FINANCIAL HEALTH CARE
For almost 2 years, we have focused on physical and mental health during the pandemic: for our kids, for ourselves, and for the bigger communities and even the national health picture. Our physical and mental health are absolutely priorities. But isn’t it time to recognize that our financial health is equally important? And we believe this is also for our kids, for ourselves, and for the broader cities, provinces and nations.
Many of you already know that my first career was in Nursing. I worked with Leukemia and Bone Marrow Transplant patients, then Cardiac Surgery patients, then I moved into Trauma Intensive Care Units. Recently I have been amazed by the similarities between physical/mental health care, and financial care.
Each of these processes has many co-mingling factors. Physical health is an interplay of diet, exercise, sleep, stress and so much more. Mental health is the result of a patient’s environment, brain chemistry, head injuries, family dynamics, income level, and so much more. Similarly, financial health is so much more than a salary or hourly wage. Insurance, savings, debts, budgeting and so many other factors all come into play.
So why do so many people take care of their physical and mental health, but throw their hands up about creating and maintaining their financial health? Yes, it does require time, but so does a nutritious meal and a workout. Isn’t retirement worth it? Or leaving a legacy? Or simply having financial certainty? What if we brought our financial health in to see a specialist; and then what if that financial health care professional provided diagnosis and treatment?
Let’s use nursing as an example. The nursing process has 4 basic components: assessment, planning, intervention and evaluation. Yup, everything nurses do comes down to a combination of these 4 thought processes. So if the “patient” is our finances, let’s see how that plays out.
Begin with an honest assessment. Whether you already have 20 doors, or you have zero, it’s important to know exactly where you are today. Many investors have a good income, some savings/RRSP’s, and some personal insurance. These folks can probably find a way to just dive into the FOMO of the current real estate craze. A better real estate investor will be a little more thorough. They’ll take a look at the big picture, possibly using a certified financial planner. An accountant will have some advice for you as well. The key player for real estate investors is a mortgage broker that specializes in real estate investors. Oh yes, some digging might be required to find the one that best suits your needs; this is the difference between hiring an orthopedic doctor that specializes in hipknee replacements, or hiring an orthopedic doctor that specializes in childhood and/or athletic injuries. Your accountant, financial planner and mortgage broker are like your doctor, pharmacist and nurse. Each member has a key role to play in the accurate assessment of an investor’s current financial health.
What is your plan? Yup, we all need one. It doesn’t have to be the same plan forever; things might change significantly after marriage, kids, or an illness. Good real estate investors know WHY they’re investing, and have a goal (or 10!) in mind. Just like a physio treats an Olympic athlete differently than a 70 year old Grandma, your financial specialists create plans for different goals. A real estate investor who wants one multi-family property will proceed down a much different path than an investor who intends to own 30 properties (of any size and shape).
Intervention is the fun part for most people who use real estate as part of their financial health plan. It’s easy to get caught up in the search, negotiating a deal, renovations and then finding your ideal tenants. Just a little reminder that implementing your strategy also involves managing those tenants, and the property, over 5, 10 or 20 years or more. Generally, we have noticed that people who dive into the intervention phase, and skip the assessment and planning parts of the process, will end up either stuck or very frustrated when they’re part way into the journey. We encourage other investors to make sure that they’re “treating” the right injury, and creating the right outcome for their goals.
For longevity, a constant evaluation is critical. It is equally relevant for physical, mental and/or financial health. You wouldn’t go to the dentist once, and then say, “ok, I’m good to go for the next 5 years,” would you? Many people try to go for an annual physical with a family doctor too. It should be the same for your financial health—if financial certainty or freedom matters to you. This January, we took our own advice. We have evaluated our financial health and are making some changes as we plan for the next 5, 10 and 20 years. We have set some goals, and are involved in some strategic planning so we can acquire the properties involved in our plan. Even our wills are being updated to reflect the forward momentum we have planned. Is this fun? Honestly, nope. But sometimes workouts are a chore too, until we see and feel the benefits of that exercise.
As we all emerge from the pandemic, we will need to celebrate a little, have a little fun, and reconnect with so many cherished friends and family. We will continue taking care of our physical and mental health—and these aspects should improve tremendously! A big part of our future involves growing and strengthening our financial health, and we are looking forward to real estate investing opportunities as part of our plan. Financial freedom is one of our priorities.
