From Goals to Action: Crafting a Personalized Financial Plan

September 22, 2023

by Eric Sheldon

When it comes to financial well-being, a one-size-fits-all approach simply doesn’t work.

“Personalized financial planning is the key to long-term stability and wealth accumulation,” informs Eric Sheldon, CPA. “With a tailored plan, you can align your spending, saving, and investment strategies with your unique goals and financial situation.”

Crafting a Personalized Financial Plan

Here’s how to craft a customized plan, along with some examples to illustrate key concepts.

Assess Your Financial Situation

The first step is to take stock of your current finances. Make a list of all your assets (bank balances, investments, real estate, etc.) and liabilities (loans, credit card debt, etc.). Your net worth is the difference between the two.

Example: Sally has $10,000 in savings, $5,000 in a retirement fund, and owes $3,000 on her credit card. Her net worth is $12,000 ($15,000 in assets – $3,000 in liabilities).

Define Your Goals

Specify what you wish to achieve both in the short term (next 1-2 years) and long term (5-10 years or more). Your goals could range from buying a home or car to saving for retirement or a child’s education.

Example: John wants to buy a car in two years and aims to save $20,000 for the down payment.

Develop a Budget

List your income and expenditures to figure out how much you can afford to save or invest each month. Always account for unexpected expenses by setting aside an emergency fund.

Example: Emily earns $4,000 a month and spends $3,000 on bills, groceries, and other necessities. She can potentially save or invest $1,000 per month.

Create an Investment Plan

Based on your goals and risk tolerance, formulate an investment strategy. If you’re saving for long-term goals like retirement, you might opt for riskier, higher-yield options. For short-term goals, safer investments are more suitable.

Example: Emma, aged 35, wants to retire by 60. Considering her risk tolerance and time horizon, she allocates 70% of her investment portfolio to stocks and 30% to bonds.

Monitor and Adjust

Revisit your financial plan at least annually or whenever there’s a significant change in your life circumstances. Make adjustments to reflect new goals or changes in income.

Example: After getting a job promotion, Alex sees his monthly income increase from $5,000 to $6,000. He decides to adjust his savings rate from 20% to 25%.

Crafting a personalized financial plan isn’t a one-off task but a continuous process. As you go through different stages in life, your goals, needs, and risk tolerance will change. Regularly updating your financial plan ensures that you remain on track to achieve your objectives.

You don’t need to tackle this alone. Give me a call to help you formulate and update your plan as stages in your life change.

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