Creating a Successful and Achievable Financial Plan
A personal financial plan gives you the comfort of knowing that you are taking steps to ensure the future you want.
A LOM private financial adviser will work with you to create a plan to enhance your long-term economic success and security. Your plan should reflect your goals, needs and tolerance for investment risk.
5 Steps in Building a Successful Financial Plan
These 5 steps are designed to help you get started. They will help you determine where you are now and where you want to be in the future.
- Personal Profile. Preparing a personal profile is the first step of any financial planning process; we collect personal details of each family member, anticipated dates for attending college, retirement and even life expectancy.
- Setting Goals and Objectives. The foundation to any sound financial plan is setting realistic and achievable objectives. These may include buying a home, going on vacation, saving for college, and saving for retirement.
- Risk Tolerance vs. Time Horizon. Understanding how you react to market fluctuations and determining your investment duration are vital to successfully achieving your goal. For investment allocations examples visit LOM’s Asset Management page.
- Recommendations and Implementation. Your financial plan should confirm that your goals are achievable, and appropriate recommendations will help define what you need to do to ensure that you reach these goals. After suitable recommendations have been agreed upon, it is time to implement your strategy.
- Follow-up and Annual Reviews. This is critical to ensuring you maintain a clear focus in order to succeed.
Key Elements to Getting the Most out of your Financial Plan
- Cut costs to create discretionary income. In order to invest, you need to squeeze additional money from your income each month. Sticking to your budget will help you do this. For a budget example download our Budget Worksheet.
- Create an Emergency Fund. Most experts recommend you maintain at least three to six months worth of income in an accessible account should you unexpectedly lose your job, become injured, or even perhaps look after an elderly family member and you are unable to work.
- Outpace Inflation. You need to invest money enough to beat the effects of inflation over the long term.
- Minimize Taxes. Like inflation, taxes decrease the value of your income. That is why it is important to understand which investment vehicles are appropriate for which goals.
- Diversify. A sound rule for all financial plans is to diversify your invested holdings. Spreading your assets among many different types of securities helps ensure you will not lose your entire nest egg in one investment.
- Work with a Professional. Whether you are new to investing or experienced in selecting your own strategy, dealing with a professional who is educated and experienced in giving sound financial advice is the final element in creating a successful financial plan.
Achieving financial health is learning what really drives you when it comes to money and how money can help you achieve your dreams in life. Your attitude toward money will determine how much money you need, and how hard you are willing to work for it. Setting a financial strategy will help achieve your goals and hopefully enable you to live the life you have always wanted.
It is never too early and it is never too late to create a sound financial plan. Just ask your financial adviser how LOM Asset Management can help you.