When most people hear the words financial plan, they immediately think about investments, retirement accounts or the stock market. While those are important pieces of the puzzle, a true financial plan is much more than an investment portfolio.
At its simplest, a financial plan is a roadmap that connects where you are today with where you want to be in the future.
The first step is understanding what you are working toward. Maybe you want to retire at 65, pay for your children’s education, purchase a new home, start a business or simply have more confidence in your ability to handle the unexpected. Your goals, timeline and priorities should ultimately drive your financial decisions.
From there, a financial plan can bring together several areas of your financial life, including:
Cash Flow: Understanding what is coming in, what is going out and how much you are able to save.
Investments: Determining how your investments should be allocated based on your goals, time horizon and comfort with risk.
Retirement: Estimating how much you may need to retire and evaluating whether your current savings strategy is keeping you on track.
Taxes: Looking for opportunities to make your savings and investment decisions more tax-efficient.
Insurance: Making sure your financial plan accounts for the risks that could derail your progress.
Estate Planning: Ensuring your assets are positioned to pass to the people or organizations you care about according to your wishes.
One of the most valuable aspects of financial planning is that these decisions do not exist independently. Increasing your retirement contributions, for example, may affect your current cash flow and your tax situation. Buying a new home may change how much you can invest. Retiring earlier may require a different savings strategy and investment allocation.
A financial plan helps bring these decisions together so you can see the bigger picture.
It is also important to remember that a financial plan is not something you create once and put in a drawer. Life changes. Careers change, families grow, markets fluctuate and goals evolve. Your financial plan should evolve with you.
You do not need to have a certain amount of money to benefit from financial planning. In fact, having a plan early can help you make informed decisions before your financial situation becomes more complicated.
Whether you are just beginning your career, raising a family, building a business or approaching retirement, the fundamental question is the same:
What are you trying to accomplish with your money, and are the decisions you are making today helping you get there?
That is where financial planning begins.
Contact us today for a complimentary financial plan and take the first step toward creating a financial roadmap designed around your goals.
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