What does it cost us to live? We need to know our cost of living to work with investment professionals, and create an estate plan.
When I was married, my husband controlled everything: how much we spent, what we spent it on, and how we invested. When we divorced, I received a settlement which I placed in the hands of a financial advisor, so I could focus on my children and rebuild my life. I have never actively managed my finances because, until recently, the financial markets cooperated and the income from my nest egg easily supported our lifestyle. But now I worry that the income from my investments will not be sufficient for my lifetime. My future suddenly feels uncertain. I need to get a handle on my cost of living and find ways to reduce my spending so I can be a better partner with my financial advisor in building my wealth.
The Dilemma
Client received large divorce settlement
Had never managed the household finances or investments
Wanted a plan to build wealth, create an estate plan and work with investment professionals, but had no idea how to go about it
Client needed to track certain expenses for reimbursement by the ex- spouse
Had no concept of what it cost to maintain current lifestyle
Spending was routinely outpacing portfolio income, requiring random liquidation of assets for cash affecting portfolio performance
Spending continued despite rapid decrease in portfolio values in radically altered financial markets
Client felt vulnerable and ill-equipped to manage the changes being requested of her by her financial advisor
The OSI Solution
Created a custom QuickBooks file to track expenses and amounts “drawn down” from investments in a style that was meaningful to the client.
Implemented quarterly and year-to-year spending comparisons to give client benchmarks and ways to compare the costs of various spending choices
Developed a custom budget comparing current spending to budgeted spending quarterly and annually
Provided a framework for interviewing, evaluating, and hiring a wealth advisor
Created an “asset snapshot” format for monitoring asset values over time
Client has embraced the budget process, plans in advance for large expenditures and has reduced overall personal spending by 35%
OSI provides client with a quarterly one page summary of asset values compared to prior periods so that she can speak knowledgably with her advisors about results
Client is monitoring advising fees
Client feels knowledgeable, capable and empowered
OSI Budgeting for Wealth Building Services can also include:
Periodic net worth “snapshots”
Organization of investment records and statements
Cash Flow monitoring and budgeting to meet financial planning and “draw down” goals
Streamlining and consolidating bill payment; cash flow forecasting
Keeping records of capital improvements and basis in primary residence and additional homes
Gathering and summarizing asset basis data
Providing information to and coordinating with wealth managers, financial planners, and estate planning counsel
Scheduling and planning for property tax and personal estimated tax payments