This post was written by Anjali Jariwala, founder of Financial Investment Tax Advisors. Anjali and I became friends after meeting at the XYPN conference and I asked her to write some thoughts on financial planning as a guest topic for this site. Without further ado, take it away, Anjali!
Financial planning is one of those things that most people wouldn’t mind having, but they don’t always know when they should look into it.
What if I told you that the best time to start your financial plan was yesterday, but the next best time is today? Of course I would say that. I am a financial planner after all. Even so, I honestly believe that all people have the potential to benefit and thrive with a financial plan and here’s why.
When you understand how to save, invest, spend, preserve, and grow your money, you are able to direct your money where you want it to go.
Here’s what is typically covered in a financial plan and why you’re going to want it (if you don’t have one already)!
The Workings of a Financial Plan
- Your Financial Goals
Financial planning is results in a different story for each person. Starting with a clear vision of what you want to achieve with your financial planning efforts is the first step. Knowing what you want to accomplish financially in your lifetime is only just the beginning.
- Where You Are Today
A good plan isn’t complete without uncovering exactly where you are today, financially. This will include an overview of your assets, liabilities, income, and debt so your financial advisor can determine your net worth. From here, you and your advisor will have a good baseline to work from.
Most experts will tell you that it’s hard to preserve and grow your wealth if you’re not investing. That means delving into stocks, bonds, mutual funds CDs, and ETFs. Keep in mind there’s an inherent risk that comes with investing, so ease in gently and never go it alone. Get advice!
Diversification prevents you from investing too much money in any one area. A financial plan will spread your money around into different investment vehicles so if one type of investment doesn’t perform well on a given day, month or year – you have others that do and counteract any losses to keep you on a smoother ride to retirement.
Speaking of retirement, another important aspect of your financial plan is preparing for your eventual retirement. Honestly, the earlier you start the better considering how much more time you have to allow your money to grow! A financial plan will absolutely focus here and help your steps to the retirement of your dreams.
- Tax Planning
There’s another aspect of tax planning, and that’s how to avoid certain types of taxes like the Capital Gains Tax, the Gift Tax, Estate Tax, and more. Your financial advisor does not prepare taxes for you; however, he does look for legal ways for you to reduce your tax exposure as much as possible and can do so by introducing different investment vehicles into your financial planning strategy.
What Else Do You Want to Know?
As you can see, a financial plan is a tool that can help you clarify your money goals and get on track to reach them. Doing this sort of in-depth planning is probably best with a financial planner who can walk you through the process and help you do what’s necessary to see it through.
Getting good, sound advice on how to manage your finances is always a good investment!
About the Author: Anjali Jariwala is the founder of Financial Investment Tax Advisors, a fee-only financial planning firm serving clients across the United States. Young professionals who are ready to build wealth are often met with obstacles from the very industry that should be helping them. FIT Advisors is a trustworthy alternative to the status quo. We serve physicians and business owners in the wealth accumulation stage as their financial life coach.