The Components of Your Financial Plan

It’s a strange thing, but many people who would never take a trip without carefully planning their route - they will go from year to year without a plan for their financial futures. Obviously, their financial futures will have a greater impact on their lives than any single trip – but it happens!


The purpose of a financial plan, professionally drawn up, is much the same as the purpose of planning a trip. You determine your objective; you choose the best route for reaching it; and having planned well, you follow your plan until you reach your objectives.


The analogy is too simple, though:

·  The factors affecting your financial plan are more complex than the interstate highway

·  The chances of reaching a secure financial future are better when based on a sound plan

·  And, this explains the need for a professional financial planner

·  At the hub of your financial trip is your financial advisor, see image below.


A professional financial planner will include 6 main components to a sound financial plan. Each of these components may have multiple aspects that include real estate, wills and trusts, employee benefits, and investments. 


1. Cash Flow Planning – Monitor, analyze, and suggest adjustments to the cash flow from various sources


2. Income Tax – research into all methods and means of reducing your income taxes.


3. Portfolio and Debt Management – Analysis of your present debt, cash flow coverage and use of investment leverage. Research into means of increasing or decreasing your debt and reducing your interest rates.


4. Wealth Growth Management – Evaluation of investment returns, mix and diversification. Research and assistance in finding quality investment vehicles that fit your financial planning needs.


5. Personal Risk Management – Analysis of the financial risks you face today and in the future. Consideration of the alternative methods of handling these risks – insurance, risk retention, risk prevention, non insurance risk transfer and elimination of loss possibility.


6. Estate Planning – Plans for keeping what you have accumulated.Means and methods of avoiding and handling estate taxes.


If your current financial plan is missing any of these components, call Dan.

Dan will help you realign your financial planning wheel to get it back on track.