There’s never been a greater need for financial planning.
We Americans are living increasingly longer, which means we’ll require safe and stable income for longer than our parents’ and grandparents’ generations did. At the same time, the direction of the economy and the markets is uncertain. And with the demise of traditional pension plans, we are ultimately responsible for our future financial well-being. That’s why financial planning has become a necessity.
By the way, being financially comfortable in the present isn’t the same as being financially secure long term. According to the National Association of Personal Financial Advisors, 56% of U.S. adults lack a budget. Nearly 40% lack any non-retirement savings. Incredibly, 50% of Americans with children don’t have a will.
Everyone has at least a vague idea of how they’d like their financial future to unfold. It takes careful planning to crystallize your financial goals and help you to achieve them. Let’s look at the key components of financial planning:
- Clarifying goals. Financial planning forces you to sharpen up your fuzzy goals, make clear choices, and understand what they’re going to cost. Sending kids to college. Retiring comfortably. Leaving a legacy. With your destination clearly laid out, you can focus on what it’s going to take to get there.
- Taking stock of your situation. In our busy lives, most of us don’t have a firm handle on our finances. We don’t know our assets and liabilities. We’re not sure how much money is coming in and where it’s going. We’re not sure if all of our estate planning documents are in place and updated. By methodically reviewing your situation with a financial planner, you’ll learn exactly where you stand.
- Creating a plan. Your advisor will create a plan that not only maps out where you are now, but lays out clear directions to your destination. Financial plans replace uncertainty with answers and doubts with confidence.
- Investing properly. Your financial plan forms the basis for the investing guidance provided by your advisor. The result is a portfolio tailored to your specific goals, time horizon, and comfort level with risk.
- Estate planning. Estate plans convey your wishes when you are no longer able to, and the time to do them is now. Estate planning covers everything from end-of-life decisions to who your dependents’ caregivers will be and who will receive your assets. Flowing naturally from the goals identified in your financial plan, an estate plan can be a huge source of reassurance for you and your family.
In the end, financial planning is about peace of mind. While it’s possible to create your own financial plan, few people have the time, expertise and objective perspective that a qualified financial advisor brings to the task. As the foundation of your financial security, financial plans are perhaps the best single investment you can make. Please don’t hesitate to contact us if you’d like to discuss your financial plan.