Do you have a financial plan? We’re not talking about a portfolio of investments, or an investment philosophy; what we’re talking about is a written financial plan that guides you from your present circumstances, through the important, anticipated life events that lay along the way, to the end of your journey. Far too many people these days have all of the instruments associated with financial planning…stocks, mutual funds, insurance, to name just a few…but don’t actually have a plan itself.
As dated as a reference to a roadmap might be these days, there is nothing else that quite represents the financial plan as well as the old fashioned roadmap. What does a roadmap ultimately do? It provides you with the route from Point A to Point B. It’s not enough to simply know where you’re at presently and at where you want to be when your journey ends. If I’m interested in driving from Orlando, Florida to someplace far away and to which I’ve never been before, does knowing only those two basic facts help me to get the car from Orlando to my destination? Of course not. I need to have a route to follow; if I just point the car in some direction out of the driveway and keep it moving, is that enough? Hardly - I need my map.
So it is with your financial journey. Knowing where you are at presently, and where you want to be eventually, is a start, but that’s all it is. You need a plan, one that takes into account a number of variables, to include risk tolerance, assumed rate of return, amount of available monies to set aside in investment accounts, and several other factors that must be scrutinized in order to realize your hoped-for success. For example, how can you tell if the instruments and vehicles you own presently (see the first paragraph) are the best ones for you if you have no financial plan that connects the dots?
Something else you need with your plan: the resolve to review it from time to time. Again, in sticking with our roadmap analogy, it’s not enough to review the map at the outset of your journey and throw it in the backseat for the remainder of your voyage. You have to check it regularly to be sure you’re still on the right path as you make your way. Once again, that’s what you must do with your financial plan. You have to review it regularly to compare it with what you’re actually doing and with the results you seem to be achieving, and be dedicated enough to make the necessary adjustments as changes occur in your family’s financial circumstances.
Many will ask if one absolutely needs the help of a planner or other financial advisor to devise a worthwhile plan, and our answer is that receiving that sort of help is essential if you have no experience with any of this. What’s more, even if you do have some experience, it never hurts to get a second opinion, to have another set of eyes look at what you’re doing. Still, whether you want to tough this out on your own or do it with the help of a professional, the overriding consideration is that you work to assemble a good, coherent roadmap for yourself to ensure that when you leave Point A…your trip really does end at the desired Point B.
James L. Paris and Robert G. Yetman, Jr.
Christian Financial Planner
None of the information contained in the above article is intended to be, nor should be construed as, a solicitation or recommendation to buy or sell any security, or engage in any financial transaction whatsoever. It should be noted that, at any given time, the author(s) may or may not own any of the securities or other financial products mentioned in this column. Furthermore, it is strongly suggested that you seek the advice of an appropriate financial professional before making any changes or implementing any decisions with regard to your personal financial profile.
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