Over the last week, my home has become a construction zone due to mold remediation that was required in our crawlspace and attic. Our home was built in 2018 so this shouldn’t have been an issue. What we discovered is that when the builder was encapsulating the crawlspace, he did it 80-90% of the way. He didn’t do those last few steps which would have ensured that it was a safe environment and mold wouldn’t grow.
As frustrating as this has been as a homeowner, my mind has been drawn to the parallels between this situation and helping our clients plan for and create the future they want:
- The builder wasn’t disciplined enough to complete the last 10-20% of the encapsulation. If you’re going to be successful financially (and you can define success however you want), you don’t have to be the smartest person in the room or pick the next hot stock that’s going to deliver incredibly high returns. The predominant driver of our ability to achieve our financial goals rests on our ability to stay disciplined. Are we spending less than we make and saving for the future? Are we keeping up with the Joneses and buying the more expensive car or larger home? Or are we content with what we have? Are we sticking to our investment strategy when a global pandemic strikes or do we panic and make choices that will hurt us in the long run?
- The cost of remediating the mold at our home is multiples of what it would have cost if it would have been done right the first time. This is true in just about every area of financial planning. For example, when it comes to estate planning, I always tell clients you can spend the money to do it right now or your heirs will spend significantly more when you pass to fix the problems then.
- It would have taken much less time to do it right the first time. When it comes to investing, saving as early as possible is important to let compounding work for you. For example, if you save $6,000/year from age 25-65 and earn an 8% average annual rate of return, you could have $1.55M saved for retirement. However, if you wait and begin saving that same $6,000/year at age 35 and earn an 8% average annual rate of return, you’d only have $679K saved for retirement. The extra $60,000 that was saved in the first 10 years does make a difference but the vast majority comes from those extra 10 years of compounding growth.
With working from home and virtual learning for kids, it’s been so easy to put off something that’s important but not urgent like working on our budget to be able to increase our savings, getting the right life insurance coverage in place to protect our family, or updating our estate plan. The right time is now. Waiting can always have unintended consequences. Please don’t hesitate to reach out as we can help with many of these or get you to the right person.
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