BUILDING A SOLID FINANCIAL PLAN (Part 1)

BUILD A SOLID FINANCIAL PLANFor you to have a solid financial plan, you should consider your financial goals, your net worth, your cash flow analysis, and tax reduction strategies. Your retirement strategy, risk management plan, long term investment plan and estate planning should also factor into how you build your plan. Each of these categories are crucial in building a complete strategy for your future. This post will describe the first four and the following post will focus on the other four.

Your plan must be based on your personal or family financial goals. You will need these to be well-defined and understood. Writing these goals down can help to make them concrete. Do you plan to fund a college education? For how many children or grandchildren? Will you be launching a business? Will you be buying a new home or a second residence for vacations? Have you considered your time frame for retiring? These a some of the questions you will need to ponder and then you need a method to track your results in getting to your financial goals.

What is your net worth? This includes what money you bring in minus how much you spend. Remember to include all types of income including savings and retirement accounts. When you figure what you spend, include any outstanding debts you are paying off and your other obligations.

Your cash flow analysis shows you where the money is flowing. How much you can reserve for paying off debts? What investments are you making each month? How much are you putting in savings? This will give you a picture for your investment strategy later.

Think about tax reduction strategies. Working with your CPA will help you consider how to let your assets work for you, so you can decrease your tax liabilities. This step is important to keep as much of the income you are earning.

These four factors are the beginning of setting up your financial plan. We will examine the other four in the next post.

Les Merritt has been helping families and businesses plan their future for more than three decades. As a CPA (Certified Public Accountant) and a CFP (Certified Financial Planner) he can advise you. Computing and analyzing all of this can be difficult for most people so let Les help you. He can construct the right financial plan that will fit your economic circumstances. Call (919) 269-8553 today to set an appointment. Begin building your solid financial plan or reviewing your current one.

Updated: July 27, 2018 — 10:57 am
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