Man is, by nature, a grouping animal. All our lives are spent building relationships with other human beings. We start life in a relationship with our parents. We go on to establish friendships, marriage relationships, business relationships and relationships with our children. Each of these relationships–and the shape they are in—can have an impact on your financial plan.

The first two priorities we covered–health and career–dealt with your individual condition, separate from all others. This third of the four priorities of life affords your financial advisors an important look at how other people in your life affect your journey to financial freedom.

One key factor to consider in every relationship is your dependency status. You may be dependent on, independent of or interdependent with the other person in any relationship. For example, minor children are dependent on their parents; sole proprietors are independent of employers/ management; and the heirs of a large estate are often interdependent with one another. Further, this dependency status can change in the lifetime of a relationship. As we begin to examine the relationships in your life, be sure to acknowledge the current dependency status of each, and any changes in that status that you may foresee.

To begin with, are you married? If so, this relationship could enable you to leverage yourself for financial success. If both of you work, the contribution of two incomes toward your shared goals augments your individual ability to achieve your dream.

Conversely, a former marriage can cause a drain on your efforts to meet your financial goals. What provisions for spousal and/or child support are you obligated to meet, and for how long? Have you remarried, or will you marry again in the future? Can you arrange your financial plan in a way that allows you to fulfill your responsibility to your former spouse (and your children from a previous marriage), and adequately secure the future for yourself and your new family?

Children, of course, represent the relationship that has the most profound effect on all stages of your plan. Initially, they may remove you or your spouse from the workforce, thus reducing your family's income while adding to your expenses. Later, your plan must include ensuring their welfare and education. Unfortunately, not all children grow to become independent. Do you have a child with special needs that will require ongoing support? Finally, how will you distribute your estate to your children?

Other relationships that can impact your financial strategy are those that are formed by your career. As the owner or key employee of a closely held business, your financial plan should include provisions for business succession and encompass the needs of your partners or associates. Moreover, if you have a family-run business, will all of your children share equally in the operation after your death? If not, you may need to consider additional arrangements for any children that will not.

On the other hand, if your business relationship does not include owning the company, there's still work you must do to secure your financial future. Too often corporate executives believe that, in exchange for dedication and loyalty, all of their financial needs will be taken care of by their company. This can be a fatal mind-set. Anyone who has experienced the recent trend towards layoffs and downsizing of businesses is keenly aware that a sound financial plan must embrace, but be founded outside of corporate benevolence.

Finally, are you a member of the so-called "squeeze" generation? This group, typically age 50 and over, is composed of an increasing number of Americans who find they must provide financially for their dependent parents, often while still supporting their children. We know that 95% of those over age 65 require Social Security to supplement their retirement income. And that benefit is woefully inadequate if it is the sole source of support. While you work to secure financial freedom for yourself, carefully consider whether or not you will need to plan for your parents' needs as well.

Of course, you may actually inherit wealth from your parents someday. Although no one can predict the timing of an inheritance (and you certainly should not allow the prospect to take the place of formulating your own strategy for financial freedom), your plan should embrace this potential source of additional wealth.

As with the other three priorities of life (health, career and home), you can see how the relationship priority gives your financial advisors important information needed for the formulation of your financial strategy. Through careful examination, we gain insight into the outside forces that can affect your plan. Then by building your plan around your relationships, you can secure financial freedom for yourself and the ones you love.

"we gain insight into the outside forces
that can affect your plan."

The Priorities of Life
Part III – The Relationship Priority

Select Additional Articles from Jerry's Corner The Investment Way of Life Four Cornerstones of Success Excuses... More Excuses The Wealth Cycle Investment & the Wealth Cycle An Economics Primer The Life Cycle Creating A Saving Culture Entrepreneurialism A Fortune in Your Hands Look to the Pros - Introduction - Part I - Insurance - Part II - Stock Broker - Part III - Real Estate - Part IV - Attorney - Part V - CPA The Priorities of Life - Introduction - Part I - Health - Part II - Career - Part III - Relationship - Part IV - Home Elements of Investment - Introduction - Part I - Risk - Part II - Management - Part III - Flexibility - Part IV - Liquidity - Part V - Cash Flow - Part VI - Rate of Return - Part VII - Appreciation - Part VIII - Leverage - Part IX - Taxes

Moorman and Company, an accounting and personal financial management firm based in Palo Alto, serves the San Francisco Bay Area, Peninsula, and Silicon Valley from Hillsborough to Saratoga-Los Gatos, including Atherton, Menlo Park, Los Altos, Los Altos Hills, and Cupertino.