Most Canadians have fears about money. While that’s not surprising for most of the population, what is surprising is that even the wealthy do not escape worrying about money.
High net worth individuals worry about money, often for distinct reasons. Let’s look at some of the main causes of stress for the wealthy and how these can be resolved through purposeful financial planning.
As Income Increases, So Do Expenses
While high net worth individuals might not lie awake in bed at night wondering how they’ll pay an electricity bill or find extra funds for much-needed car repairs, there are often other expenses tugging at their attention. For example, owning multiple properties comes with a greater number of expenses related to maintenance, insurance, and repairs.
Solution: Create a budget with your financial planner. Yes, even the wealthy need to weigh their expenses and other financial obligations against their income!
A Fear of Falling into Debt
Alongside increases in spending, there may also be increases in debts. Wealthy individuals are more likely to have larger mortgages, as well as loans for big-ticket items such as boats or luxury vehicles. In many cases, debt makes sense for the wealthy because it allows them to build assets and income elsewhere. However, it’s important for individuals to have a solid understanding of a healthy debt ratio based on their specific circumstances.
Solution: Meeting with your financial advisor regularly to manage your debt ratio and checking in on your long-term financial plan before adding debt.
The Pressure to Make More Money
Many wealthy people feel the pressure to sustain or grow their wealth, often through investments or business ventures. However, large investments often also require greater oversight, for which many people do not have the time, inclination, or education. In many cases, it makes sense to create a team of professionals to provide tools, strategies, and advice when it comes to investments or ventures.
Solutions: Working with a financial advisor who provides full oversight on your portfolio. Regular portfolio check-ins can help eliminate poorly performing investments and pinpoint potential opportunities. Or, get a personalized financial snapshot to see how close you are to achieving your retirement goals.
A Fear of Losing it All
Many people fear that unexpected circumstances could cause them to lose everything they’ve worked so hard to achieve (or that future generations have worked to achieve, in the case of inheritances). Although it is impossible to look into the future with a crystal ball, there are some circumstances that it is possible to plan for financially, including illness, injury, and death.
Solution: Make insurance planning a priority. Talk to your financial advisor about your options for life insurance, critical illness insurance, disability insurance, and long-term care insurance.
Making the Right Decisions
Others may be afraid of their own choices when it comes to their money. Questions like, “how much should I invest in a new opportunity?” arise often, but they can also be complex. With multiple expenses, debts, sources of income, investments, and other financial assets and burdens, there may not be a clear picture of the present, let alone the future.
This is why many high net worth individuals seek out the advice of financial advisors when they need to create financial plans. A financial plan is a dynamic tool that changes and grows as new challenges and opportunities arise. It includes forecasting to examine the potential growth of your investments, goal-setting that helps you work toward specific targets, and risk management for all of life’s unexpected ups and downs.
If you’re worried about your financial resources and experience stress, worry, or fear, it’s time to check in with a qualified financial advisor and insurance specialist. You can also find free financial planning resources on the Regan Schiller & Associates’ IG Private Wealth Management website.
This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Regan Schiller is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant.
Mutual funds and investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm). Additional investment products and brokerage services are offered through Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund. Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Canada Life Assurance Company.