Personal Financial Management: Helping You See the Big Picture
By Steven D. Brett, Managing Director, Partner, Marcum Wealth
Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you, and each comes with a price tag attached.
That’s where Personal Financial Management planning comes in. Personal Financial Management is a process that can help you target your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.
Why is Financial Planning Important?
A comprehensive Personal Financial Management plan serves as a framework for organizing the pieces of your financial picture. With a Personal Financial Management plan in place, you’ll be better able to focus on your goals and understand what it will take to reach them.
One of the main benefits of having a Personal Financial Management plan is that it can help you balance competing financial priorities. A Personal Financial Management plan will clearly show you how your financial goals are related – for example, how saving for your children’s college education might impact your ability to save for retirement. Then you can use the information you’ve gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you’ll know that your financial life is headed in the right direction.
The Financial Planning Process
Creating and implementing a comprehensive Personal Financial Management plan generally involves working with financial professionals to:
- Develop a clear picture of your current financial situation by reviewing your income, assets, and liabilities, and evaluating your insurance coverage, your investment portfolio, your tax exposure, and your estate plan.
- Establish and prioritize financial goals and time frames for achieving these goals.
- Implement strategies that address your current financial weaknesses and build on your financial strengths.
- Choose specific products and services that are tailored to help meet your financial objectives.
- Monitor your plan, making adjustments as your goals, time frames, or circumstances change.
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Some Members of the Team
The Personal Financial Management planning process can involve a number of professionals.
Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas.
Accountants or tax attorneys provide advice on federal and state tax issues.
Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death.
Insurance specialists evaluate insurance needs and recommend appropriate products and strategies.
Investment advisors provide advice about investment options and asset allocation, and can help you plan a strategy to manage your investment portfolio.
The most important member of the team, however, is you. Your needs and objectives drive the team, and once you’ve carefully considered any recommendations, all decisions lie in your hands.
Why Can’t I do it Myself?
You can, if you have enough time and knowledge, but developing a comprehensive Personal Financial Management plan may require expertise in several areas. A Personal Financial Management professional can give you objective information and help you weigh your alternatives, saving you time and ensuring that all angles of your financial picture are covered.
Staying on Track
The Personal Financial Management process doesn’t end once your initial plan has been created. Your plan should generally be reviewed at least once a year to make sure that it’s up-to-date. It’s also possible that you’ll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:
- Your goals or time horizons change.
- You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss.
- You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a retirement account, paying long-term care expenses).
- Your income or expenses substantially increase or decrease.
- Your portfolio hasn’t performed as expected.
- You’re affected by changes to the economy or tax laws.
Common Questions about Financial Planning
What if I’m too busy?
Don’t wait until you’re in the midst of a financial crisis before beginning the planning process. The sooner you start, the more options you may have.
Is the Personal Financial Management planning process complicated?
Each Personal Financial Management plan is tailored to the needs of the individual, so how complicated the process will be depends on your individual circumstances. But no matter what type of help you need, a financial professional will work hard to make the process as easy as possible, and will gladly answer all of your questions.
What if my spouse and I disagree?
A Personal Financial Management professional is trained to listen to your concerns, identify any underlying issues, and help you find common ground.
Can I still control my own finances?
Personal Financial Management professionals make recommendations, not decisions. You retain control over your finances. Recommendations will be based on your needs, values, goals, and time frames. You decide which recommendations to follow, then work with a Personal Financial Management professional to implement them.
This material was prepared by Raymond James for use by Steven D. Brett, President of Marcum Financial Services LLC., and Branch Manager of Raymond James Financial Services, Inc. Member FINRA/SIPC. If you have any questions pertaining to this article, please contact Steven D. Brett at 631-414-4020 or by e-mail at [email protected].
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