We live in a financial world more than ever today where the level of or lack of, sound, effective personal financial planning and management play a critical role in your financial health (wellbeing) and ability to achieve your financial goals and objectives. It’s the beginning of a New Year – the time for resolutions and to do list(s). Two things that should be on your list are:
- Conducting an in depth and thorough financial review.
- Preparing and/or updating financial plans and planning documents.
If you have not yet done the above, I strongly recommend that you do so before the end of the first quarter of 2017.
Some of you reading this article, no doubt are experience veterans; and, extremely knowledgeable when it come to this subject matter (issue of your financial plans and planning documents); however, I know that there are many who are in need of sound advice and guidance, and this article is intended to provide a good overview and start.
Below are three critical components of Financial Planning:
- Life Style Planning – Current and Future:
The primary objective is to ensure sound, effective management of your personal finances.
Knowing and understanding the sources and uses of funds (i.e., income and funds to your life style budget and leave a surplus to save and investment is extremely important. You should also come out of this process a clear understanding of current financial position; knowing whether you are armed with annual operating budget that will generate a surplus or deficit; your net worth, whether it is positive or negative and projected to grow, increase positively, as oppose ton decreasing.
- Retirement Nest Egg Planning – Pre and Post Periods:
The primary objective is to ensure you save and invest wisely to enjoy a safe secure retirement. Establishing and maintain a sound and suitable savings and investment strategy and portfolio during your pre and post retirement years; and knowing and understating how much your nest egg need to be at the start of your retirement is critical and whether you are on your way to reaching it, not reaching or exceeding it. Development and maintenance of sound realistic retirement budget and plans; that addresses sources of expected and projected retirement saving and contributions, income, expenditures, investment gains and withdrawals are critical success factors.
- College Education Planning – Current and Future (as needed):
The primary objective is to save accordingly and invest wisely in an effort to reach target(s)/ goals. Critical factors to reaching, not reaching or exceeding targeted goals and objectives are: Knowing and understanding current and projected future costs; expected and/or likely funding sources (i.e., financial support, scholarship grants, personal assets savings, investments and income); Establishing and maintaining sound and suitable savings and investment plan(s) and strategies; that addresses sources of expected and projected saving contributions, investment rates of return, growth in value; funds available and withdrawals.
If you are the do it yourself type you can easily find tools on the internet to help you with preparation of a personal financial budget; retirement planning (determine your nest egg, how much to save and invest to enjoy a safe retirement); college education planning (current and projected future costs and funding source). However, I must warn, do it yourself programs and documents are often generic in nature and tailored to address broad common categories and standard scenario or strategy. Thus, if you want to put yourself in the best possible position to succeed in your efforts and accomplish you goals and objectives, I encourage you to seek and obtain the services of competent, qualified experience, professional practitioners.
This Article was written by Patrick Lyte, an experienced financial, investment and tax consultant and Principal at PRL Associates and The Financial Network Group, two organizations dedicated to providing high quality, competent services at reasonable prices. Seek him for valued added advice and guidance via Phone: 617-307-9672, Email: Patricklyte@thefngroup.com.