Good planning is required for your financial journey. It’s unlikely to be smooth without unexpected events requiring a change in plans.
We believe a personal financial roadmap is the first step in the planning process.
Potential Benefits of a Personal Financial Roadmap
Having a financial plan makes it more likely you’ll reach your retirement goals. It can also provide a sense of control that reduces financial anxiety.
If you feel stressed about money, you’re not alone.
One survey found that 70% of Americans cried over something related to their finances.
The survey found that money- especially debt – is the top stressor for most Americans.
Another survey found that many Americans struggle to stick to their monthly budgets, have difficulty paying their student loan debt, and believe they may have to reduce their standard of living in retirement.
One survey found that 83% of those with a financial plan felt better about their finances after just one year.
Having a financial plan can alleviate stress and help you plan for retirement.
A financial plan can provide a framework for making better financial decisions in your personal and business life. You can make more informed decisions by having a detailed understanding of your current financial situation and long-term goals and by having strategies in place to achieve them.
A financial plan can help you prioritize your spending, invest your money wisely, and save for retirement or a child’s education.
With a financial plan, you can track your progress over time and adjust your strategies to ensure you stay on track.
One survey (discussed here) found that 65% of those with a financial plan felt financially stable, compared to only 40% without a plan.
This gap was more significant when participants were asked if they felt “very confident” they would reach their goals. 54% of those with plans answered in the affirmative, while only 18% of non-planners did.
You can start the planning process with small amounts of money and begin to budget and save. According to Charles Schwab, doing so can have a “profound impact” on improving savings.
One survey found that those with written plans have better financial habits and more positive outcomes. According to another study, those with a written plan are two and a half times more likely to save enough money for retirement.
Better financial habits
Americans with a financial plan have healthier money habits than those without.
They are more likely to have an emergency fund, be aware of fees and investment costs, regularly rebalance their portfolio, and have no debt.
Achieve financial goals
A financial plan will define your goals and tell you how much money you need to achieve them.
Typical goals might include increasing your savings rate, paying down or eliminating high-interest debt, and being sure you have adequate life and disability insurance in place to protect your family.
With this information, you’ll be less likely to spend the funds necessary to reach your goals before you reach them.
Part of financial planning is preparing for the unexpected, like a health crisis, dealing with natural disasters, or losing a job.
Because an emergency fund is built into your plan, 65% of planners reported having an emergency fund, compared with only 33% of non-planners.
Building a financial roadmap involves:
- Goal setting
- A spending analysis
- A budget
- A savings plan
- An emergency fund
- Managing debt
- Having adequate life and disability insurance in place
- Funding your retirement
- Investing in retirement and non-retirement accounts
- Creating an estate plan
Building a financial roadmap is an ongoing process. You should review and update your plan regularly as your financial situation changes.
Consider retaining a financial advisor
A financial advisor can provide helpful guidance to the financial planning process by providing insights into those areas of your financial life that require more attention, like cash flow management and tax planning. They can also help you plan for the long term and assist in researching and comparing different investment options and strategies to determine what’s most suitable for you.
A financial advisor can also make investment recommendations and advise you on asset allocation, the importance of global diversification, rebalancing, tax-efficient withdrawal strategies, and tax loss harvesting, where appropriate.
At Allied Integrated Wealth, we are both a financial advisor and a certified public accountant. We assist clients with all aspects of their financial lives, including planning and investments.