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Financial Planning for the New Year

Only one in three people spends the time needed to plan for their financial future


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Make 2019 the year you resolve to get your financial life in order. Having a plan in place is crucial to growing your net worth and yet, only 30 percent of Americans say they currently have a long-term financial plan. Most of us plan everything throughout our days including what we’re wearing, what tasks to complete and what we’re having for dinner. Yet, only one in three of us spends the time needed to plan for our financial future – something that will inevitably impact us each and every day going forward.

Planning is extremely important, not only so you can see where you are and where you want to go, but because without a plan, how are you able to track your progress or adjust accordingly? Things can change quickly when it comes to finances, whether it at the macro level – including world events and interest rate variables – or changes that are more specific to you such as an unexpected expense, a job change, buying or selling a home. Having a financial plan will allow you to better monitor how financial variables impact you and how to make the appropriate adjustments for a successful financial future.

PUTTING TOGETHER YOUR FINANCIAL PLAN

Many people put off establishing a financial plan because the process seems intimidating and time consuming. Take it one step at a time. Determine what your No. 1 priority is. Do you need help managing your current cash flow? If so, start by asking your financial professional to help you create a budget. Do you worry about your 401k being allocated appropriately? Ask your advisor for his or her thoughts on your investments and risk tolerance. Remember that while the process may take some time and effort up front, there are few things that will impact your future as much as your financial situation; make it a priority. After your plan is in place, annual edits and updates are typically quick and easy.

ENSURING YOUR PLAN FOCUSES ON YOUR GOALS

Putting a financial plan together should focus on whether you’re getting closer to what it is you are trying to accomplish, not whether you’re out- or under-performing the markets. Investing, specifically, is not only about looking at an algorithm and making investments based off the way you answered a series of questions. Investing is about aligning your goals and your risk tolerance, figuring out what you want for yourself and your family, considering your previous investment experiences and knowledge base, and making decisions that help you get where you are trying to go. Your investment strategy and your overall financial plan should be about consistently reacting to changes in your life and in the market.

REVISITING YOUR PLAN

Revisit your plan often and try to do a full financial review annually, and any time a “major” change occurs in your life (e.g., changing jobs, getting married or divorced, having a new child, retiring, receiving an inheritance, selling or buying property, etc.). As we continue to see technological advances, seeing and changing your portfolio is becoming easier than ever.

A financial plan can keep you organized, help you stay true to your goals and allow you to make easy adjustments. Knowing where you are and where you want to go is the best way to help you get there.


Sara Hemmings is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Loveland. She can be reached at 970 776-5506 or Sara.Hemmings@morganstanley.com.

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