Everyone can benefit from a financial plan, from the ultra-wealthy to those living from paycheck to paycheck. Financial planning gives you insights into your current situation as well as providing action items to help you achieve your financial goals. You’ll dive deep into your earnings, savings, debt, investments, insurance, and other details that are fundamental to your financial well-being.
Creating a financial road map isn’t a one-and-done task. As your circumstances change, you can alter your financial plan to account for those changes. Anything from selling a business to adopting a child can have a major impact on your personal finances. Financial planning helps you prepare for the unexpected while also helping you to accomplish the goals you’re truly passionate about. So, you might be wondering, “Do I need a financial advisor?” The answer may depend on the complexity of your financial life.
Financial planning creates a roadmap for your money. You can tackle the process on your own or tap into the resources provided by your financial advisor. Your financial plan can change over time, especially as you accumulate wealth and you experience different life events, like marriage, children, or retirement.
The process takes time, and it can be costly to take shortcuts. Start by reviewing the core components of financial planning and identify the areas that are most relevant to you:
You may want to utilize the expertise of different financial service professionals to get the knowledge you need for a truly comprehensive plan, such as a financial advisor, a tax accountant, an estate planning attorney, and an insurance agent.
It takes multiple steps to create a financial plan, especially when you need to address some or all of the topics described above. Here are some ideas of how to get started, whether you intend to work through the process on your own or with a financial advisor.
The first part of financial planning is determining your goals – for the year, for the decade, and for the years beyond. Consider where you want to live in the coming years, any career changes, and advancements you expect. Also, think about when you want to retire and what kind of lifestyle you’d like once you stop working. Do you plan on downsizing your home? Do you want to travel extensively? All of these goals should be a part of what defines your financial planning process.
Once you’ve figured out your short-term, mid-term, and long-term goals, break down your budget accordingly. A financial advisor is well-equipped to help with this task. They’ll have a realistic understanding of how much you should save towards your retirement goals and how to determine what is needed to better reach anything else you want to achieve. Overall, a financial professional can help guide you while making strategic financial planning decisions.
Just as important as knowing how much to save is how to save. When investing your money for the long-term, consider tax-deferred accounts, such as a traditional or Roth IRA. These accounts do come with contribution and income limits, so check with your advisor to make sure you qualify. You can also contribute to your employer’s 401(k) if one is available to you. If you receive an employer match, be sure to contribute the maximum amount to receive the full match. It’s never too late to start saving for your retirement and starting now will help to bring you one step closer to your financial goals.
Check in with your financial plan on an annual basis or as your life events dictate. Your financial advisor will monitor your investments to make sure your assets remain appropriate for your risk profile and financial goals.
It’s also important to revisit your goals consistently; after all, what you want in life may change. Perhaps you’ve had a baby and need to add a college savings plan. Maybe you’re going through a divorce and need help adjusting your financial plan. Whatever the case may be, financial planning is an ever-evolving process – just like life.
You can certainly start the financial planning process on your own. But it becomes much more complicated as you earn more and accumulate assets. A CERTIFIED FINANCIAL PLANNERTM (also known a CFP® practitioner) meets stringent requirements to ensure they have the knowledge and experience to help clients with their finances.
A financial planner is equipped to handle many of the steps involved. However, a reputable CERTIFIED FINANCIAL PLANNERTM also knows when to collaborate with other financial and legal professionals, like working with an attorney to nail down your estate planning needs or with your accountant to identify a truly holistic tax strategy.
Also, make sure your financial planner is well-versed in your specific needs. For instance, Dowling & Yahnke Wealth Advisors’ team can help high earners navigate more complex financial planning and have experience with less common events such as sudden wealth and executive compensation.
No matter what your financial situation may be, choose a financial planner whose expertise aligns with your needs. As a registered investment adviser Dowling & Yahnke Wealth Advisors can provide you with financial planning and investment advice as a fiduciary financial advisor. If you want to learn more about fiduciary financial advisors read our article “What is a Fiduciary Financial Advisor?” on our blog.
Enlisting the help of a professional gives you a neutral opinion about the best way to reach your goals. It can also help you prioritize and collaborate on multiple goals, especially if you’re working with a spouse or partner who may have different ideas. It’s also important to make sure you’re not missing any glaring red flags that you simply don’t know about or how to approach and adjust during life’s tougher moments. Using a financial planner can help you with the increasing complexities of your financial life wealth management. Dowling & Yahnke Wealth Advisors, for example, can help executives and entrepreneurs manage stock options and other less common scenarios. We also have experience in liquidity events and sudden wealth, so that you steward your new funds in the best way possible.
Life can be unpredictable and that’s why financial planning should be something that everyone does on a regular basis. When life throws you a curveball, you’ll be much better prepared if you already have a financial plan in place. You’ll know exactly how much you have, what resources are available to you, and how to adjust when your what priorities shift.