Common Sense Financial Podcast Different Approach of Financial Planning Addresses 'the Missing Middle' - Replay
Sep 18, 2024
15:40
Emergencies and retirement. This is what we're taught to save for. But what if you created a different system, which allowed you to pay for the expenses you will incur between now and retirement age – without losing the ability to build wealth?
Find out why you may need to rethink your financial planning approach and what you should do about the "Missing Middle."
- According to popular opinion, sound financial planning advice typically consists of two main steps: saving for emergencies and saving for retirement.
- Brian found this to be slightly misleading because of the phenomenon he refers to as "The Missing Middle."
- Think about how life generally goes: there are car payments, furniture, credit cards, tuition… you also have money going into an account that you can't touch until you're 60 and then, before you know it, you have thousands of dollars of debt. And that's by following general advice.
- However, opting for a less traditional and more customized approach allows you to pay for the expenses you incur between now and retirement – the middle of your life, without entirely losing the ability to build wealth.
- Brian believes that the real benchmark you're going to use should be based on your personal needs, goals, and financial situation.
- When there are big expenses people don't account for in their regular cash flow, one of two things happens.
- People either continually deplete savings in order to pay for the things in cash (constantly funneling money back into their bank account to replenish the emergency fund).
- Alternatively, they finance everything with bank loans and credit cards. Neither option leads to wealth being created.
- Brian is convinced that you should model your entire financial life around your actual life, instead of around arbitrary concepts or ideas that don't fit into the puzzle of what you're actually trying to create (Brian calls this Your Life Cycle Model).
- In the Life Cycle Model individuals allocate resources over their lifetime with the aim of avoiding sharp changes in their standard of living, while avoiding debt and simultaneously building wealth.
- Brian explains how using the so-called build banking instead of a traditional bank can help you leverage the Life Cycle Model (and why you shouldn't compare it to the stock market).
- People tend to separate their money into two buckets: saving and spending. Brian explains why that may not be the best of approaches – and what to do instead.
Mentioned in this episode:
How Long Will My Money Last in Retirement
Securities offered only by duly registered individuals through Madison Avenue Securities, LLC. (MAS), Member FINRA & SIPC. Advisory services offered only by duly registered individuals through Skrobonja Wealth Management (SWM), a registered investment advisor. Tax services offered only through Skrobonja Tax Consulting. MAS does not offer Build Banking or tax advice. Skrobonja Financial Group, LLC, Skrobonja Wealth Management, LLC, Skrobonja Insurance Services, LLC, Skrobonja Tax Consulting, and Build Banking are not affiliated with MAS. The firm is a registered investment adviser with the state of Missouri, and may only transact business with residents of those states, or residents of other states where otherwise legally permitted subject to exemption or exclusion from registration requirements. Registration with the United States Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training. Advisory services are only offered to clients or prospective clients where Skrobonja Wealth Management, LLC and its representatives are properly licensed or exempt from licensure. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Skrobonja Wealth Management, LLC unless a client service agreement is in place. Skrobonja Financial Group, LLC provides links for your convenience to websites produced by other providers of industry related material. Accessing websites through links directs you away from our website. Users who gain access to third party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from use of those websites. Any references to protection, safety or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the issuing carrier. This is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. Our firm is not permitted to offer, and no statement made on this site shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained here in provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Any media logos and/or trademarks contained herein are the property of their respective owners and no endorsement by those owners of Brian Skrobonja is stated or implied. The awards, accolades and appearances are not representative of any one client's experience and is not indicative of future performance. Each of these awards have set criteria for their nominations and eligibility requirements. "Best Wealth Managers" and "Future 50 Company" are annual surveys conducted by Small Business Monthly. The winner is chosen by an online vote of the general public and no specific criteria is utilized to determine the winner other than number of votes. Some voters may not be clients of Brian Skrobonja and Skrobonja Financial Group. These awards are not representative of any one client's experience and is not indicative of future performance.