Financial Planning 101

Financial Planning 101

June 08, 2022
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Understand the Basics of Creating a Financial Plan

Financial planning addresses a person’s current circumstances and long-term wealth objectives, along with ways to work toward those objectives. Learn what a financial plan contains and why it can be important for shaping your monetary future.

A complete financial plan contains many elements that include a retirement strategy, long-term investment plan, tax reduction strategy, risk management plan, and estate plan. A financial professional helps you create, monitor, and adjust your financial plan, with the goal of maximizing its effectiveness and relevance as your life evolves.

Begin with your net worth. The first step in creating a financial plan is to assess your net worth, which equals what you own (your assets) minus what you owe (your liabilities). Assets might include your home, vehicles, savings, investments, retirement accounts, and whatever else you own. Your liabilities encompass student loans, credit card balances, mortgages, car loans, and other debts. One of the plan’s primary missions is to help you maximize your net worth and pursue a comfortable retirement.

Calculate your cash flows. Your plan requires you to know where your money comes from and where it goes. In effect, this is your budget, and it documents how much you spend each month on necessities, luxuries, investments, savings, and debt repayment. You can use your credit card and checking account statements to develop your spending history. If you have seasonal expenses, average them over a 12-month period. Carefully categorize your expenditures to create the most accurate picture of your cash flows and how to improve them through a combination of increased income, debt reduction, less spending, and higher savings.

Consider your priorities. Your financial plan should closely align with your priorities, both in your current spending and your long-term wealth formation. An important focus should be controlling your financial risk with tools like disability and life insurance, liability coverage, property insurance, and even trust accounts to shield your assets. Risk is also key to your long-term investment goals, which should balance your risk tolerance and capacity. Other priorities can include reducing your taxes over your lifetime and arranging your estate plan to protect your heirs.

Your retirement plan is fundamental. Whatever your priorities are, you need a strategy to create a nest egg that will provide you with the retirement income you require. The plan should project your monetary needs for your entire retirement and the means to fund those needs. Maximizing contributions to retirement accounts such as 401(k)s and Individual Retirement Accounts (IRAs) are typical for funding the plan’s foundation, augmented with other considerations like annuities, cash-value life insurance, your current investment portfolio, Social Security benefits, and the property you acquire.

Financial planning helps reduce stress. Whatever your circumstances, having a concrete plan to address your current and future economic challenges is much better than simply worrying about them. My job is to work with you to create a financial blueprint that aims to satisfy your goals and then adapt the plan to your changing needs. Call me today to start the process.

Wherever your goals take you, we can help you get there. We help our clients to navigate these and other important decisions that impact their economic future.

Click the link below or give us a call today at 914-533-4050 for a no obligation consultation.



Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. LPL Financial and GrandView Insurance & Financial Services LLC are separate entities.

This material was prepared for Chris Larkin and does not necessarily represent the views of the presenting party or their affiliates. This information has been derived from sources believed to be accurate. Please note—investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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