Do You Really Have a Financial Plan?
So, it’s National Financial Planning Month! What a joyous time of year! But no, really. The holiday season is upon us. Thanksgiving, Christmas, Holiday Parties, Family Dinners, Travel and Spending. It’s no wonder that so many companies do 40-50% of their revenue in the last quarter of the year.
However, this is not about the country’s revenue or the earnings of publicly traded companies: It’s about you and your family’s financial well-being.
So, let’s delve into the what, who, when, where, why and how of Financial Planning.
What is a Financial Plan? – Let’s start off by saying what it isn’t. A financial plan is not the stock of the month pick. A financial plan is not a mutual fund recommendation. A financial plan is not having term or whole life insurance or having an investment account statement. A financial plan is not an asset allocation model. Please do not confuse having a financial plan with receiving financial recommendations.
A Financial Plan is a WRITTEN document that contains these components. I repeat, WRITTEN:
- Cash Flow Analysis – This is just a fancy way of saying “know your budget.” It’s listing all your assets and all your liabilities on paper and knowing how much income is coming in and how much is going out in expenses. This is the foundation of your financial plan. It should be reviewed often.
- Risk Management – What is this you ask? Is it like wearing a seatbelt? Well, it kinda is. Risk Management refers to protection and reducing risk or even better… planning for it. Protecting your family with life insurance, protecting your income with disability insurance, protecting your retirement income with annuity contracts and diversifying your assets are all ways that you can mitigate risk. The absolute best financial plan can fall apart if you die, become disabled or if the market crashes. Plan for it!
- Retirement Planning – In short, how are you going to replace your income when you retire? How will you replace 80-100% of your income? This can be done by contributing to a 401k, Roth and Traditional IRA’s, creating business or rental income, cash value policies, social security planning, etc. So…. what is your Number? No, not your waist size… I mean the number that you need to have in your retirement nest egg or monthly cashflow to be able to retire.
- Investing – Simply put, what vehicles should you invest in? Stocks, bonds, annuities, mutual funds, etc. You should know how much money you need to put away annually and where that money should go. If you have investments but don’t know why you are invested in them, then you need to have your plan reviewed immediately.
- Tax Planning – I love paying taxes! Yeaaaa, that’s not true. Tax planning is having your taxes reviewed and determining if you are maximizing your deductions as well as planning for changes in your tax liabilities in the future. Are you overpaying in taxes? Your financial plan should address your taxes. It’s about how much you keep; not how much you make. Who cares about their gross income? We as humans care about the NET INCOME! I recommend reading the Power of Zero. How to get to the 0% tax bracket during retirement.
- Estate Planning – I have people say to me all of the time that they don’t have money or assets for estate planning. Hmmm. Do you plan on dying one day? I am. When I die, I want to make sure that I avoid probate, that my wife and kids don’t have debt, that my income is replaced, that they don’t run into a taxation nightmare and that the 2 million dollars in life insurance they may receive is spent according to my wishes. Legacy, legacy, legacy
When do you need a financial plan? – So, question for ya. Would you start building a home without the architectural drawings? Would you travel cross country by car without a map? If your answer is no, then the answer is simple, you need a financial plan now. Get a good plan from the start and avoid having to completely re-do everything.
Who needs a financial plan? – Someone who is serious about the 3 F’s: Family, Finances and Future. Your age or income doesn’t matter. The sooner you have a WRITTEN PLAN, the better. Word of advice, take ownership of your finances. Don’t go to a financial advisor and not know your numbers. i.e. monthly income, monthly expenses, how much in 401k, how much in savings, etc. Gather your statements then get to work!
Where do you get a financial plan? – Sometimes this is a touchy subject because so many pseudo-professionals claim to be “Financial Advisors” These are my thoughts. No one professional can know everything about everything. Build a team of experts, but have a quarterback. It’s like going to the doctor. You have a general practitioner who knows all your health history, but sometimes you will be referred to a specialist like a cardiologist. However, the doctor and cardiologist communicate with each other for your benefit. Find your Financial advisor and connect them with your accountant, lawyer, insurance agents and other members of your team.
Why do you need a financial plan? – Save T.E.A.M. (Time, Energy and Money). Without a financial plan you are simply wishing and guessing. A goal without a plan is a wish.
How much does a plan cost? – Just like building a house, there will be a difference in costs based upon the size of the house. The complexity of the plan will determine the cost of the plan. A simple plan could run you a couple of hundred bucks. Many financial advisors offer complimentary planning for their clients who are doing business with them. As with anything, find the right advisor within your budget, but find one!
I hope this was helpful. Happy planning your financial life.
Are you ready to make that most important first step in your financial plan? Schedule a complimentary 15 min appointment with us today Click HERE. A member of our time will be happy to speak to you.
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Perry founded Phy-nancially Fit LLC in 2012.
“Phy-nancially Fit LLC looks to impact the lives of Entrepreneurs and Individuals by showing them how to increase their income, energy and efficiency by creating customized financial, wellness and growth plans, so that they can one day retire Healthy and Wealthy.”
Perry is the President of Diamond Equity Advisors located in Columbus, OH. Diamond Equity Advisors is a full-service Wealth Management / Financial Planning firm.
Perry currently Holds a Series 7 License (Securities License), Series 66 License (Investment Advisor), Life / Health / Annuity Licenses (Insurance License), has a CRPC (Chartered Retirement Planning Counselor) Designation through the College of Financial Planning and is Currently working on the CPFA (Certified Pension Fiduciary Advisor) Designation.
In the areas of fitness, Perry has held the CSCS (Certified Strength and Conditioning Specialist) certification through the NSCA (National Strength and Conditioning Association) and still holds the PES (Performance Enhancement Specialist) certification through the NASM (National Academy of Sports Medicine).
In addition, Perry is also a member of the John Maxwell Global Leadership Team. He has earned the certification of an Independent Speaker, Coach and Trainer with the John Maxwell Team. He specializes in corporate leadership training, sales, and coaching entrepreneurs. Learn what a Personal CFO can do for you HERE.
Securities offered through First Heartland Capital, Inc.
Member FINRA & SIPC
Diamond Equity Advisors is not affiliated with
First Heartland Capital, Inc.
Securities offered through First Heartland Capital, Inc.
Member FINRA & SIPC
Advisory Services offered through
First Heartland Consultants, Inc.
Diamond Equity Advisors is not affiliated with
First Heartland Capital, Inc.
