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Do You Have a Plan?

As Seen In the Fort Bend Independent

Gen. George Patton once said, “A good plan executed now is better than a perfect plan next week.” For many of us, financial planning is not top of mind. It’s often perceived as cumbersome or time consuming. But all too often, there are many changes that can occur during a lifetime and risks to consider that can alter the final outcome. Therefore, planning becomes instrumental in helping you prepare for and secure your financial future. Living life without a financial plan is like taking a trip without packing and not knowing where you want to go. You might have a general idea or direction you want to take, but until you take the time to actually plan it out, you’ll aimlessly wander down the path, unprepared for the bumps and detours ahead.

Goals

Know where you want to go before you plan the trip. Although specific goals are different for everyone, some common goals include retirement, paying for college or a wedding, vacation, starting a business, charitable giving, providing care for a loved one, home improvements or major purchases such as a new car or home. Whatever your goals, it’s also important to separate those goals into three simple priorities: needs, wants and wishes. Needs are what you must have, wants are what you’d like to have, and wishes are what you hope to have.

Current situation

Know where you are in order to set the starting point for the trip. A map is useless if you don’t know your current location. Understand your assets (what you own) and liabilities (what you owe). Assets include your cash, investment assets (retirement plans, college savings plans and taxable accounts), real estate, personal property and collectibles. Liabilities include mortgages, car loans, outstanding balances on credit cards and balances on other debts. Additionally, have a good understanding of your annual income and living expenses. Expenses include your basic monthly living expenses, such as groceries, utilities, gas, entertainment, dining out, etc. Your annual living expenses should also include home and vehicle maintenance and HOA dues.

The unexpected

Know what potential risks are out there that could alter the course you take during your trip. Plan and prepare for risks that you know exist and understand what you can tolerate. It’s hard to be ready for every catastrophic event, but careful planning around what could go wrong will help you stay on course toward achieving your goals and objectives. Some, but not all, of the risks to prepare for are mortality risk, disability risk, investment volatility and inflation, including the differences in inflation for normal living expenses, education and healthcare.

Analyze

Assess your gear and your current limitations before you plan your trip. Do you have proper insurance coverage? When’s the last time you reviewed your estate planning documents? Do you even have a will? How is your current investment portfolio positioned? Are you saving enough to achieve financial independence? Can you realize any tax benefits with your current or future situation? Are you taking full advantage of your employee benefits? These are some of the many questions you must ask before putting the plan together.

Develop

Plot the course you will take to guide you along your trip. After establishing your goals and objectives, assessing your risks and analyzing your situation, put the plan together. The more detailed the plan, the more likely you are to achieve your goals and avoid potential pitfalls along the way.

Execute

Planning without action is futile.

Don’t do it alone. Work with a financial advisor to help you objectively think through your current situation, issues and potential risks and to help you stay abreast of changes in the economy and legislation that could impact your plan. Sit down with your advisor on a regular basis to reassess and to evaluate any changes that need to be made along the way. Making a concerted effort to plan and execute today will help you to achieve your goals tomorrow. What is your plan?

 

WJ Interests, LLC, has provided Fee-Only financial advice to individuals, families and businesses since 1996. For more information, please contact us at wj@wjwealth.com or 281-634-9400.

 

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