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Developing a Financial Plan: Frequently Asked Questions
A financial plan connects your money to your goals. These answers explain how to get started and what a good plan includes.
What is a financial plan?
It is a written roadmap that covers your income, spending, savings, debt, insurance, investments, taxes and estate arrangements, organized around what you want to accomplish. It is not a one-time document; it should be reviewed and updated as your life changes.
Where should I begin?
Begin by listing your goals, such as buying a home, paying for education, starting a business or retiring at a certain age. Then take stock of where you stand today: assets, debts, income and expenses. The gap between the two shows what you need to do.
What are the main parts of a plan?
- Cash flow and budgeting
- An emergency fund
- Debt management
- Insurance for life, health, disability, property and liability
- Retirement and investment strategy
- Tax planning
- Estate planning, including wills, beneficiaries and powers of attorney
How much should I keep in savings versus invest?
Money you may need within a few years generally belongs in safe, accessible accounts. Money for long-term goals can take more investment risk, since it has time to recover from market declines. Your own comfort with risk matters as well as your timeline.
How does tax planning fit in?
Taxes affect nearly every financial decision, from which account to contribute to, to when to sell an investment. Coordinating the plan with your tax situation can reduce what you owe over time, and it avoids choices that look good on paper but create an unexpected tax bill.
How often should I update my plan?
Review it at least once a year, and after major events such as marriage, a new child, a job change, an inheritance, a move, the sale of a business or a health issue. Rebalance investments and update beneficiaries as needed.
Do I need a professional?
Not everyone does, but an outside view can catch gaps and keep you on track. A CPA is especially useful for the tax pieces. Be sure that anyone providing investment advice is properly registered; you can check on investor.gov.
We can help you pull the pieces together, so please explore our tax planning services or reach out to schedule a meeting.
This article is general information, not tax, legal or investment advice for your specific situation.