Financial planning very quickly becomes front and center in the conversation when we start to think of our lives, and our families, growing. Whether through adoption, surrogacy and IVF, fostering or co-parenting, having a solid financial plan and system in place will be imperative.

When I work with clients on comprehensive financial planning, it’s important to evaluate how to make plans for people, not money. Financial planning should be unique and individualized. Not just looking at what you have, but what you need, to help you get what you want. Not just someday, but today.

Let’s discuss how to lay the bedrock… so where to begin?

Planning should be designed to help you balance your current and future priorities. It is important to look at your whole financial picture to understand how one financial decision affects another.

To help simplify the planning process, it’s best to organize your goals into three categories:

1. Protect – Risk management for you and your family
2. Optimize – Preservation and distribution of wealth
3. Grow – Wealth accumulation

This framework helps to coordinate your plan’s many moving parts to help tell the story of the life you want to live and the life you’re preparing to share with your growing family. Working with a professional advisor will help to organize your thoughts and goals and get specific.  

Identify your goal. For our purposes, let’s identify two:

• How do I create a solid and comprehensive plan to present myself/ourselves in the strongest light to those that are considering and evaluating us?
• How much money am I (or are we) going to need to handle all the expenses that come with planning to grow this family?

For information on the costs to consider for each path to becoming a parent, I recommend using this link from the Gays with Kids site:

Cost of Paths to Fatherhood

Once you’ve identified which path best suits your needs, you can have a more detailed discussion of how to get there.

Goal funding requires that three fundamental questions be answered.

#1. How much is the total amount of money needed to fully fund this goal? It is better to overestimate than underestimate, so if it MIGHT happen, count it.

#2. How long until I am going to be accessing these funds? The sooner you are going to need to access these funds, the more liquid the account needs to be.

• 0-2 years: Short-term goals, should be saved somewhere safe, readily available, and liquid. A tradeoff is that these investments customarily earn less than the rate of inflation, resulting in the loss of purchasing power over longer time horizons.
• 3-10 years: Mid-term goals, saving for future goals provides the opportunity for growth over time—withstanding the ups and downs of the market.
• 10+ years: Long-term goals, consider tax efficiency and diversity for your long-term savings.

#3. What is the risk I am willing to assume with these funds leading up to usage? Time horizon will be a major factor in deciding risk tolerance.

• The degree in which the value of an investment increases and decreases is one measure of risk. More volatile investments generally offer greater long-term growth potential than less volatile investments; however, they may also produce greater losses.

A Financial Advisor can do a risk analysis to create an investor profile with you so you can understand your tolerance.

It is important to reiterate that this goal should be one piece of the larger comprehensive picture. Talking through your short-term, mid-term and long-term goals will help put things in perspective and lay down a bit of scaffolding. Now, of course, these goals can change over time. Priorities shift, goals ebb and flow; which is why it is important to regularly review your plan with a professional and adjust where needed.

I am honored and excited to be a resource through GWK. I would love to connect to discuss everything in more detail in order to get specific with you and your family’s planning. Please reach out to me (matthew.erickson@nm.com) to schedule an appointment for us to discuss.

Disclosure: Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries, including Northwestern Long Term Care Insurance Company (NLTC) Northwestern Mutual Investment Services, LLC (NMIS), a registered investment adviser, broker-dealer, and member of FINRA and SIPC, and Northwestern Mutual Wealth Management Company® (NMWMC), a federal savings bank. NM and its subsidiaries are in Milwaukee, WI.