Financial Planning: Find Your True North

by | Oct 20, 2021 | Financial Planning

Think about a long road trip you’ve always wanted to take and how you might plan for it. You will probably ask yourself some basic questions like: How long will the drive take? Will there be multiple stops along the way? What route should you take? What’s the plan for an emergency like a flat tire or bad weather?

In the same way you might plan for an epic journey, you should plan the path you will take to achieve your financial goals. Without the right financial strategy, you may not know if you’re sailing in the right direction or if your finances are lost at sea. On the other hand, with the right financial plan, you can have confidence that your actions are aligned with your goals, your beliefs, and your purpose – and that’s what we mean by Finding Your True North.

Why is Financial Planning Important?

A financial plan is important because it details your financial goals and your strategies for achieving them. Without a plan, you risk redirecting your financial future from one that is predictable and established to one that is unreliable or even a dead end. Working with an advisor and having a written financial plan can help you prepare for unexpected circumstances on your life’s journey.

In a recent study, 67% of individuals who work with a financial advisor reported feeling prepared for a recession versus only 38% for those who do not have an advisor. This means working with a financial advisor can almost double your chances of feeling prepared for an economic downturn – that equates to more peace of mind.

Your financial plan should be customized to meet your specific needs.

Your financial plan should be comprehensive and individualized, so that your personal situation, risk appetite, and expectations for the future are identified. When these are clearly identified, you are able to set realistic, attainable goals and strategies for achieving them.

Just as you plan to reach certain milestones on a road trip, your financial plan should include goals with milestones that you are able to reach along the way. Keep in mind that financial planning is a life-long journey. You will not get from point A to point B overnight but rather through a process of calculated decisions and investments.

Find Your True North by Mapping Your Future

Perhaps you have made significant process in your financial planning journey, or maybe you are just at the beginning of the process. In any event, there are several overarching questions you might consider when it comes to your financial plan: How much emergency savings do I need?  What insurance needs to I have? What type of lifestyle do I want now and in retirement? What will I need to consider for estate planning or end-of-life?

As you gather the answers to these types of questions, you should examine your cash flows to understand exactly how you earn money and where you spend it. Review your banking and credit card statements and create a plan to maximize your earnings, reduce spending, and maximize the cash available for investing.

Monitor Your Net Worth

You should also keep an eye on your net worth to ensure it is trending upward. Your net worth is a simple calculation of the value of your assets minus liabilities. Assets may include things like your home, vehicles, bank accounts, and investments. Liabilities, on the other hand, may include debt such as credit cards, student loans, mortgages, or car loans.

A good way to analyze these figures is to develop your personal balance sheet and cash flow statement – much like a business. An experienced financial advisor can assist you in creating these reports and they should also help you to determine a starting point for your financial plan – or redirect your financial journey as your situation changes.

Constantly Evaluate Your Goals

Lastly, be aware of your goals for the future. This includes short-term goals like a new car or a vacation as well as long-term goals like retirement or your children’s education. Planning involves looking at the here-and-now through end-of-life, and how your financial situation can impact your family. As you think through your wishes, record objectives that you would like to reach and begin prioritizing them based on timeline and importance to you.

By having a personal assessment of your finances and goals in place, you will be able to create a list of actions that can turn your plan into a reality. However, with so many options for investments and decisions to choose from, it can be helpful to have a guide for your journey. In fact, a recent study shows that 95% of people who work with a financial advisor believe that the advice they receive is worth the investment. So, whether you need assistance planning for retirement or managing your day-to-day budget, a financial advisor can help you chart a course to achieving your goals. Further, the experienced team of financial professionals at Brookstone Wealth Management will help you Find Your True North.

Connect with Brookstone Wealth Management and Find Your True North

Whether you need to create a financial plan or adjust an existing plan to correct your course, it is never too late to meet with a financial advisor at Brookstone Wealth Management. In about an hour, we can develop your Financial Fingerprint™ – a custom wealth management plan that is quick to assembleeasy to understand, and simple to modify as your circumstances change.

With your Financial Fingerprint™ and access to a trusted financial partner focused on coaching, teaching and mentoring, you will have the tools to stay on the path toward your True North. Contact the team at Brookstone Wealth Management today.