Growing your number.
John Stackhouse
Vice President of Wealth Management at Palmetto Citizens Federal Credit Union
It might start in high school or the first few years in college. It may start to change as you enter into your career, get married, or start to have children. You have a number, a financial number of where you want to be. The process is mostly aspirational as you are not there financially and the number is where you desire to be.
Fifty years ago, someone entering the workforce may have dreamed, “if I could only make $250 a week, I would be set for life.” A few decades ago a middle-aged person may have felt just having a million dollars by the time they retired would be living the dream.
The number just has its way of changing over time. One certainty is that it does not change down. Inflation paired with any other combination of changes in lifestyle can make the number grow from a newly planted tree to a giant redwood given enough time.
Using just the average rate of inflation in this century of 2.17%, $1,000 of expenses in 2000 would be roughly $1,472 in 2018 for the same expenses. This is just the change in the general cost of living. Now add in changes in health care, taking care of a parent or even supporting an adult child during a rough economy, and the increase just grows and grows.
In conversations, we all talk and comment about the cost of living and inflation. We comment about gas prices, food prices, clothing. When it comes to growing our number, do we factor that all in when we are daydreaming in the early years? This is where having a financial plan can show how the number needs to grow over time. It is not that any financial plan magically solves the issue. It takes you and a financial professional working together and using the plan as a set of blueprints, knowing changes may happen to the plans along the way.
It takes saving, investing, spending, and risk management to help toward growing your number, maintaining your desired lifestyle, and having protections for some potential risks.
Growing your number starts by fully understanding what the number may need to be. A financial plan and strategy are just one of the better ways to gain that understanding.
Great insight, Stack!