Personal financial planning can be defined as a process of determining an individual’s financial goals and priorities in life. Financial planning includes taking resources and current lifestyle into consideration and creating realistic plans to meet those goals. But only 31% of American financial decision makers in families say they have a comprehensive financial plan either on their own or with professional help.
As Shawn Landis, a senior advisor at HCR Wealth Advisors, said, financial planning is a journey, not a destination. “It’s more important than ever to start planning your finances earlier because social security may not be around in 30 years or be as impactful.”
To help in this regard, it is important to have a financial plan so that you can structure your investments properly and have professionals manage them. Every decision regarding your finances can and should be monitored if a suitable plan is developed in advance.
Financial Planning Fallacies
Many people think that financial plans are only for people who are rich. However, a comprehensive financial plan can benefit people at all income levels. HCR is dedicated to providing financial and investment strategies to their clients. The wealth management firm integrates the investments, retirement plans and financial targets into one comprehensive strategy that everyone can understand and use.
But only a few people have plans that would cover even a part of their finances; only 35% of people have a plan to save for emergencies. Also, only two-thirds have a plan for retirement, a child’s education or a down payment on a house. Given that comprehensive financial plans benefit everyone, even people with low incomes, it’s a shame that these figures aren’t higher.
How, When and Where to Start Financial Planning
Shawn Landis has been in the wealth management business for 11 years. His main focus has always been financial planning. Although times have changed, the biggest issues people have with planning their finances have remained the same.
The biggest issue regarding financial planning is often the anxiety peope feel regarding money. Will it work in your case? Do you have enough warrant to make it work? Many people are embarrassed about where their current financial situation is.
“The team at HCR helps people work through this anxiety,” said Landis and added, “we help our clients understand that stressing out and avoiding financial planning is completely unnecessary. We help them understand every touchpoint money has on their lives.”
The embarrassment many people feel is normal. According to Landis, many people feel like they don’t know enough or have enough to make a financial plan. These mental factors can get in the way of how people perceive their finances. One of the best ways to learn more about whether and how you qualify for wealth planning is to find the right advisor.
Searching for a wealth advisor that is right for you is critical. Some people ask their friends or family, while others look directly for an accountant or lawyer. Usually, a referral is what makes a difference in the end.
Knowledge is Power With HCR Wealth Advisors
When it comes to HCR financial planners, they are working with their clients on reviews and actions plans. “Most advisors talk the talk but do not walk the walk. But HCR does,” Shawn explains. The difference between HCR financial advisors and the others is that they see the entire process through. “At HCR, we expect our clients to be engaged in the process of managing their welath. Our wealth planners do a good job of having everyone participate because they make it more about the clients and what’s important to them, constantly reviewing things and changing them if needed.”
Jordan Kahn, HCR’s Chief Investment Officer, said that clients often get scared and it is the financial advisor’s job to recognize and combat this. “HCR helps reduce its clients’ anxiety d proactively,” Kahn added. “We can also offer options to clients to help mitigate their financial ris, whichc an also help alleviate some anxiety associated with their finances and their investment portfolio.”.”
At HCR, managing risk is always first. “While many other advisors simply look at the client’s age and where they need to get, we proactively work on the changes that can happen in life,” Kahn explained. According to Kahn, HCR advisors understand that there are tiomes when the market will dip, and this is where our proactive approach can help to address the effects of downturns.
HCR prides on its client-first mentality. “Managing expectations is a great responsibility, but when you know your clients well, you can anticipate how they will react to certain things. We show you all the options and advise you, instead of selling to you,” Jordan concluded.
Save Early and Often
Procrastination is another problem that investors may face aside from feeling anxious about money. If you look at people who are financially successful, you will notice that the many of them have been making smart financial decisions all their life.
That’s why the sooner you start investing, the sooner you will know where you want to go. But the one thing nobody can give you is time. So if you start saving in your 20s, you may not have to save that much. Time can help grow thozse savings. However, the longer you wait, the more you may have to save to get where you want to go financially.
Once again, financial planning is a journey, not a destination. Many people focus on the end goal and never get there. “It’s not about needing a certain amount of money to retire, it’s about making it work for you and finding out what you want out of it,” Landis explained.
Here are five additional benefits of developing a financial plan and saving money earlier rather than later.
- You Will Waste Less Money
Sure, making more money is wonderful, but reducing your spending is the quickest way to increase savings. Understanding your budget and making the commitment to start saving a soon as possible also makes you aware of the cuts you need to make. But don’t worry, everyone has many things they can cut without making a serious sacrifice to their living standard. You just need to identify these things.
- You Will Find Compatible Friends
The earlier you change your spending habits, the more likely you will end up hanging around people who are financially compatible with you. You will also realize that you don’t have to spend a lot of money to enjoy life because you will be doing activities together that don’t require tons of money. People often overlook the importance of surrounding themselves with quality people, and the way we see money can often make or break a friendship.
- You Will Have More Options in Life
When you start saving money early and live below or within your means, you have more options to pursue the opportunities you want. Everyone experiences unexpected gaps in income or career changes during a lifetime. But when you save early, you amass a reasonable amount of money that can allow you to take the opportunities you wouldn’t be able to otherwise. You can’t predict everything in life, but you can plan to make life transitions as painless as possible.
