By: Paul A. Werlin, President, Human Capital Resources, Inc.
“A goal without a plan is just a wish,” said Antoine de Saint-Exupéry, the poet, author of The Little Prince and hero fighter pilot who perished in World War II. In fact, there is actually scientific evidence that people are more likely to achieve their goals when they write them down. Want to lose weight? Put your goal in writing on your refrigerator. Want to take that vacation of a lifetime? Write the date and details down in your calendar. Whatever goals you set for yourself, the odds of reaching your goals go up if you put them in writing. By writing them down, you create a “mental contract” with yourself (and others).
If you want to reach your financial goals—whether it's saving for college for kids/grandkids, having enough money to retire or to make sure you’ve got the insurance coverage you need to protect yourself and your loved ones—you also need a written plan.
Financial plans typically come in two types: comprehensive, which covers all aspects of your financial situation, from insurance, retirement, taxes and estate planning; or goal-specific, for example a retirement plan, college savings plan etc. Regardless of the kind of plan you want, a well-designed plan will show your current situation, risk-tolerance, income, tax bracket, marital situation and dependents and lay out specific steps to take to achieve your goals. It is also important to remember that a plan is just a picture of where you are and your plan to get to your destination and as such has to be constantly monitored and revised as your personal situation changes (get a divorce, want to add new grandchildren to a college fund, etc.) and financial environment changes too. Tax laws and tax brackets change, you change jobs, interest rates and inflation rates move. So, it’s imperative that you not get a plan and forget about it. A good financial plan is dynamic—it can adapt and change as circumstances necessitate.
So, how do you go about getting a financial plan? Many brokerage firms provide a wide range of planning-from very basic to very comprehensive financial plans. People with large amounts of financial assets and/or complicated financial situations, might consider using a Certified Financial Planner (CFP). A CFP has studied and passed a rigorous financial program to earn this respected designation and you will revive a very comprehensive customized plan. You can learn more about CFP’s and find one near you at letsmakeaplan.org. A CFP will typically charge a fee based on your specific needs and the complexity of your financial situation, while a brokerage firm or on-line service may offer basic free planning or may have a fee. Check with your brokerage firm.
Everyone can benefit from a financial plan. It can show you the path to financial success and at the same time, give you peace of mind that you’re working towards your goals. And remember, if you don’t know where you’re going, any road will take you there.