ABC's of Financial Planning

Benjamin Haas |





Last week we discussed some common financial planning mistakes that even financially conscientious people make. With as complicated as our financial lives can be, it’s understandable that we sometimes lose focus on the main parts of our plan and simple things end up slipping through the cracks.

When you find that happening, take a step back and hit the reset button. Brush up on the fundamentals of financial planning and regain some confidence in your direction. Here’s a review of the ABCs of financial planning.

A- Avoid too much debt. Debt and leverage may be a necessary part of buying a home or starting a business. But understand that there are healthy and unhealthy levels of debt relative to your income. Many corporations have failed, not because they didn’t have income or assets, but because they had too much debt.

B-Build a cash reserve. Yes, investments are good to have. But keep enough cash for emergencies and opportunities that may arise on a year-to-year basis. It’s important to be able to withstand a market downturn without being forced to withdraw depressed investments. Liquidity is important.

C- Cover yourself. In short, it’s important to protect what's important to you. So be prepared for the certainty of uncertainty with insurance from your employer or fill the gaps with personal insurance. Get what you need, pay as little as possible, and get rid when you don’t need it anymore

D- Defer income and earnings. Financial confidence is rarely found unless you spend less than you make and save the difference. And know how much YOU need to save to reach YOUR goals. Have someone hold you accountable to saving and track you progress over time.

E- An estate plan, just do it. No one likes to think about end of life situations. But there are rules and regulations in place that will make decisions for you if you don’t document your wishes appropriately. Protect your family business, your property, the interest of your heirs and ultimately, your dignity.

F -Find the right advisor. There are many different kinds of advisors with different focuses, experiences, designations, etc. Know how they are compensated and whether they specialize in working with people like you.

G- Set goals. I’ve worked with many a couple who were doomed to fail, not because they didn’t have assets, but because they didn’t take the necessary steps to have a plan and put it in motion. So set goals and review the assumptions you’re using to ensure you stay on track. In the end those with a plan are more likely to find financial confidence.

No building stands for long on a weak foundation. So take the time to review this list to be sure your building blocks are properly aligned. Call it your “financial house Spring cleaning.” If you need a second set of eyes, or have questions about your plan, give us a call. We’re here to align your personal values, vision and wealth.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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