Setting financial goals

Put Your Future in Order with a Financial Plan
Whether it’s a new home, a child’s education or a secure retirement,most people know what they want out of life. However, the individuals most likely to achieve their goals are those who have developed and implemented a financial plan.

What is a financial plan?
A financial plan typically evaluates your current monetary situation and develops strategies for meeting the cost of your long-term goals. A well-constructed plan covers all aspects of your economic life including investments, insurance, tax, retirement, estate planning and cash management.

Long-term investment strategy
A central component of any financial plan includes a long-term investment strategy that will help you accumulate the capital for meeting your goals. CPAs say that your allocation of investments among different classes — equities, fixed income and cash and cash equivalents — can have a greater impact on your success than the actual investments you choose.

Insurance coverage is a must
A financial plan also should consider your family’s ability to maintain its present standard of living in the event of untimely death or disability. With adequate coverage, loss of income due to death or disability should not necessitate major lifestyle changes. It is also important that your financial plan reflects adequate protection against losses resulting from damage to or loss of your home and personal property, including your cars.

Tax planning
While taxes should not drive your financial decisions, tax planning is important. To be most effective, a comprehensive financial strategy should include a year-round approach to making the most of various tax-savings opportunities, including tax-deferred and -favored investments, income shifting, effective use of deductions and credits, and managing debt.

Estate planning
For many people, planning for a financially secure retirement is a top priority. In developing your financial plan, it’s important to estimate how much money you will need to support the lifestyle you envision and decide how you will accumulate these funds.

Death is an eventuality that every financial plan must address. Estate planning assures the appropriate transfer at death of all assets you own. It also makes certain that you are utilizing the appropriate techniques for minimizing your potential liabilities and expenses and preserving your wealth for future generations.

Budgeting
Cash flow management encompasses everyday strategies for budgeting, managing debt and building an emergency cash reserve. An analysis of your cash flow shows, for better or worse, how you earn and spend your money. You can use this information to adjust your expenses to cover immediate needs, while investing for long-term goals.

Review your plan annually
Developing a financial plan is an ongoing process. CPAs recommend reviewing your plan at least annually and more often if there are major changes in your life, the economy or tax law.