What the vast majority of people typically overlook in planning for the future is the planning process itself. Amazing realizations seem to occur when people stop, take a breath and start some financial planning.
Just the process of doing an inventory of one's financial assets, making a complete listing of the assets and liabilities to construct a basic balance sheet is a good place to start. Many times the balance sheet inventory creation will uncover assets long forgotten. The newfound assets may include old retirement plans, savings bonds, appreciated coins or stamps, and a litany of other mothballed financial resources.
Recently a friend conducted a financial inventory and discovered that limited prints they had purchased over 15 years ago had now appreciated over 800%. Would they continue to grow in value? They didn't know but this alerted them to get their home owners insurance updated. They also started looking at ways to liquidate some of the prints and invest the proceeds in more liquid assets while continuing to enjoy their remaining favorites.
In another example, a former engineer at a company that manufactured telephones had accumulated prototype phones that, with his employer's approval, he had been taking home for years and storing in his basement. Had he not rescued them from the scrap pile they would have been destroyed. In doing his financial inventory, he became motivated to see if the former prototype phones had any value. He was surprised to learn that they were worth up to several thousand dollars each. So as to not flood the market he began a systematic marketing program by selling one every two or more months on EBay. It may take him several years to turn his "scrap" phones into a significant increase to his retirement assets.
Another couple who started the financial planning process recalled receiving a box of coins over 10 years ago from the husband's long deceased uncle. The coins were inventoried and sold for enough to fund both their Roth IRA's for two years.
Conducting a reasonably thorough review of the last several years' tax returns helps in understanding sources of income and sometimes uncovers surprise assets as well. Many assets produce clues in the way of tax reports, such as 1099s.
The sad reality is that most Americans spend more time planning their vacations that their financial future. This is so true as pointed out in a recent discussion with a couple making a one week Alaskan cruise. They had spent the better part of a month weighing their options on available daily side trips as the cruise ship sailed from Vancouver, BC to Anchorage and back. Yet upon questioning they didn't have a good idea as to where their 401k contributions were being invested or if they contributed enough to receive the maximum companies match.
Beginning the financial planning process now; take the first step and you will be far ahead of most people as the planning process is typically overlooked until it is too late.
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