Everyone has their own set of individual financial goals. Yours may include funding a child’s college education, enjoying a comfortable retirement, purchasing a home, starting your own business, minimizing your tax costs or any combination thereof. But, no matter which financial goals you have chosen, developing a comprehensive financial plan is one of the most important steps you can take toward achieving them.
A comprehensive financial plan offers many significant benefits – 10 of the most important of which are listed below:
1. Americans are living longer, healthier and more active lives than ever before. Many of us will spend nearly as much time in our retirement as we did in our working careers. If you’re looking forward to a lengthy and rewarding retirement, it’s likely that you’ll need significant financial resources. Financial planning can help you make the most of the money you earn during your working years.
2. Higher education costs continue to outpace inflation at a time when the need for a higher education has never been more pronounced. According to the College Board, for the 2001-2002 school year average college tuition costs rose 5.5% to $17,123 at private institutions, and 7.7% to $3,754 at public institutions. By beginning to create your financial plan today, you’ll be better prepared for the educational expenses of tomorrow.
3. More and more Americans are being asked to take responsibility for their own health care. In fact, you may already be choosing your long-term care and disability coverage from a pre-established menu of options and funding all or a part of your health insurance on your own. A comprehensive financial plan can help you meet the increasing cost of medical insurance.
4. Estate taxes can possibly consume as much as 50% of your estate within nine months of your death. Financial planning can result in a larger legacy for your heirs by helping to minimize your estate tax bill.
5. A sound financial plan provides a complete assessment of your current financial status – including your net worth, cash flow and debt management practices. It can also help identify ways to improve your financial situation.
7. A comprehensive financial plan identifies specific strategies and opportunities to let you actively work towards meeting your financial objectives.
8. By examining the amounts and types of insurance that may be right for you, a financial plan can help protect your family, your business interests and your assets.
9. As you work to create your financial plan, you’ll be organizing your financial information, as well as your own personal network of professional legal, tax and investment professionals.
10. As changes occur in your financial and personal situation over time, a financial plan can help you measure the impact of these changes and help keep you on track toward reaching your goals.