A client recently asked us, why do I need a financial plan? This got us thinking about all the great things that can come from creating and updating a financial plan. Creating a financial plan allows you to determine your short and long-term goals, formulate a plan to reach them, and identify the tools and strategies you can use along the way.
At Hyre Personal Wealth Advisors we believe in finding True Wealth which means you have clarity about your life’s goals and confidence in knowing how you can fulfill them. Creating a financial plan allows you to look at the big picture, from today to beyond your own lifetime, and determine if you have the means to achieve all your goals and, if not, what you can do to make it possible.
A financial plan will give you a roadmap for all stages of your life. When you are young it is typically much simpler, you are trying to get rid of any debts and save what you can. As you progress through life your financial situation will become more complicated. You will likely find yourself juggling home mortgages, saving for retirement, investment accounts, saving for your children’s college, and more. A financial plan will help you determine your current assets and liabilities, insurance gaps, retirement and education funding strategies, and the strengths and weaknesses of your current financial situation.
Financial plans are essential guides through life transitions. The great thing about having a financial plan is that it looks at your entire lifetime and helps you determine how much you should save and spend throughout your life to afford all your goals. Each time there is a major change in your life, like a new job, another child, or a new goal, you can add those details into the plan to find out what changes need to be made, if any, to have financial freedom throughout all life transitions.
Once you know where you stand at that time and assuming you are able to successfully cover all your needs during your lifetime a financial plan can also help you build and protect your estate for your loved ones, create a charitable legacy, or achieve even greater goals. A financial plan will review your lifetime gifts and final transfer of assets to reduce or eliminate taxes. If charitable giving is important to you, a financial plan can help determine the most efficient ways for you to give. It also gives you the opportunity to see what may be possible. Could you purchase a vacation home? Travel across all of Europe? Buy the car you have dreamed of since you were a kid? Maybe so and a financial plan will tell you if that is possible.
John Allen Paulos once said, “Uncertainty is the only certainty there is” and we all know this to be true. One of the biggest benefits of creating a financial plan is that it can help protect you and your loved ones from uncertainty. Having a financial plan can help you worry less about market downturns, emergency expenses, long-term care costs, or outliving your retirement income. Having a financial plan and working with an advisor can alleviate the stress of making complicated financial decisions and give you more confidence in your decision making.