~ Chapter One: Introducing the Buckets, Shovels, Beach and Map ~

This chapter presents an overview of the Buckets, Shovels, Beach and Map.

The Buckets

As you can see each of the buckets is a diff erent shape and size. This makes sense, as the asset groups that each bucket represents are all very diff erent. The buckets represent the fi nancial assets that you will accumulate during your life. With a little imagination and some organization, you will see that every asset can be placed into one of the fi ve buckets. Some of these assets will be associated with corresponding debt or mortgages, and some are owned debt-free .

A brief summary of the fi ve buckets are as follows:

Liquid Assets Bucket

These are the assets that you can save and spend frequently with little or no tax eff ect. This is also where you would put your paycheck and pay your living expenses . For all practical purposes this bucket contains your checking, savings account and liquid investments that are not tax deferred such as retirement accounts . These are the assets that you can save and spend frequently with little or no tax eff ect. This is also where you would put your paycheck and pay your living expenses . For all practical purposes this bucket contains your checking, savings account and liquid investments that are not tax deferred such as retirement accounts . These are the assets that you can save and spend frequently with little or no tax eff ect. This is also where you would put your paycheck and pay your living expenses . For all practical purposes this bucket contains your checking, savings account and liquid investments that are not tax deferred such as retirement accounts .

Insurance Assets Bucket

These are the insurance assets and products that you will need during your lifetime . These include term life insurance, whole life insurance, and disability insurance, as well as property, casualty, and general liability insurance . Insurance Assets Bucket These are the insurance assets and products that you will need during your lifetime . These include term life property, casualty, and general liability insurance . Insurance Assets Bucket These are the insurance assets and products that you will need during your lifetime . These include term life property, casualty, and general liability insurance . Insurance Assets Bucket These are the insurance assets and products that you will need during your lifetime . These include term life property, casualty, and general liability insurance .

Personal Assets Bucket

These are the physical assets that you own such as your house, a second home, your car,your jewelry and other such items . Usually, these assets are associated with a corresponding debt or mortgage . Personal Assets Bucket These are the physical assets that you own such as your house, a second home, your car,your jewelry and other such items . Usually, these assets are associated with a corresponding debt or mortgage . Personal Assets Bucket These are the physical assets that you own such as your house, a second home, your car,your jewelry and other such items . Usually, these assets are associated with a corresponding debt or mortgage . Personal Assets Bucket These are the physical assets that you own such as your house, a second home, your car,your jewelry and other such items . Usually, these assets are associated with a corresponding debt or mortgage .

Retirement Assets Bucket

These are the assets that are accumulating on a tax deferred basis that you can use in your retirement . These include IRAs, pension plans, 401(k) accounts and social security . Retirement Assets Bucket These are the assets that are accumulating on a tax deferred basis that you can use in your retirement . These include IRAs, pension plans, 401(k) accounts and social security . Retirement Assets Bucket These are the assets that are accumulating on a tax deferred basis that you can use in your retirement . These include IRAs, pension plans, 401(k) accounts and social security . Retirement Assets Bucket These are the assets that are accumulating on a tax deferred basis that you can use in your retirement . These include IRAs, pension plans, 401(k) accounts and social security .

Investment Assets Bucket

These are long-term assets such as rental real estate, your company or possibly an inheritance that you are counting on receiving . The hope is that these assets will appreciate over time and will generate a large amount of cash via a liquidity event . Investment Assets Bucket These are long-term assets such as rental real estate, your company or possibly an inheritance that you are counting on receiving . The hope is that these assets will appreciate over time and will generate a large amount of cash via a liquidity event . Investment Assets Bucket These are long-term assets such as rental real estate, your company or possibly an inheritance that you are counting on receiving . The hope is that these assets will appreciate over time and will generate a large amount of cash via a liquidity event .

The Shovels

The shovels represent the professionals who have the training and experience to guide you through the ongoing process to most effi ciently fi ll and empty the buckets at the right time. They also help you organize your fi nancial aff airs in order to protect you and your family in times of crisis or upheaval. The shovels are:

Your CPA Shovel

The advisor who will focus on tax and cash fl ow planning, and can most likely help you put together a comprehensive fi nancial plan. Many times the CPA is a good choice for advising on the overall plan and managing other advisors .

Your Attorney Shovel

The advisor who will focus on estate planning and help you with legal matters if and when they arise .

Your Investment Shovel

The advisor who will focus on investing your liquid and retirement assets to produce a reasonable rate of return while mitigating risk and undue exposure .

Your Insurance Shovel

The advisor who will focus on protecting you, your family and your assets from a sudden event while at the same time helping you build long term assets .

The Beach

The beach represents your life, all of the people that you will meet, the gradual evolution that takes place in life, and also the sudden and dramatic changes (such as a huge storm) that we all face in life . The picture below begins with a couple living their lives contently, and then a storm hits and washes the beach away . In real life, these storms include things such as divorce, fi nancial crisis, the death of a family member, losing a job, losing a home, illness or hospitalization. But, like in life, on the other side of these storms, things eventually get back to some level of normality, as is the case of the beach below . This makes the planning process more complicated but certainly much more interesting, and a good fi nancial plan will try to account for the storms and the renewal that occurs afterwards. Looks like the couple below had children, which they’ve accounted for in their fi nancial plan.

The sand on the beach represents your money. Over the course of your life, the shovels (your advisors) will help you fi ll the various buckets with sand (money) and eventually work with you to move sand from one bucket to another when appropriate to do so .

The Map

The Map represents the plan to help guide you to achieve fi nancial security. The plan will constantly change as you meander through life . Despite this, but like any good map, it will eventually help to get you to the right place at the right time .

Looking at the Map you can see that there are several major categories, which we go over in the next chapter .