Just as there are four distinct seasons in the year, there are four financial seasons of life that can help you stay on track toward achieving your long-term financial goals. These four financial seasons include accumulation, preservation, distribution, and succession. For many people, the seasons change along with the way they see themselves, their investments, and their goals. But how can they and you plan for these seasons and adapt financial plans accordingly?The first season of financial planning is accumulation.
This season starts when you start working and earning money. While you may not have reached your highest income years yet, spring is no less important for financial planning. It's a crucial time to build a solid foundation for lifelong planning. Track your backlog, budget for needs such as student loan and mortgage payments, save for emergencies, and set life goals to secure your roots this spring investment season. The second season is preservation.
This is the best earning season for investors as many stabilize their careers during this phase, advance in their roles and enjoy the additional income provided by their experience and seniority. This high-income season provides an opportunity to make the most of your income to produce and store the fruit you will need to live comfortably during the fall and winter seasons. The third season is distribution. This is when many people lose their resources as the assets they accumulated during previous seasons serve as a means of sustenance. However, planning is still necessary as the first frost of winter approaches.
Following your financial plans is still important for those in this stage, as is active estate planning. It is necessary to continue to adjust financial plans as needed during late retirement as needs change. The fourth season is succession. Active estate planning allows investors to leave gifts to their beneficiaries so that they can start their own financial planning plans when spring comes, take deeper roots or achieve their goals more quickly in summer, or bolster their own reserves for retirement in the fall and winter. Focusing your finances with these four seasons in mind can help you stay on track toward achieving your long-term financial goals. Just like a new year, financial planning starts with accumulating income in the spring and continues from the highest incomes in the summer to retirement in the fall.
The cycle is complete and, in many cases, starts again with late winter retirement.