simple budget, and lay a foundation of multiple saving accounts, each with different purposes. Many people do not have a money problem but a spending problem. If you cannot get your spending under control, you will most likely be broke your entire life. Being broke is not a fun way to live.

Step one: Create a simple budget of fixed costs (essentials) and discretionary spending (optional). Trim your budget so you have excess income each month.

Step Two: Put 10 or 20% of your income into monthly savings. If your income is limited, start with one account and work toward 3 or 4 before investing. Ensure you get a 4 to 5% return on your savings. Start with an emergency savings account. Why? Life happens (financial setbacks), and cash is king in a crisis. I have a good friend who I chatted with recently, and within the last month, he had his truck motor seized up, and their dishwasher and microwave failed. Maybe you can relate. Thankfully, my friend has the savings to cover these expenses and does not have to go into debt.

  1. Another excellent option for part of your savings is physical gold and silver. In the long term, they retain your purchasing power (while fiat currencies do not), and both metals are very liquid.

Step Three: Once you have built up 3 to 6 months of emergency savings, create a second account for goals. We all work hard to enjoy life, and hopefully, we will fulfill many of our goals. Whether travel, education, a new computer, or a car. Paying cash for these things creates financial freedom. 

Step Four: Once you have adequate savings to cover life essentials and goals, consider starting an investment savings account (offence strategy). We will discuss offence soon, and I will share some ideas to consider.

Step Five: Insurance is defence.

  1. Consider term, permanent, or a combination to protect loved ones and offset debts.
  2. Put critical life insurance in place as part of your defence. Add critical illness insurance to provide a tax-free lump sum payment in the event of a severe illness like cancer. Three individuals I know have been paid 100K after cancer diagnosis, and remember, cash is king in a crisis. 
  3. Next, consider disability insurance that provides a monthly income if you cannot work. If you have a group plan through work, you will receive approximately 1/3 less income than usual if you are on a long-term disability. How long can you go before you are in financial trouble with 1/3 less income. Consider a top-up disability plan or, if you have no coverage, a complete DI plan.

Step Six: To develop a solid long-term wealth plan, educate yourself and build one step at a time. Education helps you avoid big mistakes! Education is critical to your ongoing success. Think lifetime, not short-term, when it comes to building wealth. In my wealth foundations course, I cover the most important steps you will need to take to create or adjust a wealth plan that lasts a lifetime. Someone can do the six-lesson online course over two or three evenings or on the weekend. Special Price $49CA

Lastly, I will co-host a fall webinar on October 7 at 10 AM PST (45 minutes, plus Q&A) with Forian Grummes of Midas Touch Consulting. Florian is an expert trader and analyst on the markets, precious metals and cryptocurrency. Florian will share his insights and forecast for the coming months. Florian is a regular guest on Kitco, the David Lin Show and speaks at many European resource and cryptocurrency conferences. I will send a Zoom invite and registration link in next week’s Blog, and I hope you can join us. “Increase your financial IQ, and you will make better money decisions” BW.

Bill Westmacott, Financial Educator and Solution Provider.

Financial Education & Honest Solutions Create Success

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