Getting rich quick is the ultimate fantasy for us Americans. We dream about that big business deal, that once-in-a-lifetime investment, or even that winning lottery ticket.
Yet it’s exceedingly rare that our dreams come true in one fell swoop. More often, we make them come true—through hard work, dedication, and most importantly, planning.
My experience as a professional is that if you want to identify your goals clearly and achieve them, there is no better tool for doing so than a financial plan. Financial plans allow us to harness our energies and put resources toward specific goals so that we end up getting what we want out of life rather than spinning our wheels.
So how does financial planning work? In a nutshell, the planners will gather information from a client to construct a well-defined picture of his or her current financial situation and financial goals. Building a clear understanding of our starting point—as far as income, assets and liabilities, insurance coverage, investments, and tax exposure, is critical for drawing a map that will allow us to reach our ultimate goals.
Once we’ve helped a client clarify and prioritize his or her goals, we develop an action plan for achieving them in the timeframe the client desires. This step involves developing strategies to strengthen your current financial management, such as building an effective budget or adjusting your savings rate. Then we recommend specific investments and financial solutions to help our client meet the financial objectives we’ve identified.
One of the most rewarding features of a financial plan is that it allows you to measure how much progress you’re making toward your goals. Knowing that you are on track is a great antidote for the financial anxiety that can shadow our lives.
If you’ve ever done any sailing, you know that you cannot simply set a course. You must also make corrections along the way to compensate for weather conditions and other factors. Financial planning can require adjustments of its own due to any number of reasons:
- Your goals may change.
- You may experience a big change such as marriage, new kids, or health problems.
- Your income may substantially increase or decrease.
- Changes in the markets, the economy, or the tax laws may affect you.
To make sure you remain on course, we recommend your plan be reviewed at least once a year.
In theory, it is possible for an individual to create his or her own financial plan. But it does require time as well as a great deal of expertise in several areas. Another benefit of working with a financial advisor is objectivity: We all have a tendency to see our situations through our own filters. Working with a professional can ensure you’ll end up with a plan based purely on facts.
Once you have a financial plan in place, you’ll likely find that you are more confident about reaching your goals. What’s more, because you’ll have laid to rest nagging questions about your future, you may be more focused and effective in your present life. If you’d like to discuss financial planning further, please don’t hesitate to contact us.
