Just like a map or a GPS is needed for someone driving a car on a long trip, a financial plan is useful for anyone wondering about their financial future. A financial plan lets us know if we are heading in the right direction, for example north instead of south. Much like a long journey, life will have many twists, turns and a few unexpected bumps in the road. However, with a well-planned route, we can have a clear idea of whether we are heading in the direction of our destination.
What is a Financial Plan?
A financial plan is a document that evaluates cash flow, assets, goals, and brings the information together in a document that predicts how much money and income you will have in the future. This document will be used to determine if your current strategy will accomplish your goals, or if you need a different one.
Who can benefit from a financial plan?
Financial plans are useful for people of all ages. A financial plan looks at money that is coming in (wages for most people), assets that you have saved so far, and what you are currently saving. This along with other factors helps to plan a path for your financial future. This could be saving for a large purchase, paying off debt, or saving for the future (children’s education or retirement). Financial plans are also helpful for people already in retirement as they can be used to help identify a strategy for creating retirement income, spending down assets, or planning to leave them to heirs.
To prepare a financial plan your financial planner will need to gather some information from you. You will likely need to bring the following:
- Recent paystubs
- Last year’s tax return
- Statements for any retirement or investment accounts that you have
- Information on any pensions that you may have
- Social Security Statements (get yours at ssa.gov/myaccount )
- More complex plans may require information about insurance and/or legal work
Your planner will ask some questions to get to know you and find out what is important to you. A good planner will be interested in not just how much money you have, but also in what you would like to accomplish with your money. This conversation along with the data you bring to your appointment will help your planner to craft a financial plan that is specific to your goals. Your planning process will likely consist of several meetings. Costs are generally dependent on the complexity of your plan, and it is even possible that your advisor will provide some basic planning at no cost.
Life will continue to change over time, for this reason it is important to revisit your financial plan with your advisor every so often to account for any detours or bumps along the road of life. Financial plans are working documents that need to be adjusted as circumstances change. You should expect to update your financial plan several times during your working years. Generally, this will be every few years or when a major life change occurs.
If you would like to find out more about having your personal financial plan prepared, contact us to set up your no obligation consultation today.
Investment Advisor Representative & Tax Preparer
Kate joined Advisors Management Group in December 2017. Prior to joining the firm, she worked in manufacturing and healthcare during her career as a financial analyst.
Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin. Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security. Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses. Please do not send orders via e-mail as they are not binding and cannot be acted upon. Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation. This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services. Any subsequent, direct communication by AMG with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.