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Financial Plan Needs More Than Just Investments |
"Cash flow is probably the most significant issue when it comes to planning." |
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When people think about financial planning, the discussion almost always shifts to the stock market and ailing 401(k) plans. While what happens to the market may affect your financial plan, things besides the market can also mess it up. Goals and dreams vary for each of us. For some, it may be a comfortable lifestyle or retirement. For others, it may be the education of grandchildren, reducing estate taxes or making sure that their family is financially solvent in the event of a premature death. For many, it is all of the above and then some. A good financial plan will take a look at six major areas of your financial life. It will look at your cash flow - income and expenses today and those expected in the future. Cash flow is probably the most significant issue when it comes to planning. In fact, reckless spending or poor income planning has caused just as many problems for Americans as a losing portfolio. The plan should take a careful look at risk management. What can happen that would really mess up your long-term plan? You could die prematurely or become permanently disabled. Your home could suffer an uninsured or undercovered accident such as frozen pipes, floods or injury to a visitor. Your plan should address taxes. Everyone thinks they are doing whatever they can to minimize taxes, but I’ve seen some stupid tactics and some of the better ones ignored by people who think they are doing a great job. Your retirement planning should be addressed well in advance of your planned retirement. This may include how much to save, where to save it or what type of retirement may best suit your needs. Estate planning is also a must in any financial plan. A good estate plan considers your incapacity or disability - as well as what happens when you die. And finally, a financial plan does include a thorough review of your investments - including a look at your tolerance for risk, what you need to earn to accomplish your objectives and your exposure to different holdings. You can do your plan yourself or hire a qualified planner. Don’t kid yourself. Just because you spend Saturdays and Sundays working on your portfolio or have more money than you need doesn’t mean that you have a financial plan. John P. Napolitano |
Financial planning is one of the fastest growing careers in America today. Have you ever wondered what you need to become a CFP® and how you can make it a successful career path? Written by veteran certified financial planning expert, John P. Napolitano, this book contains information on: education and training; the certification process, including differences state-by-state; tips for setting up in private practice; self-marketing techniques, including networking and client base expansion; and the all important client management and trust building.
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