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"I should have done this ten years ago!"


Our favorite part of presenting a financial plan is that lightbulb moment – when a concept that a new client was previously unaware of comes into clarity.  Inevitably, the next words we hear are some variation of, “Wow!   We should have done this ten years ago.”   Between managing a career, kids, trying to stay healthy and finding that precious down time, it is easy to understand why managing your personal finances is easy to put off.  But what is the cost?  Let’s dive right into some examples.

Example 1 – College Savings

When parents of newborns find out how much they need to be saving each month toward college, it is usually a jaw-dropping moment.  When parents of a ten-year-old who want to start saving for college find out how much they need to save, it can induce a panic attack.

A family who starts saving $500/month for college when their child is born will have accumulated roughly $224,000 when she reaches 18.   A family who saves at the same pace, but doesn’t start until age 10, will have accumulated only around $72,000.  If the family who starts late wants to catch up, they will have to save more than $1,500/month! 1  Even starting with a small amount early can make a big difference.

Example 2 – Portfolio Management

Maybe, instead of earning a 6.5% annual return, you can improve your portfolio efficiency just a little bit and earn 7%.  In a $500,000 portfolio, the difference between 6.5% and 7% over 20 years amounts to more than $173,000.  That’s 35% of what you started with! 2  If you think your portfolio could be managed even just a little bit better, there is a steep cost to putting it off.

Example 3 – Budget/Refinancing

This one is a big New Year’s Resolution item.  You get your budget in order, but haven’t gotten around to it.  Maybe there are items with room for improvement, such as a mortgage that could be refinanced or a credit card balance that needs paid down.   On a 30-year $300,000 mortgage, the difference between a 4% interest rate and a 3% interest rate is $167/month.  That comes out to over $60,000 over the life of the loan!

While these examples are simple as can be, it is easy to see that the numbers add up fast!  To put it simply, the cost of putting off your financial planning could translate to a greater student loan burden for your kids, more years until retirement, and of course, a lot more STRESS!  If you are telling yourself that you don’t have time to talk to a professional, we would argue that you don’t have time NOT to.   As a wise man once said, “Life moves pretty fast.  If you don’t stop and look around once in a while, you could miss it."


1 Assuming annual compounding, earning 7% per year.

2 Assuming annual compounding.  No additional savings included.

Adam Weingartner is a registered representative of LPL Financial. Securities and advisory services offered through LPL Financial., a broker-dealer (Member SIPC) and a registered investment advisor. Insurance offered through LPL Financial affiliates and other fine companies.  LPL Financial does not provide legal or tax advice.