Credit - Getting Started, Part 2

So far, our young friend has not come to grips with his problem. For two reasons:

First-he has not yet acquired the determination to build an estate. By determination, we mean the conscious and active desire to make estate building an integral part of his financial planning-from now until the day he dies. Without this determination, it is almost impossible to build an estate; with it, the way is opened up. It is the foundation of the estate plan, the catalytic ingredient which sets the rest of the process in motion.

Second-and as a result of his lack of determination-our young friend has not yet made a conscious evaluation of his estate planning objectives. Without such objectives, an estate plan lacks direction; it is like sending a ship to sea without a rudder.

Three People and Their Objectives

Here are three people we know. Examine for a moment their attitudes toward this problem of determining objectives.

The first is a doctor, just finishing her residency, married, no children yet. She has a clear idea of exactly how much money she can earn from her specialty, pediatric surgery. She has selected the locale where she will set up practice, made a rough estimate of her yearly earnings and expenses for the next five years. She has already started an insurance and investment program. All this done with some definite goals in mind. She and her husband, a sales manager, want to create an estate of about $ 1 million before they are 45, and think they can do it.

The second is a patent attorney, age 63, very successful. His income is substantial and has been for years. He has the usual accouterments that go with success; he and his family live extremely well. He has saved very little, has no insurance or investment plan, has never really thought about where he is going, financially speaking, or why. In a vague way he knows he's going to have to work till the day he dies. But what about his family's security after that? He has for some years past resolved to do something about hedging against the possibility of his disability or death. But he has never really made a determination of what he wanted to do or how to do it-and certainly has never taken the first small steps in translating his wavering resolution into action.

The third is a businessman, married, three children. He is a real loner. He operates his export-import office without benefit of even a secretary. Some years he brings in a good deal, as much as $150,000 or $200,000. In others he earns only $50,000. He has no savings; he makes no investments; all he has in the way of an estate is a small insurance policy. When he has money he lives high. When he doesn't he hauls in his belt and lives off his much reduced income. He is a nonconformist, who is not interested in security for either himself or his family. He believes that such considerations hamper his freedom and restrict his life. He is confident of his ability to produce enough income to support the family and educate his children. Beyond that, they must take their chances as he did.

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• Credit - Getting Started, Part 2
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