What Building a House is Teaching Me About Financial Planning

Two years ago, I bought an old house on a small lake west of Milwaukee. Since then, I’ve decided to tear it down and build another one in its place. In the process, I’ve learned that a good architect is like a good financial planner—and that it takes a team effort to bring a plan to fruition.

When I was considering buying the old house from a family member, I was drawn to more than just the property itself. The idea of spending summers on the lake brought back memories of long, carefree days at a cottage when I was growing up. During that time, my sister hosted a party at the house. It had rained earlier in the day, but the sun started to break through the clouds in the afternoon and the prettiest rainbow appeared over the water. It felt like my parents, who had passed about 18 months earlier, were saying, “you should do this.”

So, I bought it.

Then the doorknob fell off. Then my toilet broke. Then winter came I realized this house built in 1928 was perhaps not very well insulated. Then I realized that the guest bathroom was so tight that you were at risk of chipping a tooth on the sink when doing your business. Then the floods came and my pier floated away.

In short, reality intruded on my fantasy. And today I find myself doing something—building a house—that had never been part of my plan.

Before Breaking Ground

Now this is where my learning curve started and the parallels to financial planning begin. I had only ever owned one house before and it wasn’t one I wanted to recreate. I had some vague ideas of wanting my new house to look “coastal,” with high ceilings and lots of light, but I really didn’t know what I wanted or even the right questions to ask. I hired an architect with the idea that I could just tell him to build something nice for me and it would all work out.

But I quickly learned that it doesn’t work that way, in architecture or financial planning. You don’t walk in and say, “Just build me something nice,” or “create me a financial plan so I don’t run out of money.” It takes communication, collaboration and an architect or financial planner that is willing to become, as my colleague Joe Maier puts it, your biographer.

The architect listens, asks hard questions about how you live, what matters to you and what makes you happy. How many kids do you have? Do your in-laws visit? How often do you entertain? How long do you plan to live in this home? Do you love to cook? Are you a wine connoisseur? Are pets a big part of your life? Then — only then — does an architect start drawing or a financial plan begin to take shape.

The architect/planner’s job is not to build the house or portfolio he would want -- it’s to build the home you want and the financial life you want to live. That means understanding not just your tastes but your values, your fears, your dreams.

You Can’t Always Get What You Want (But If You Try Sometimes, You Get What You Need)

I also quickly learned that building a house, like a financial plan, requires trade-offs. In traditional financial planning parlance, we might call these Needs, Wants, and Wishes. In a less generous description of this phenomenon, one builder I interviewed had a great saying: “Buyers are Liars,” by which he meant that client budgets often don’t match their expectations.

Every architect has had a version of this conversation with their clients. The plans come back from the first draft and the number is too high. Now choices have to be made. The heated floors (or for me a golf simulator)? That’s a wish. The extra bedroom for guests? That’s a want. A solid roof, adequate storage, proper insulation, a foundation that won’t crack? Those are needs — non-negotiable, no matter what else gets cut.

Having seen my parents struggle with stairs later in life, I decided that a first-floor master bedroom was a must. But the pool, the multiple fireplaces and the balconies were unrealistic on my budget.

 My colleagues and I have these same conversations with clients every day, just in financial terms:

• • Needs are things like covering your living expenses in retirement, maintaining adequate insurance and not outliving your money. 
  • Wants are the fun stuff that gives meaning to life. These might include travel, helping your kids with a down payment or upgrading your lifestyle in your early retirement years when you’re healthy and active. 
  • Wishes are the big dreams like leaving a legacy, buying the vacation house or funding your grandchildren’s education. 

The hard truth that both architects and financial planners will tell you is that if you try to fund every wish before securing every need, your house will never get built or your plan will fail.

But that doesn’t mean abandoning your wishes or goals. A good financial planner doesn’t just say no to every wish. They help you build toward them intelligently. Maybe the vacation house comes at 65, not 55. Maybe Roth conversion early in retirement can enable a legacy for grandchildren that didn’t seem possible. There are often creative solutions for different types of challenges. That’s why planning matters. In my case, my architect and I agreed to leave my bonus room and basement unfinished but dig the foundation deep enough for a golf simulator someday when it fits my budget.

Renovations Cost More Than Building It Right the First Time

A house can always be added onto and a financial plan is a living document that changes as your life evolves. But you don’t want to end up rewiring electricity, redoing faulty plumbing or fixing a bad foundation. That’s the predicament I find myself in now with a fixer upper. Some things you need done right from the start.

Financial course corrections work the same way. Catching up on retirement savings in your 50s, unwinding a poorly structured estate or rebuilding after a tax mistake are costly renovations. Early, well-executed planning is smarter and cheaper.

Making major financial decisions like buying investment properties or taking Social Security early without a comprehensive financial plan in place is like starting construction without blueprints.

The best way to avoid costly mistakes is to engage with your architect or financial planning partner first. When that happens, every room, and every dollar, has a purpose. Does the house flow? Is your cash flow working efficiently? Are your investments aligned with your timeline? Is your estate plan connected to your insurance strategy? A beautiful plan is one where everything works together.

Building the House

Good architects stay involved through construction. They catch problems before they become expensive. They adapt when the unexpected happens. It’s the same with financial planning. Your plan is never finished and it doesn’t just sit in a drawer: it’s a living strategy that evolves as you go through life.

I’m planning on living in the house I am building for a very long time. I’m working with my architect to build room by room with intention. That’s what gives me confidence in the plan. That’s the same approach we take with financial planning at Johnson Financial Group. Your financial future is the house you’ll spend the rest of your life in. Our job is to help provide clarity and peace of mind to our clients as they pursue their passions with confidence.

If you are ready to start drawing up the blueprints for your future, reach out to a Johnson Financial Group advisor. We’ll help you every step of the way.