A Parent’s Portfolio: Climbing the Financial Mountain

By Damon Poeter

In 1953, Col. John Hunt set out to “lay siege” to Mount Everest, sending British expedition climbers up the mountain over the course of weeks to set ropes and establish higher-altitude camps before climbing back down to base camp. Once the highest camps were established, different teams of climbers were ready to attempt to get to the top of the mountain. Each team was prepared to continue their ascent if the one ahead didn’t succeed.

This strategy – a methodical, patient, diversified approach – was a success. On May 29, 1953, Tenzing Norgay and Edmund Hillary, the second team in the expedition, became the first people to make it to the summit of Mt. Everest.

So what does this have to do with financial planning for your family?

Well, you’re always looking for the best ways to save money and grow investments for your children. But, with everything else going on in your life, it can often seem like climbing an impossibly tall mountain, with its peak hidden way up in the clouds.

Building up your family’s savings and investment portfolio is quite like ascending to the top of a very tall mountain. That’s not a bad thing.

What are your investing success stories? In the USAA Community forum, share the baby steps you took to grow your portfolio.

Laying Siege to the Financial Mountain

Instead of winging it or procrastinating, you could “lay siege” to your family’s financial future like the British expedition did to Mount Everest. This means saving regularly, protecting your family with insurance and building a diversified investment portfolio in stages to help reduce risk and maximize your chances of success.

If the “financial mountain” seems daunting, that’s OK, says Matthew Angel, a USAA advice director and CERTIFIED FINANCIAL PLANNER™ practitioner. No matter where you are financially now, it’s important to start setting goals and climbing up higher toward your financial summit.

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Base Camp: Getting Your Financial Life in Order

If you and your partner aren’t planning on having kids any time soon but do hope to have them someday, start building the foundations of your future family’s finances.

“When you’re a young couple and don’t have kids yet, there’s no better time to build your financial base,” Angel says.

Here are some areas he recommends that young couples focus on:

  • Develop a budget and good spending habits as a team
  • Save for long- and short-term goals for the future
  • Build a financial cushion of at least $1,000, growing it over time to reach the equivalent of 3–6 months of your living expenses
  • Pay off your high-interest debt, consumer debt and student loans

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Camp One: Protect Your Family’s Future

Even before you’re expecting your first child, the most important thing to do is to put your family’s protection plan in place, if you haven’t already, Angel says.

You can take several steps to safeguard your child’s future. Start by having a will in place and naming a guardian who would step in if something should happen to you and your partner. Next, get insurance coverage for certain key areas of your life.

“Life insurance covers the No. 1 overlooked risk families face: the death of a parent. If you buy sooner and lock in cheaper rates, it can save you a lot in the long run,” he says.

Here are four pillars of an insurance plan for protecting your young family’s future:

  • Life insurance to offset the financial hit if you or your partner die
  • Disability insurance in case your ability to work is threatened
  • Property or renters insurance to protect your home and valuables
  • Health insurance to avoid catastrophic medical costs

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Camp Two: Saving and Investing for Tomorrow

Your first child is walking and talking – and perhaps more young ones are on the way. Your growing family has growing needs, and it’s time to climb up even higher on the financial mountain, where the air is thinner but the summit is within sight.

This is the stage where many parents may want to start building a college fund for a child. While saving and beginning to invest should be goals at this stage, saving for your kids’ future needs shouldn’t be a first priority, Angel says.

“Put on your own oxygen mask first,” he says. “You may emotionally really want to start saving for your bundle of joy’s education and other future needs, but you need to start saving for your retirement first and working on all the foundational things, like your financial cushion and protection plan.

“Many people think at this stage, ‘I’ll just save more for retirement later,’ but usually they’re not able to.”

Here are some keys to saving and investing for your retirement:

  • Remember that paying down student loans now frees up money in the future
  • Start early, start small, stay committed – even small amounts add up over time
  • Take advantage of employer retirement plans, especially if they offer a match on a 401(k)
  • Seek professional investing advice

Mutual funds and bond funds can be an easy way to start building a diversified portfolio, but they carry the risk of going up and down in value and loss of the principal invested. Getting started early gives you time to recover from market fluctuations before you retire.

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Camp Three: Growing What You’ve Built

Kids grow up so fast. It seems like just yesterday you were holding them in your arms. Now they’re becoming increasingly independent, and you can see the day in the not-so-distant future when they head off to college or otherwise leave home.

At this stage in your parenting and investing life, you’re probably earning more than you ever have. What you do with that extra income can mean the difference between making it to the top of the financial mountain or getting stuck halfway up the slope, Angel says.

“Avoid the temptation to spend more when you start to make more money. People who knock it out of the park financially keep their expenses constant even as their income increases,” he says. “That’s what gives you the opportunity to really begin investing.

“Even though your income may have grown significantly since you first started out, you may feel more financially pinched than ever. Caring for aging parents, looming child education costs and an increased realization that retirement is coming all compete with the here-and-now of buying homes, cars, trips and the needs of an established family.”

Here’s how you can meet all those growing needs, while still making your final push to the summit of your family’s financial mountain:

  • Prioritize well by balancing both current needs with long-term goals
  • Spend less on cars and other assets that go down in value
  • Don’t sacrifice your retirement for the here-and-now; be creative in meeting competing needs
  • Do enjoy life as well: Balance is key

Arriving at the Top of the Mountain

One nice difference between financial mountaineering and real-life mountaineering is that when you do reach the summit, you don’t have to climb back down again. You’ve saved up for retirement, you’ve helped put your kids through school, you’ve put protections in place for your family and you’ve assembled a strong investment portfolio.

Now you can plant your family’s flag and enjoy the view.

Matthew Angel serves as the advice director at USAA, focusing on the personal finance tenets of short-term saving and home advice. Matthew holds professional credentials including a CERTIFIED FINANCIAL PLANNER™ designation, AAMS®, and a Master of Business Administration degree from the University of Texas at San Antonio. Matthew’s history at USAA includes seven years serving members as a financial planner and leading teams of financial professionals to help members achieve financial security. Outside of work, Matthew enjoys hunting and riding motorcycles and is a proud husband and father to four kids.


Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.

USAA means United Services Automobile Association and its affiliates. Financial advice provided by USAA Financial Advisors, Inc. (FAI), a registered broker-dealer, USAA Investment Management Company (IMCO), a registered broker-dealer and investment adviser, and for insurance, USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California, License # OE36312). Investment products and services offered by IMCO and FAI.  Life insurance and annuities provided by USAA Life Insurance Co., San Antonio, TX, and in NY by USAA Life Insurance Co of New York, Highland falls, NY. Other life and health insurance from select companies offered through USAA Life General Agency, Inc. (known in CA (license #0782231) and in NY as USAA Health and Life Insurance Agency). Banking products offered by USAA Federal Savings Bank and USAA Savings Bank, both FDIC insured. Trust services provided by USAA Federal Savings Bank.

Health solutions provided by USAA Life Insurance Company and through USAA Life General Agency, Inc. (LGA) (known in CA and NY as USAA Health and Life Insurance Agency), which acts as an agent for select insurance companies to provide products to USAA members. LGA representatives are salaried and receive no commissions. However, LGA receives compensation from those companies, which may be based on the total quantity and quality of insurance coverage purchased through LGA. Plans not available in all states. Each company has sole financial responsibility for its own products.




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Tags - Family, Investing


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