Five principles of personal wealth management

Norbert Schwarz
Norbert Schwarz

Recently a business-owning family facing the sale of their business asked me how they might prepare the family to face the issues of sudden wealth. Their primary concern was for their children and how this major change might affect them.

Over the years of serving as a banker, investment advisor and family business consultant, five principles of personal wealth management came to mind. These principles apply to adults as well as children and have been confirmed by the test of time for families of wealth and those just managing to get by.

The first, and most important, is to learn to live below your means.

Number two is to maintain a budget. Whether it relates to an allowance or a paycheck, the old adage “you can’t manage what you can’t measure” is just as true in managing your finances as it is in managing your company.

The third principle involves establishing a regular saving discipline. Save regularly, and when possible, save on a tax-effective basis.

Number four is to exercise financial patience in investing. Don’t try to time the market.

Finally, from a life as well as an investment perspective, understand the benefits of balance. In investments, it means asset allocation and periodically balancing assets according to the targeted allocation. Seeking balance in everything you do in life can make life’s transitions more rewarding.


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