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Financial Planning Checkup: 5 Questions You Must Ask Yourself


Financial Planning Checkup: 5 Questions You Must Ask Yourself

Last time we talked about the five questions you should be asking when talking to financial advisors to determine their ability to manage your family’s financial affairs.

Now that you have a financial advisor, it’s time for a financial planning checkup: What questions should you ask to find out whether the two of you are on the right track to meeting your financial goals? 

Your Financial Planning Checkup

1) How will you help me to reach my financial goals?

Reaching your financial goals starts by looking at where you are at today, where you want to be in the future and how you will get there. In other words, you need to have a financial plan.

2) Do I have a plan?

A lot of people think they have a financial plan when in fact; they just have a brief overview of where they are at financially or recommendation on how they should be investing. That is great to have but it’s not a detailed personalized financial plan.

Why is a plan important? Imagine you are taking a family vacation driving across country. Before you start your adventure you will assess where you are right now (location, your vehicle, and your resources) and how you are going to get to your desired destination:

  • Will you need a road map?
  • How will you decide on what routes to take?
  • How much gas you will need?
  • Where you will stop over?
  • What clothes will you need to pack?
  • How much food will you need to bring?
  • How much will this cost?

This is your travel plan. A financial plan is no different; it should tell you where you are today (what you own and what you owe, how you are spending your money or what is coming in and what is going out) and where you want to be regarding your financial goals (savings for your kids’ education, buying a home, paying down your debt, protecting your income, saving for retirement). A financial plan is a road map, or detailed instructions, on what you need to be doing today to reach or achieve your future goals.

3) Will having a financial plan guarantee that I reach my financial goals?

Well, unfortunately, no. Your financial plan is a life-long journey. Unless you are fortunate enough to have a financial life that never has any bumps in the road, you will need to review your plan regularly and make room for life changes, such as family illness, losing your job, forced retirement, or divorce. Life events can’t always be predicted; sometimes you are just plain sideswiped. However, proper planning can help to minimize the financial impact when they occur.

Review your financial plan annually with your financial advisor unless a life event occurs. If something important or unexpected happens in your life, let your advisor know right away and meet soon after to make any necessary adjustments needed to your plan.

4) Is my retirement plan on track to meet my goals?

Retirement is usually the biggest component of a financial plan, as you may conceivably have to pay for 20 or more years of living. If you don’t have a company pension plan or are worried about government pensions, then your personal savings will be responsible to cover the majority of your retirement living costs. Start saving EARLY and save as much as you can!

The closer you are to retirement, the more important it is to keep a close eye on your retirement plan, your long-term goals and day-to-day spending. Even if it’s awkward, you should be able to open up to your financial advisor about concerns you have about whether your job or marriage is secure. Do you need to make plans to care for a disabled child or are there other special circumstances in your life that need to be accounted for in your financial plan?

5) What happens to my plan after I retire?

Planning doesn’t stop once you reached your retirement goals; instead it shifts to retirement income planning which is an approach that will help you to wisely draw down on your savings to sustain you throughout the rest of your life. We are living longer and we want to be sure we have enough money to cover day-to-day expenses as well as the unexpected. How we invest and spend our money in the early years of retirement greatly impacts our financial wellbeing later on. Ask your financial advisor for a retirement income plan as you enter into your golden years to be sure you are on track.

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