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Six steps to a solid financial plan

Published 9:26pm Thursday, September 6, 2012

By Mark U. McGahee
Guest Columnist

“Financial planning” is a term that gets a lot of attention today, whether on the Internet, television, radio, in print media, on the golf course or at a table in a Suffolk restaurant. Just the mention of it can seem intimidating. What is it, and is it right for you?

Financial planning is “the process of determining whether and how an individual can meet life goals through the proper management of financial resources.”

That sounds intimidating, doesn’t it?

Once it is broken into parts, it’s not so bad. The process has six steps: assembling your relevant financial information, financial goal setting, figuring out where you stand now, constructing a strategy to help you reach your goals, putting your plan into action and monitoring and adjusting the plan as you go along.

By having a plan, you can understand better how each financial decision you make affects other parts of your finances. An investment or purchase you make today could positively affect your retirement objectives, or it could cause a significant delay in when you can retire comfortably.

Your plan will allow you to evaluate your progress as you move through your career. You can more easily handle the unexpected events along the way, because you have made room in your plan for the unknowns that occur somewhere along life’s path.

There are multiple tools available, including software packages, financial magazines, and self-help books, to guide you if you choose to do your own financial planning. If you do not wish to devote the time and effort in doing your own planning, you may want to consider speaking with a professional financial planner for assistance. A financial planner will utilize the six-step process to help you meet your life goals.

Most people need advice about budgeting and saving, taxes, investments, insurance, retirement, and estate planning. You may want the planner to work with you in all of these categories, or you may decide that you only want help in one or two of them.

Be careful whom you choose, because the government does not regulate financial planners as financial planners. It regulates them by the services they provide. A licensed insurance agent in Virginia is regulated by the Bureau of Insurance at the State Corporation Commission in Richmond. A person who can offer to buy and sell securities such as stocks, bonds, and mutual funds is regulated as a stockbroker or investment advisor by the Securities and Exchange Commission, or by the Financial Industry Regulatory Authority.

If you want to be sure that the advice you are getting is coming from a qualified professional, contact the Certified Financial Planner Board of Standards at 800-487-1497, or visit www.CFP.net for a free brochure, “10 Questions to Ask When Choosing a Financial Planner.”

Mark U. McGahee is a financial planner and specializes in investment and protection planning. Email him at mmcgahee@investorssecurity.net.

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