By Gary J. Birdsall, Jr., JD, CFP®

“If you fail to plan, you are planning to fail.”— Benjamin Franklin

What exactly is financial planning? Financial planning is the formulation of strategies to achieve your life purpose by connecting your money to your goals, values, and concerns. 

A financial plan is essentially a road map of your life’s goals. It considers where you are today, where you want to be in the future, and how to create a path to get there. 

To be successful, the plan should be constantly adjusted as life happens and goals change. You must navigate market swings, job changes, income changes, marriage, possibly divorce, children, grandchildren, health issues, disasters, taxes, death, etc., while keeping up with law changes and balancing your emotions. 

Professional financial planning is holistic and addresses all aspects of life related to money. Financial planning addresses key areas, including:

• Cash flow and budgeting: Balance funding future goals while living comfortably in the present.

• Investment planning: Connect your money to your goals to achieve a higher probability of financial success.

• Retirement planning: Achieve your retirement goals without outliving your money.

• Tax planning: Maximize refunds and minimize tax liability.

• Insurance planning: Balance the need for managing risk and self-insuring.

• Legacy planning: Transfer your money according to your wishes in a cost-, tax-, and time-efficient manner.

• Estate planning: Make things easier for loved ones after you pass away.

The role of the financial planner is to help you articulate goals and values, coordinate with other professionals, and provide recommendations, strategies, and tools to achieve your goals. 

A financial planner should be your fiduciary, meaning someone who works in your best interest. A fiduciary planner is often independent and works directly for you, not for an insurance company, bank, or large investment company. 

CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals have the education, experience, and access to research and provide insights necessary for comprehensive and individually tailored planning. 

A CPF® certificant’s expertise in maintaining up-to-date knowledge of changes in the law and tax codes while keeping your goals in mind may save you a lot of money over time.

 Your financial planner can answer many questions, including these common examples:

• How do I achieve my goals and not run out of money?

• At what age should I begin taking Social Security income?

• How much should I put in my 401(k)?

• How much, where, and when should I invest my money?

• Should I pay off my mortgage early?

• How do I pay off my student loans?

• How much cash should I have on hand in savings?

• Should I pay cash or finance a purchase like a car?

• How much life insurance do I need, and what kind?

• How do I pay fewer taxes?

• What benefits should I participate in at work?

• What should I do with an old 401(k)?

• What should I do with restricted stock?

• What should I do if I am laid off or temporarily out of work?

• How do I pay down debt?

• How should I prepare for a large purchase?

• How do I navigate finances in divorce or the death of a spouse?

• Can my spouse stop working or work part-time without harming our goals?

• How much money will I need in retirement?

• When can I retire?

• How do I get out of an investment I no longer like?

• How do I prepare for a long-term health event, such as needing assisted living or developing dementia?

• How do I plan for my children’s education?

• Should I invest through work [such as a 401(k)] or individually (such as an IRA or taxable account)?

• Does a Roth conversion make sense?

• Which health insurance option should I choose?

• What do I need to do to retire early?

• How do I pass my money on to my children?

• Do I need a will or trust?

• What investment strategy works best for my goals and tolerance to market risk?

• How do I start a new business?

• How do I sell my business?

• What retirement plan should I set up for myself and my employees?

• What benefits should I offer at my business?

Many people have some type of financial “plan,” but these plans are not always comprehensive and may be missing critical components. 

Many plans are fragmented across different insurance agents for life, disability, homeowners, and auto policies; a CPA or tax preparer; an attorney; a personal representative at one or more banks; a stockbroker; and advice from family, friends, and coworkers. None of these people communicate with one another, and each resource can contradict or even prevent certain aspects of your plan from coming to fruition. 

A healthy financial plan can be complex and ever-changing. Having a professional planner assist you can simplify the complexity of financial planning and lead you on a more likely course to achieve your life’s goals.  

“Our goals can only be reached through a vehicle of a plan in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” —Pablo Picasso

If you would like to find out more information on starting a financial plan and want to speak with an independent financial planner about the steps you should take, schedule a complimentary 30-minute discovery call with one of our Wealth Advisors.