Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you. It’s ok to dream big! A wise friend once told me, “If you watch your nickels and dimes your dollars will take care of themselves.” While the principal of this quote bears truth, there is work and planning that needs to be done to achieve your goals. Financial planning is a process that can help you target your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.
Why is financial planning important?
Imagine gathering a group of athletes that have never played together and taking them to the championship game without a practice, equipment, coach, or set of plays to compete against a team that has played together for years. A comprehensive financial plan serves as a “playbook” for organizing the pieces of your financial picture. With a financial plan in place, you’ll be better able to focus on your goals and understand what it will take to reach them. One of the main benefits of having a financial plan is that it can help you balance competing financial priorities. A financial plan will clearly show you how your financial goals are related for example, how saving for your children’s college education might impact your ability to save for retirement. Then you can use the information you’ve gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you’ll know that your financial life is headed in the right direction.
The financial planning process
Creating and implementing your financial playbook generally involves working with financial professionals to:
Develop a clear picture of your current financial situation by reviewing your income, assets, and liabilities, and evaluating your insurance coverage, your investment portfolio, your tax exposure, and your estate plan
Establish and prioritize financial goals and time frames for achieving these goals
Choose specific products and services that are tailored to help meet your financial objectives*
Monitor your plan, making adjustments as your goals, time frames, or circumstances change
Some members of the team
To achieve your financial goals you need an arsenal of coaches. As the financial advisor, we are like the head coach by focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas. These other professionals are the assistant coaches that specialize in a specific “play” and we need them on our team. Accountants or tax attorneys provide advice on federal and state tax issues. Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death. Insurance professionals evaluate insurance needs and recommend appropriate products and strategies.
Investment advisors provide advice about investment options and asset allocation, and can help you plan a strategy to manage your investment portfolio. The most important member of the team, however, is you. Your needs and objectives drive the team, and once you’ve carefully considered any recommendations, all decisions lie in your hands.
Staying on track
The financial planning process doesn’t end once your initial plan has been created. Your plan should generally be reviewed at least once a year to make sure that it’s up-to-date. It’s also possible that you’ll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:
Your goals or time horizons change
You experience a life-changing event such as marriage, the birth of a child or grandchild, retirement, or a job change
You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a retirement account, paying long-term care expenses)
Your income or expenses substantially increase or decrease
You’re affected by changes to the economy or tax laws
We are in the financial planning process together. As your financial advisor, I am invested in YOU. I want to celebrate with you when you achieve your goals!
Wishing you and your family a Merry Christmas and Happy New Year!