When I originally wrote this article in 1995 I felt very inadequate and untrained. I was unsure of what to do, how to do it and what the outcome would be. I can tell you today, 25 years henceforth, that I have learned considerably more than I knew in 1995. However, I am still learning. Eight miraculous years have flown by like the wind, but I still feel like an amateur when it comes to child rearing. Read on to see how this relates to investing and your money and enjoy your life, your family and hopefully your financial freedom.
Now that my daughter is grown and “on her own,” I feel that I can adequately advise the masses on the trials and tribulations of fatherhood, parenthood and bringing up baby. NOT!!! After raising a daughter, I have truly learned that I am an amateur, a neophyte, a wet-behind-the-ears rookie that has yet to learn the meaning of child rearing and how to be a good parent. OK Doctor Spock, I admit it, I have read the books, magazines and the myriad of articles that tell you how to be the best parent in the world and you know they all make good sense. However, they are nothing more than recycled paper and environmentally friendly ink when it comes to the real world. They are printed with the best intentions of helping guide us through the most difficult times for both child and parents. Believe me I was once a child and I remember how difficult I made life for my folks. What I can tell you, beyond a shadow of a doubt, is that experience comes with age and time.
This leads me to the subject of finances, not just for the growing family, which I will discuss in a moment, but for you and your community association as well. When it comes to working with a board of directors and management professionals on the financial future of your association, you wouldn’t want a 4-year-old or someone with very little experience in common interest developments handling your funds. You want to find someone who has gone through the growing pains, the trials and tribulations, the annual meetings and marathon board discussions on items like landscaping, lighting and when to heat or not heat the pool during the winter months. Someone who has a working knowledge of Civil Codes, corporate resolutions and many other details that revolve around common interest developments. Only after many years of dealing with the 5 “P’s” of community association living can you relate to intricacies of how to work with and advise an association because all of this experience leads to a common denominator… MONEY and managing your money or the money for your community can be an experience in itself that makes living with children look like child’s play.
Now this article started out as a primer in child-rearing and finance and the $64,000 question is how can we afford to raise this little bundle of joy, provide a safe and secure environment and send them to college in about 15 years on a limited budget. The answer is planning, NOW !!! Not waiting until they reach the age of 10, 11 or 12 and say hey Mom, Dad, I want to go to Harvard and study Macroeconomics. If that happens it’s too late. Then again with that kind of intelligence they are probably going to receive a full scholarship to Stanford, Oxford or Yale anyway. So, for the rest of us “normal” folks who try to raise good kids, here is the answer. PLAN for your future TODAY !!! Start a college fund when your child is born. Convince the Grandparents to contribute every year for birthdays, Christmas, Hanukah, and other special occasions. You too should contribute monthly if possible. Put these funds to work in a fashion that can help build and preserve assets over the next 10 to 15 years. This way you can avoid having to take a 2nd or 3rd mortgage out on the house to afford a $15,000 – $75,000 a year college education. Yes, $75,000 a year is truly a possibility when you consider tuition, books, lodging, entertainment and all the other expenses that go along with living away from Mom and Dad for 4 or 5 years.
What should you look for when planning for the future? First and foremost, a professional who can help you plan for your future. A dedicated professional who has the experience, knowledge and the wherewithal to advise you in the prudent and proper placement of funds that helps you balance your risk with return potential in accordance with your criteria. Look for someone who can sit with you and work out a game plan for the short, intermediate and long haul. Discuss your goals, financial and otherwise so your advisor can incorporate these into a well-formulated plan that can help you pursue these goals, be they for your children, your retirement or even your homeowner’s association. A well thought out plan with the proper input and realistic goals can and should also be reviewed on at least an annual basis. Since all of us experience changes as time goes by, it is important to re-evaluate our financial goals and make whatever changes in our investment strategy are necessary in an attempt to work towards these goals. Similar forethought should be given to the handling of your association’s long-term reserve funds. With this type of approach, our goal 10-15 years from now is that you have sufficient funds available to maintain the complex and restore any items that need replacement.
Second, commit these plans and your goals to paper. Once you have a written “Investment Policy Statement” or have at least outlined what it is you want to do, it becomes much easier for an experienced professional advisor to assist you in the formulation of a game plan. Many Financial Advisors now have the capability of helping you put your goals in written and even graphical form so you can actually SEE what the future holds for you. This is also critical when you think about your community association since we are now discussing a multi-million-dollar corporation with numerous owners to contend with.
Maintaining the value of your and their investments is YOUR responsibility as a board member and should not be taken lightly. Sounds a little like raising children doesn’t it?
Finally, make certain you have covered your financial assets. By that I mean you should allow yourself some latitude to enjoy life while looking out for your future and the future of your family. If possible, begin looking at your own financial future and how you are currently spending your hard-earned income. It will provide you a starting point in which to begin your journey into the future.
Helping You Build a Firm Financial Foundation For Your Future
Nico F. March is the Managing Director for The March Group, LLC. He has worked with Community Associations since 1974 and has served on several Boards, including the Board of Directors for the Community Association Institute (CAI), San Diego Chapter. His team has specialized in Corporate Cash and Association Financial Management since 1982 and has assisted over 1000 Associations, Nonprofits and Timeshares invest over $4 Billion in reserve, operating and reconstruction funds. Nico and his team work out of their San Diego and Wyoming offices and may be reached at 888.811.6501 or email [email protected] for further information and consultations.
The March Group is not a tax or legal advisor. We will be glad to work with your professional CPA and Attorney to help you with your financial goals. Neither the information contained herein nor any opinion expressed shall be construed to constitute an offer to sell or a solicitation to buy any securities mentioned herein. Securities offered through LPL Financial, Member FINRA/SIPC.
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.