The Financial Planning Paradox

Talk about irony!  Some people will spend months planning a vacation or wedding yet be unwilling to commit even a couple of hours to financial planning.  It’s ironic, because weddings and vacations, while important, are transient events, whereas financial planning (or lack of planning) may have a profound impact on our present and future lives…as well as the lives of our loved ones. 

When we consider the scope of our financial goals and activities, the number can easily exceed $1 million for many families.  Moving through our lives, we typically invest in one or more personal residences, provide for our children’s education, and prepare ourselves for a secure retirement.  We also deal with “normal” living expenses and other possibilities such as funding a business, caring for aging parents, and purchasing a second home. 

Needless to say, all of the above may also involve significant income and/or estate tax implications.  Risk must also be addressed, thus leading to consideration of risk management tools such as disability, life, and long-term care insurance. 

Sound daunting?  It is, and that’s why so many people avoid or procrastinate when it comes to financial planning.  

Yet planning presents us with a wonderful opportunity to analyze our personal financial situations and to exercise some measure of control over our lives.  

How do you get started?  First, identify your financial goals.  Those goals should address the following areas: 

  • Preparing for retirement,
  • Estate planning,
  • Day-to-day finance, including debt management,
  • Risk management (life, disability, and long-term care insurance),
  • Emergency cash reserves,
  • College funding, and
  • Eliminating or minimizing tax liabilities. 

Second, work with a qualified financial planning professional.  Such an individual will help you identify and prioritize your goals.  He or she will also work with other members of your team (investment manager, estate planning attorney, accountant, and insurance professional).  As a group, these individuals will create a coordinated plan that will move you toward your financial goals. 

Last but not least, get started today.  Execute the plan. 

As the old saying goes, make a plan…work a plan!


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