- You Will Be More Confident
Speaking of planning, you should never underestimate the power of knowing you have the assets to get through any problem. If you start planning your finances early enough, you and your family will be okay no matter what. This is especially important as it gives you more confidence to take bold steps at your job. When you’re not afraid of what might happen if you lose your job, you are able to perform at a higher level.
- Your Quality of Life Will Improve
It’s not just you, tight finances makes everyone stressed out. Often, humans tend to deal with stress in unhealthy ways such as eating comfort food, drinking alcohol or even spending more money. This eventually leads to family conflicts because the emotions are high. But this can change with a comprehensive financial plan. Once you understand your spending and start saving money, you will feel more relaxed and the new harmony within your household will add great value to the quality of your life.
Personalization is Key
Think about the last time you shopped online. You were probably provided with recommendations for a product that might interest you based on your order history. Nowadays, financial planning is personalized as well.
For many years, people were provided a plan based on a common set of financial priorities and goals that could apply to most individuals and their families. This usually included establishing an emergency fund equal to at least three to six months of living expenses, making sure you were saving for retirement, ideally in an employer-sponsored retirement plan.
These options are still relevant, but today’s financial plans are shaped more around your unique family needs and household structure. One-size-fits-all is no longer something you should accept.
This is especially important as the definition of the American family has expanded to include single-parent-households, blended families, multigenerational households and others. The evolving economy and political changes have created the need for new strategies and customized solutions. HCR has recognized this need from the start.
According to a survey, nearly half of advisors in the US serve clients with a connection to the special-needs community. One in five Americans will be affected by a special need in their lifetime, and this group has many unique considerations when it comes to financial security. Even with early intervention and significant advances in education, having a child with special needs or a disability creates the need to account for some level of support when creating a long-term financial plan. That’s why a comprehensive and holistic financial plan is one of the best options for your financial future.
Holistic Approach to Finances
Unlike the past, when the basis for a financial plan was formed around the question “How much money do I need to retire?” today, the approach is more holistic and focused on the question “What will my retirement look like?” This includes the timing of when you’d like to retire and the type of lifestyle you’d like to have.
It’s no wonder that the approach to financial planning is always evolving. Take the definition of retirement into consideration. For some people, retirement means working part-time during the transition to retiring completely, while for others it includes additional goals such as financial support for children and grandchildren, minimizing tax exposure and even paying off debt.
Modern financial plans address the shift from accumulating retirement income to achieving financial independence while maintaining the lifestyle you wish to keep. And since the style of retirement is unique to each individual, understanding how to maintain your resources to get you there is an incredibly important step.
The holistic approach includes understanding the unique needs of the client, connecting them with a support network, such as accountants or lawyers, who can help them work on the right strategies.
Technology on Your Side
Just like the holistic approach addresses more needs of its clients, so does the technology. If you expect to walk into an office and have you plan outlined in a spiral-bound notebook, you are wrong. Gone are the days of having little ability to adjust your financial planning needs in real-time considering life events or economic conditions.
Financial planning never ends. It’s a dynamic, interactive and conversational process and technology has helped to get it there. Nowadays, there are many planning tools that have moved far beyond paper statements and stagnant, unrealistic budgets.
Modern wealth planning is all about making living and breathing plans that can be updated, adjusted and completely changed if needed. This makes it easier for the clients to stay organized and make decision based on information. It also creates a more collaborative and proactive relationship with the financial advisors.
Today’s financial planning tools allow people to test multiple scenarios and evaluate them, providing an informed outlook on what’s the best option for the future. And once you get a financial plan and establish what’s possible based on your financial circumstances, you can set the right goals.
However, always have in mind that a financial plan can be influenced by significant life events, health issues, changes in the economy or even a sudden shift in your priorities. Even with the support of technology, your financial advisor will be there for regular reviews that are necessary to ensure your plan is still relevant.
Get the Right Financial Education
While it’s important to start working on a financial plan and saving money as soon as possible, it is also important to stay calm when everyone else is panicking. This can be hard for people who watch TV and listen to buzz on social media. It’s important to understand that networks like to cause panic, but you shouldn’t let yourself get swept away.
One of the best ways is to get as much quality information as possible. Your financial advisor is always a great source of information. Aside from this, you can always do your own research and go to trusted sources such as The Wall Street Journal, Barron’s and the business section of the local newspaper.
Remember that even though you feel like you’re not an expert at finances, this can change if you start doing a little bit every day and understand more than you did yesterday. Over time, you will become smarter and you will be proud of what you’ve learned over the years.
When talking to your financial advisor, ask questions. You have to be willing to ask question when you don’t understand something. Your advisor needs to be open and available to these questions. Also, he or she should have enough patience to answer all these questions because they are critical to your future.
Finally, you will notice how your questions get more complex over time because your knowledge is getting bigger. But don’t worry, a professional wealth advisor should have the suitable information and strategy for you because they will know your needs and situation. So choose wisely and start planning today rather than tomorrow!
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