Financial planning can be a daunting task, especially if you are uncertain where to begin. Often we are asked, “How do I begin?” You begin by having meaningful discussions about your finances.
Many financial advisors focus on their products too much and not on the purpose those products are serving. Before you pick your next stock, buy your next annuity, or hire a financial advisor, you need to define your goals. Setting goals will dictate which financial tools you will utilize and decisions you will make.
In short, focus on purpose, not products. Goals are the cornerstone of a solid financial plan.
Before we enter into a financial planning agreement with a client, we asked that he or she fill out a short questionnaire to help initiate the discussion. For some, “financial goal” is an ambiguous concept. For example, what does retirement mean to you? If you are several years from retirement this may be hard to define. However, by using this questionnaire, it allows us to guide the discussion with our clients to help them discover what their financial goals are.
Please complete and return our financial discovery questionnaire. In addition, please complete the Riskalyze questionnaire, the results of which will be electronically forwarded to us.
One important thing to remember when doing a financial plan is to walk, don’t run. While some procrastinate when it comes to financial planning, others rush into it and put all their savings into retirement plans and accounts without considering the consequences and tax effects. Careful consideration should go into each step.
Below is a list of basic planning tips that Russell has collected over the course of his career that have helped clients as they work towards achieving success throughout the financial planning process.
Set measurable financial goals.
Create specific targets for what you want to achieve and when you want to see results. For example, instead of saying you want to be "comfortable" when you retire or that you want your children to attend "good" schools, you need to define exactly what "comfortable" and "good" mean so you'll know when you've reached your goals.
Understand the effects of each financial decision.
Every financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child's education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated.
Re-evaluate your financial situation periodically.
Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by so you stay on track to meet your long-term goals.
Start planning as soon as you can.
People who save or invest small amounts of money early and often tend to do better than those who wait until later in life. By developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances, you will be better prepared to handle emergencies and life changes.
Be realistic in your expectations.
Financial planning is a common sense approach to managing your finances to pursue your goals. It cannot change your situation overnight—it's a lifelong process. Remember that events beyond your control, such as inflation or changes in the stock market or interest rates, will affect your financial planning results.
You don’t need to go it alone.
Just as you seek a doctor's expert opinion for medical issues, there are times when you need a qualified financial planning professional to provide financial advice.
Realize that you are in charge.
As a CERTIFIED FINANCIAL PLANNER™ professional, Russell wants his clients to understand the financial planning process. It’s important to be comfortable providing all relevant information about your financial situation. Ask questions about the recommendations offered to you, and play an active role in decision-making.