• Matt Davis

What's a Financial Plan and Do You Need One?

As life gets more complex, it can become harder to keep up with all of the moving pieces. From kids and college to home purchases and retirement, it can be overwhelming to stay on top of all the competing goals while trying to pay the daily bills. While it can be tempting to throw your hands up in the air and try and just survive the day to day, a financial plan can be a great way to build a map to make sure your finances are getting the attention they deserve.

Where to Start

A good financial plan always starts with clearly articulating your goals and organizing them based on priority. This is a fantastic opportunity to decide what are the most important things for you and your family and what type of focus you will spend on them. They can be simple and broad or more narrow and detailed based on personal preference. Once the goals are set, it can be much easier to make the right decision when it comes to investing.

Every plan should be holistic and the next step is to understand every part of your financial life. Your finances are all interconnected and it is important to have the full picture which includes everything from your current income and expenses, to assets and liabilities, to the role of insurance and estate planning. Again this is another great opportunity to understand your personal situation and makes sure that you understand where everything is and then help organize it in a way that is easy to keep track of going forward.

Once all of this information is gathered, then it is up to the financial planner to put together a set of recommendations that are both understandable and reasonable given your particular situation.

What Does a Plan Look Like

While every plan might look slightly different, there are several reports that should be part of every plan:

  • A personal net worth statement that highlights what you own and what you owe

  • Cash flow review that makes sure you are bringing in enough overtime to cover what is and will be going out

  • Retirement review that determines if your current savings rate is enough to satisfy your long-term goals for retirement

  • A breakdown of your current investment strategy and if it aligns with your current plan - often there will be a recommendation of what type of investments work best for your goals

  • A plan for other goals such as college education, weddings, and/or travel expenses

  • A review of your employee benefits to make sure you are making the most of your compensation

Once you are armed with a financial plan, it is possible to go forward confidently that you are on top of your finances and can make future decisions, from potential moves to new job opportunities, easier to size up and understand. Whether you reach out to us or to another financial planner you trust, make sure and take the time to get your finances in order to make sure you are on track to accomplish all of your financial goals.

#financialplan #cashflowreview #investmentstrategy

DISCLOSURE Information on this website and others should be used at your own risk. Past performance does not guarantee future results. Securities investments involve risk; returns in such investments vary and may involve gain or loss. The materials and content herein are not a substitute for obtaining professional tax, personal financial planning, or other relevant financial advice from a qualified person or firm. For full disclosure click on the disclosure link at the bottom.

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