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What is a financial plan, and should you have one?

A financial plan in its simplest definition is a course-plotting a direction forwarded based on your current and future financials. By plotting and creating a plan that extends into future years, it can be determined whether the current plan is on track to help you achieve those goals based on the timing the goal is to be reached.

Your financial plan is the tool to state and prioritize each goal you are looking to achieve. It provides direction on which goals are funded and underfunded and require attention and additional planning.

The benefit that planning offers besides bringing organization to your finances, is the confidence achieved by working side by side with a financial advisor to educate you on your financial matters.  When you have that clarity, you will be more likely to stay the course instead of deviating from the plan during adversity with poor market performance or unexpected life changes.  Planning can address these points for guidance.

So, what is a financial plan?

  • Stated goals: Future the goals that pertain to you, your family, and the organizations you wish to benefit.
  • Tracking: Where you currently stand now and your expected contributions in comparison to the funding needed to meet the goals you have set.
  • Planning: Steps focused on saving, accumulating, and protecting of the assets for your future goals. Your plan should be reviewed annually to confirm or make corrections to the direction of your plan if finances or goals have changed.

Establishing Goals. What are your financial priorities?

  • Listening to what you are thinking and feeling while guiding you towards your stated goals is priority number one. This is the foundation of the planning relationship. Examples would be budgeting and debt advice, employer benefit decisions, setting money aside for college, the selling of a business and the impact of the timing of that decision are a few that are common topics.
  • By documenting these goals, progress can be tracked towards obtaining the moments that are center of our client’s lives.

Tracking and streamlining your financial affairs. Where are you today and where will you be in the future?

  • Budget: How much you bring in and spend each month. The goal is to gain a realistic idea of what you spend, where you spend it and what you will want to spend in the future. This also brings insight to a client’s current ability to make adjustments that allow them to strengthen their plan with additional savings or debt reduction.
  • Net worth: Where are you today and what can we expect your net worth to be at a future point in time.  This important figure is one facet in decision making process as to when to retire or use assets appropriately for other goals.

Your plan and how to work toward your prioritized goals. What are you doing well, and what can you do to add value to your plan?

  • The advice given by any professional or specialist, is often broken down to multiple steps and recommendations. These steps will be based on your current point in life. Different points in life have different topics. Addressing not only the current issues, but future issues today is good planning that allows you greater opportunities in the future.
  • Case in point: A young client may not be thinking about the expenses of health care later in life. By being proactive, we can plan for future needs even though they are less relevant today.

Our goal at North Star Resource Group is to help you develop the type of financial plan that is appropriate for your needs. Our mission is to provide education and support for you to help you achieve your goals and the best financial life you can live.

Max Stowe, LUTCF®

Author: Max Stowe, LUTCF®

As a member of the Financial Planning Resource Center, Max offers steady guidance and personalized solutions for individuals, families, and business owners navigating the many changes life brings.

Separate from the financial plan and our role as financial planner, we may recommend the purchase of specific investment or insurance products or accounts. These product recommendations are not part of the financial plan and you are under no obligation to follow them.

3580067/DOFU 5-2021