Do you have a written plan that covers every aspect of your financial life? If your answer is no, you’re not alone. According to a study from the Certified Financial Planner Board of Standards, only 19 percent of Americans could be categorized as “comprehensive planners.” The remaining 81 percent may plan for specific goals or challenges, like retirement or debt management, but don’t have a comprehensive plan that pulls everything together.1
Certainly, some planning is better than none. If you lack a comprehensive financial plan, however, you could be missing out on opportunities and may be unaware of potential threats.
The different areas of your financial life are likely intertwined, so any planning that you implement in one area could affect another. For instance, your retirement planning could impact your estate planning. Your college savings for your children could impact your ability to save for retirement.
A comprehensive financial plan is a document that addresses all the major areas of your financial life. It identifies your specific goals and concerns and lays out strategies for achieving your objectives. Perhaps most important, it helps you see how decisions you make in one area could impact other goals and objectives.
What should be included in your comprehensive financial plan? It depends on your unique goals, needs and concerns. However, there are a few areas and elements that are commonly included in most comprehensive plans.
Objectives and Goals
Most comprehensive plans start with a summary of what you would like to achieve. If you started a road trip, you would likely have a destination in mind. Your list of goals is your destination. It serves as the guide for the rest of your planning and decision-making.
Your goals and objectives could include everything from retirement to college funding to major purchases to risk management and more. The planning process will likely help you gain more clarity into your goals and prioritize them, so you know which goals are more important than others.
Cash flow is often the fuel that helps us reach our financial objectives. By maximizing your free cash flow, you create more dollars to contribute toward savings or to protect yourself from possible risks. Your comprehensive financial plan may include a budget or other tools that help you maximize income and minimize expenses, so you can allocate as much money as possible to your most important objectives.
Life can change quickly, and those changes can often bring negative financial consequences. You could lose your job or become disabled. While it may not be pleasant to think about, it’s possible that you could pass away, leaving your family in a challenged financial position. If you are nearing retirement, you could face risks such as needing long-term care or possibly outliving your savings.
Your comprehensive plan should address these risks and offer strategies for minimizing the potential consequences. Possible strategies may include the utilization of tools like insurance or annuities, or creating an emergency reserve.
Retirement is a major financial goal for many Americans, so it will likely play a large role in your comprehensive plan. In the retirement section, you might establish a savings goal and then develop a strategy to reach that number by your desired retirement date. You might also consider strategies to cover retirement health care costs, long-term care expenses and other possible retirement needs.
Many Americans think of estate planning as simply developing a will. However, estate planning is about much more than just a last will and testament. It’s about creating a legacy for your loved ones. You may want to protect your spouse and children in the event of your death, or you may want to distribute your assets to your kids and grandchildren. Whatever your desired legacy may be, an estate plan can help you achieve it.
Ready to develop your comprehensive financial plan? Let’s talk about it. Contact us at Gregory Financial Group. We can help you identify your needs and develop a strategy. Let’s connect soon.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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