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What is Financial Planning?

September 26, 2019 BY Kathleen McQuiggan

Ten years ago, I decided to make a major career change that I knew could have longer-term repercussions and affect my overall financial health. Up to that point, I thought I had been financially savvy by maxing out my retirement savings, tracking my spending, saving for retirement and investing that savings in a range of ways. But I didn’t have a formal financial plan in place. I realized I needed to look at all the different pieces of my financial life together so I could answer the questions I had.  How much money did I need to make each year to keep my current lifestyle?  How could I continue to most tax-efficiently save for retirement?  What if I needed to dip into savings while I was transitioning?  So, at 41 years old, I hired a financial advisor to create my own financial plan, and I only wish I had done it sooner!


What is a financial plan? 

 A financial plan is a roadmap to help you understand your money situation today, and help you determine whether and how you can meet life goals through the proper management of your financial assets. It’s a process, not just a spreadsheet. Often clients come in seeking help on one financial topic but soon realize their financial life is intertwined and end up looking for answers on a range of topics.   


Benefits of having a financial plan

A financial plan allows you to be strategic about the financial resources you have and enable you to make more informed decisions around a broad range of financial issues you may face. A financial plan gives you a better understanding of how to manage and grow your resources, enabling you to increase your financial confidence and decrease your financial stress.


Getting started:  Steps for putting a financial plan in place

  1. Get organized. Know where all your financial accounts are and what is in them.
  2. Set specific goals. We like to think about short-term, medium-term, and long-term goals. What financial assets do you need to have in place to meet your goals?     
  3. Create a balance sheet. With the list you created above of all the financial accounts you have, determine what you own and what you owe. 
  4. Establish a spending plan. Life can be expensive.  Determining your annual spending needs can be an eye-opening experience for some but understanding your cash flow is a critical component of creating a successful financial plan.
  5. Set an annual savings target.  Once you have a true understanding of your lifestyle cost structure, you will then be able to realistically determine how much money you can save.
  6. Track your net worth.  We track our clients net worth year-over-year change and make sure we fully understand all the changes happening each year in their financial lives. 
  7. Identify what protection you need. Insurance plays an important role in every financial plan and can change as your life evolves.  Whether it is the need for life insurance once you have children or getting umbrella coverage once your wealth begins to grow. 
  8. Establish basic estate planning documents.  We recommend a will, durable power of attorney, healthcare power of attorney and a living will.
  9. Establish an investment strategy.  Investing is a dynamic process that needs to be monitored and adjusted.   
  10. Accept the unknowns. Life is often full of “what ifs.” What will your future earnings be? How long will you work? What kind of lifestyle do you want today? What kind of lifestyle will you prefer in retirement?  A financial plan gives you the ability to navigate and plan for the unknowns. 


Do you need a financial plan?

Are you wondering if you are saving enough?  Are you considering a career change or perhaps growing your family?  Do you worry about how to fund the cost of college?  Do you wonder if you could be better utilizing and leveraging all your financial resources?  Most of our financial planning engagements start with us helping our clients complete the above steps. We get it. Many of our clients just don’t have the time to be on top of all these aspects of their financial life.  Whether it is more project-based or if you are looking for ongoing help on a monthly basis, we can work with you to create a financial plan.

Ten years ago, I hired Artemis Financial Advisors to create my own financial plan. It has been an invaluable asset that has helped me navigate a range of financial decisions with the information I needed to make the best decisions for me. And today, I am excited to be an advisor myself helping individuals and families fully understand the power of their own financial resources and creating a financial plan that allows them the flexibility to create their own unique roadmap.

Kathleen McQuiggan is a Wealth Advisor at Artemis Financial Advisors where she works with clients to create sustainable financial plans and investment portfolios.

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