THE IMPORTANCE OF PERSONAL FINANCIAL PLANNING

Winter, 2009

Personal financial planning is important to individuals at all income levels. Usually the first and most important phase of personal planning is ensuring that steps have been taken to provide an income stream if something should happen and you can't provide for yourself and your family. Put simply, everyone needs personal financial planning.

Unfortunately, most people don't take the time to plan and as a result are not prepared. What happens if all of a sudden you can't work; will you have an income stream to support your life style or your needs? If so, how long will it last? When will it be available? What if your disability is permanent; will your income last a lifetime? As you can see there is a need for both short-term and long-term disability planning.

The same holds true for survivor income planning. Are there enough assets to provide the family income needs? Is there a need to supplement the assets with life insurance, and, if so, how much and what kind?

College planning is a big ticket item that requires a large amount of cash over a relatively short period of time. Decisions clarifying the types of expenses, and the amount of time the family is going to provide the student with financial assistance, is essential. Things to consider are tuition, books, and fees, room and board, clothing, spending, transportation and other miscellaneous expenses. Also, how many years of education  will be required – 2 years, 4 years or more? What type of institution will the student attend (in-state, out-of-state, public or private)?

Retirement planning, unlike the other forms of planning mentioned above, requires goal setting. People retire at different times in their life and want to do different things. Your standard of living may change depending on your goals. However, like college planning, many questions need to be answered. When do you want to retire, where do you want to live and what do you want to do? The final question of how do you get there is the planning process.

Asset preservation is the result of good estate planning. Without the proper mechanics in place, the government, not the family, may end up with the bulk of the estate assets. The government can also dictate what happens to the estate. Further, other individuals may ultimately receive the assets without a proper plan. Trusts, wills and appropriate titling of assets are all ways to achieve desired asset preservation results.

Setting goals in any of the planning areas mentioned requires asset allocation monitoring. Cash, cash equivalents, income or growth, bonds, stocks, taxable or tax exempt are all considerations for on going asset allocation monitoring.

If any or all of these areas are of concern to you, we want to help. Developing and monitoring a plan is a work in progress that will grow and change with your needs. As with any goal setting activity, a plan certain is the first step to measure achievement. Our expertise and experience can help you find financial security. Call us today to learn more about the financial planning process.