By: Brian A. Magnan CFP®, AIF®Director – Magnan Family Wealth Management
One of the keys to financial success is assigning a clear purpose to each of your dollars. Here at, Magnan Family Wealth Management, we collaborate with your estate planners and accountants to tailor your plan around:
- Ideal Time Frame
- Proper Account Titling
- Tax Minimization & Efficiency
- Potential Investment Volatility
- Projected Growth Required
- Appropriate Investment Vehicles
Whether your money’s purpose is to secure lifetime income, save for a home or car, prepare for health emergencies, or simply enjoy more time with loved ones, our All-Weather Planning Process can guide you to achieve these objectives.
While assigning a purpose to your money is a straightforward concept, it’s not always easy. Early in life, we save for multiple potential needs with the same funds. We have found that many people carry this mindset into retirement, where they continue to view their savings as a catch-all for future needs. But as your wealth grows, it’s time to redefine our mindset with money. It is no longer about covering anything possible, but about planning as specific as possible.
Reevaluate Past InvestmentsWhat’s the purpose of that old life insurance policy? Or the CDs you’ve been rolling over for years? Why continue paying high fees on an annuity without realizing its benefits? Holding onto individual stocks for additional growth is not a purpose – I believe it is playing Russian Roulette with your money.
Consider using your money for tangible, meaningful purposes: weddings, homes, healthcare, vacations, cars, charities, legacy, special needs, or long-term care – just to name a few.
The Danger of Purposeless MoneySociety often overlooks the need to give money a purpose. Dollars without purpose might never be satisfied. Money for accumulation’s sake only can be unfulfilling in the long run. Chasing a benchmark return for no end purpose can lead to frustration.
Without purpose, money can breed anxiety. If your mind can’t connect your money to something tangible, it can feel like a constant threat—leading to indecision and stress. Most importantly, it leaves us vulnerable to market declines.
The Problem with “Outperformance” as a Purpose.After 30 years in finance, I've learned that "outperformance" is a nebulous goal. If achieved, what then? More outperformance? This path leads to an abrupt and often devastating end, like the old saying on Wall Street, “Trees can't grow to the sky.” Disaster can strike the financial plan when the money suddenly becomes required during this decline. If we focus on the end purpose of the money, then and only then, can an investment policy be implemented.
Benefits of Assigning Purpose to Your MoneyOnce your money has a defined purpose, it becomes resilient. It gives you the emotional and financial strength to stay invested during market declines. Having a plan that has potential to increase your income above inflation over your lifetime should bring you peace of mind. Sticking to a discipled process to cover your daughter’s wedding, or to fund your children’s college education, regardless of market fluctuations, might warm your heart.
When you assign a purpose to your money, everything may become clearer and make more sense. There is no motivation required to work harder once a purpose has been assigned. Lastly, your mind may be at ease because the path to final purpose isn’t pointless anymore.
Achieving True Financial Happiness
Without purpose, financial happiness remains elusive. Remember: “Money is a means to an end—not an end in itself.” Let’s work together to define your “end”. Then we can determine the appropriate “means” and help you achieve lasting financial peace.
They say money can’t buy love or happiness, but we believe it can certainly support the things that matter most.