Personal Financial Planning

You certainly can add the term “financial planning” to the growing list of buzzwords for the ’90’s. We are bombarded from all sides by experts telling us how we should plan to meet our financial goals. To help eliminate some of the confusion, let’s break down financial planning into five components: gathering information, setting goals, creating a program, implementing the program, and monitoring the results.

Gathering Information


Gathering information gives you a “snapshot” of your current financial situation and what you have to work with. Among the information you need to amass would be sources of income and expense, values of personal savings and retirement accounts, audits of life and disability insurance policies, and examinations of will and/or trust documents.

Setting Goals


Setting financial goals is by far the most critical part of the planning process! You must establish clearly defined, attainable goals that you can feel comfortable with and endorse in a heartfelt way. Vague, overly aggressive estimates of what you’d like to achieve, as well as lack of motivation will only lead to procrastination, inactivity, and, ultimately, failure to attain your true goals.

Some examples of common financial goals that many people wish to achieve include funding a college education, estate planning, and financial security/retirement planning.

Finally, in addition to developing clear objectives, it is equally important to prioritize your financial goals by relative importance and timeline to achieve them.

Creating a Program


With the help of your team of professional advisors, your financial objectives can be analyzed in terms of where you currently stand so that a program can be developed to enable you to achieve them.

In developing this program, your financial planning team should present a number of alternatives designed to allow you to realize those objectives. Some of these alternatives might include more sophisticated will and trust documents designed to eliminate or reduce your estate taxes, maximum participation in tax favored plans (e.g., 401k, 403b, IRA, etc.), or perhaps an analysis of available retirement options.

Remember that the final program selection is ultimately your decision, but you should choose the program that will be most effective in helping your realize your future financial goals, based on your current personal financial situation!

Implementing the Program


Once you have reviewed all of the alternative methods of accomplishing your financial goals presented by your financial planning team, it will be time to implement the program you have selected.

Often many people begin to feel uncomfortable at this time, because this is the time that changes are about to be made. However, if your objectives are truly heartfelt, you will feel able to make the necessary changes that will allow you to accomplish your goals.

Monitoring the Results

Your financial plan needs to be monitored at regular intervals to make sure it is accomplishing the results you desire. Because your financial strategy was developed based on a “snapshot” of your financial situation at the inception of the plan, you should be sure to report any changes in your personal financial profile (e.g., the birth of a child, an inheritance, etc.) to your financial planning team to determine the impact such changes may have on your overall plan. That will enable you to make the appropriate adjustments to keep you on target to achieving your financial goals, or to change those goals based on your current financial situation.