Financial Planning

Do I Need Personal Financial Planning?
by Dwight Wanken

No matter how much money you make, it pays to keep on top of money coming in and going out. Even if you do a good job of that, there are important times in your life when talking with a professional adviser makes sense.

Almost every major life event - finding or losing a job, getting married or divorced, having a baby, buying a home -- is likely to have a major impact on your finances. A new job may mean you are making more money -- no problem there as long as you know the best way to invest it. Getting married may mean you have a second income to count on, but now you have someone counting on yours as well. Buying a house means you have to come up with a hefty sum of cash for a down payment, get used to monthly mortgage payments and meet the expense of house repairs.

Let's look at what happens if a baby comes into your financial picture. First, medical bills need to be paid, so having good medical insurance is important. Few insurance plans cover everything, so you'll need to have a cash reserve to cover deductibles and extras, not to mention the furniture, clothing and sundries you'll need when the newborn comes home.

With a new addition to the family, you'll want to make sure that the entire family (baby, too) is protected if something should happened to you -- that means reviewing life and disability insurance to be sure it's adequate for your new responsibilities.

There's the future to start thinking about, too. Will your child go to college? If so, the College Board estimates that secondary education costs are rising 7% to 8% annually, a rate much higher than the rate of inflation. To afford the average $7,000 total costs for a state university, you need to start saving $195 a month. Wait until your child is 7 years old and the monthly amount jumps to $240! So, it's smart to put away a little sum each month.

What can you do to accommodate new strains on your paycheck? How can you meet all of your new responsibilities? With an important financial goal (such as educating a child) you'll want to work with a generalist -- a financial planner. A lot of professionals specialize in areas such as taxes or stocks, but a financial planner helps you understand the "big picture." A qualified financial planner can help you sort through your current financial situation, help you set short- and long-term goals and objectives, then present a "blueprint" designed to show you how you can meet your goals while staying within your means.

There's nothing more certain than change. And just as you learn to adapt to the changes life throws your way, you can count on things changing with your finances as well.

When Was Your Last Financial Checkup?
Nearly everyone has heard their doctor preach, at one time or another, about the need for routine checkups. Yet, how often do you consider the need for a review of your personal finances? By asking yourself the following questions you may determine that the time has come for a financial checkup.

·                          Do you have financial goals? If so, are they in writing and do they include deadlines?

·                          Is your debt under control? Do you pay off your credit cards each month?

·                          Have you reviewed your investment portfolio recently? Are you comfortable with the level of risk associated with your current investments?

·                          Are you satisfied with the rate of return that your investments are generating?

·                          Have you started a retirement fund yet? If so, will your current rate of savings provide an adequate fund to meet your future retirement needs?

·                          Have you reviewed your tax situation recently to see if there are ways to reduce your tax liability?

·                          Have you started a savings program to meet the cost requirements of your children's college education? If so, will your current savings rate be adequate given the effects of inflation and rising tuition costs?

·                          Have you reviewed your life insurance coverage recently? In the event of an untimely death, will your current policies provide adequately for your spouse and/or children?

If you are not satisfied with your answers to any of these questions, contact your financial advisor today. Together, you can work on getting your finances on track.