Sunday, May 16, 2010

Asset Rich, Cash Poor

Lennie was chatting with me the other day about his situation.

"My boys just spend money with no thought..."

"But Lennie what lessons did you give them when they were growing up?" I asked.

"I know, I used to earn a lot and had lots of money coming in. I never thought about money and budgets, I just spent. You're right my boys learned that from me. But now I'm... what's it called?..."

"...'asset rich, cash poor'?" I prompted.

"That's the one...."

So what caused this change? Lennie has had a love affair with rental properties like so many New Zealanders. He was earning good money in a job he enjoyed and didn't want to stop working even though he was past retirement age. Then he suffered a stroke, the rental property market took a tumble and the recession hit.

Late in life Lennie decided to see an adviser, admitting this was something he should have done when he was younger.

Financial planning is so much more than investing money on behalf of your client. It's planning for the future and devising strategies to avoid being asset rich and cash poor.

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