Financial planning is unique for each person; no two financial plans look the same because everyone’s life and personal goals are different. Regardless of what your goals are, financial planning can help you work towards achieving them. One of the most significant benefits of financial planning is that it gives you the confidence to stay on track towards your goals or make changes to pursue them.
Financial planning examines your current financial situation by assessing your budget, debt management, savings, retirement planning, insurance, and estate planning. The first year of financial planning may be more complex since your marital status, assets you own, income, health, financial literacy, employee benefits, number of children, and future retirement income are all factored into your plan.
A financial plan can’t guarantee protection from unexpected life events, but it can help you create a blueprint to work towards achieving these eight things:
- Establish an emergency fund- An emergency fund is money saved in an account to use during financial stress to help improve economic security.
- Create a budget- A budget is an estimate of income and expenses for a period, such as a month.
- Reduce debt- Whether you owe a few thousand or hundreds of thousands of dollars, paying off debt can lead to less financial stress and more financial security.
- Save money– Saving money can help prepare you for future goals and expenses and help protect you from financial emergencies.
- Improve your tax situation– A financial plan can help illustrate how tax-advantaged investment strategies may reduce your tax bill.
- Save for retirement- A financial plan can help illustrate retirement savings projections based on an assumed rate of return to help you determine if you are on track or need to revise your plan.
- Save for your child or grandchild’s education- Including education savings in your financial plan can help you estimate how much you need to save to reach your education funding goal.
- Save for other financial goals- Whatever your goal, a financial plan can help you work towards having the finances to achieve it.
An experienced financial professional can help guide you through the financial planning process by providing advice in several areas of your financial life. While every financial professional has their distinct strengths and specialties, they can also help you:
- Determine if you’re on track with your goals
- Provide a second opinion
- Evaluate your investment strategies and implement new strategies
- Assess your risk tolerance and time horizon to align with your goals
- Rebalance your portfolio
- Manage roadblocks that can impact your finances- job loss, divorce, etc.
Now that you know what a financial plan is and what it can help you address, take the next step and schedule a financial planning meeting with a financial professional today.
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
This article was prepared by Fresh Finance.
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