Becoming a do-it-yourselfer is easier than ever, thanks to the internet and YouTube. Skills and knowledge, once available only from professionals, are now accessible to anyone with the patience to watch instructional videos. For example, a person could diagnose a problem with their clothes dryer, order the necessary part, install it, and save the cost of an in-home repair. However, there are limits to self-empowerment. One area in which some people may be overconfident is financial management.
There is more to financial planning than setting goals and pinching pennies. There is no quick fix, nor a cookie cutter solution for everyone’s unique situation. Here are four benefits, which may come from working with a financial planner to develop an organized financial plan.
- Discover whether your goals are realistic in the stated time frame
Legendary Green Bay Packers coach Vince Lombardi reportedly once said, “We didn’t lose, we just ran out of time.” Savings plans can work the same way. How long will it take to accumulate enough for the down payment on the house, or to reach the target amount of college savings? The variables are the savings rate, the rate of return on savings, and time. A financial plan provides perspective on integrating savings strategies with savings timelines.
- Understand your liabilities and risks to make informed decisions
What are the chances of dying before meeting one’s financial goals? What are the odds of becoming disabled during a career? How might one spouse afford the mortgage payments if the other spouse dies prematurely? A financial plan will quantify these hazards and provide mitigation strategies, often using insurance plans. Although you can quickly and easily explore quotes for insurance to address some of these risks using our new insurance page, a financial advisor can help you understand how they apply to your specific situation, while considering your other assets and liabilities.
- Measure progress in real time and adjust as needed.
A financial plan includes benchmarks along the path toward your financial goals. If the targets are not being met, a mid-course correction may be required. There are several routine money management mistakes a surprisingly large number of people make. Failure to take full advantage of a company retirement plan is one and paying high interest charges on credit card balances is another. A financial plan helps identify opportunities for greater efficiency in money management and flag the pitfalls, which could undermine the plan. Most importantly, when you meet with an advisor, you designate a time to reflect and adjust, while building a structure for the growth and success of your financial plan.
- Financial wellness is about more than dollars and cents
A financial plan and financial advisor can help reinforce positive behavior patterns, which can lead to building more wealth in the long run. A financial plan exists in the background but helps you be proactive in the present knowing which actions have a long-term impact—actions like building your credit score or contributing to a Roth IRA. In our blog earlier this year, “How a Financial Reputation can Affect Your Retirement”, we demonstrated how improving a credit score could lead to over $300,000 more in retirement.
When you know you are on the right track to reach critical savings goals, you have more energy to focus on the work that makes those savings possible. You can avoid some of the stress associated with wondering how goals will be accomplished when the unexpected happens. Having a financial plan and following through with it takes some of the uncertainty out of life. It provides a feeling of greater control over financial destiny.
The more time you have, the better.
Financial plans are not just for the wealthy—they offer a path to becoming financially secure. They are not just for the young, or for the old, because financial plans address needs throughout one’s lifetime. It is never too late to start, but compounding over time adds up. Even do-it-yourselfers might benefit from a second opinion, and we are happy to share our knowledge or become a full partner in your success. Please click here to meet with an Arvest Wealth Management Client Advisor to learn more.
This content has been prepared by The Merrill Anderson Company and is intended as a general guideline.
© 2022 M.A. Co. All rights reserved.