Many people think that they don’t need a financial plan. They think that being able to avoid overdraft means financial success.
While avoiding debt is important, other steps are necessary to build a secure financial future. Creating a workable financial plan is one of the best ways to improve your finances. A financial plan gives you the opportunity to clearly define your financial needs and wants, and provides a specific direction you need to take in order to be able to fulfill them. A financial plan helps you see your goals clearly and finds ways to achieve them. It also shows you where you can improve your spending and your investments.
Already have a plan?
If you already have a financial plan, when was the last time you updated it? Markets change, as does the economy and life in general. It’s always important to keep on top of your plan and adapt it to the changes that occur around you.
When I build a financial plan with a client, we take these three steps together:
Gather data – We create a clear snapshot of your finances, including your current investments, pension funds, savings, financial and life goals, and risk tolerance. We consider current and anticipated expenses and income streams. While it is impossible to know anything for sure, realistic figures help to create a reasonable plan.
Evaluate your financial status – We take a look at your overall situation, including your assets and cash flow and direct you to consult with insurance, pension, tax, and legal advisors where necessary. What are the chances of financial success (read: living the lifestyle you want and not running out of money) if you continue with the status quo? Would you be satisfied with a 65% chance of success, or do you need a higher percentage of probability of meeting your goals?
Make recommendations – Based on your personal goals and situation, we recommend a clear asset allocation and individual investments.
Click here to download the free trackers to help you gather the information needed for your financial plan.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published November 9, 2015.