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Money Talk-
A weekly posting of stock market updates
and events about wealth management, financial planning, cash flow
management, etc.
Financial Planning on a Budget
by
Kevin Jarchow
Lead Wealth Manager
West Michigan Wealth Management, LLC
I’ve
been a financial planner for over 19 years. I’ve noticed that one
comment concerning financial planning seems to be made frequently. The
comment is made regardless of the conversation venue. I could be at a
fund raising event for a local charity, a chamber outing or at my
daughter’s swim practice. I might be talking to someone casually and at
some point they’ll ask what I do. “I’m a financial planner,” I’ll say.
The next comment is the killer. “I don’t have enough money to do
financial planning.” For the sake of being polite, I nod my head in
understanding. 
I’m
not really sure when the need to do financial planning was tied directly
to the possession of current wealth. Some of my most satisfying
financial planning casework has been conducted with clients at the
beginning of their careers. The lights come on, understanding is gained,
and financial peace is within reach of the client.
The
reality is that financial planning is more about asking questions and
putting goals to paper, than it is about money management or investment.
I’m convinced that in our society very few people really take the time
to think about and plan their future. It seems that if we plan and fall
short, we have failed. On the other had, few successful people have
become successful without charting a course. Success favors the
prepared.
To be
sure, wealthy people like Bill Gates, need financial planning. So does
Pastor Pete and Larry the grocery store owner. The only difference
between Pastor Pete and Bill Gates is the set of problems and challenges
each face. Pastor Pete is probably concerned about making sure his wife
and kids are taken care of financially. Bill Gates is more concerned
about charitable issues. Larry might need a career exit strategy and a
contingency plan.
Financial planning also has many faces. For one person, financial
planning might consist of some notes on a legal pad, followed up with a
one page action plan. In this case, the financial plan is most likely
for a recent college graduate with little or no invest-able assets. She
might be looking to set up a monthly investment plan and purchase her
first life insurance policy. She might need some budgeting help and some
credit counseling.
Sam,
on the other hand, might be 52 years old and at a change point in his
life. There’s a joke in my profession; financial independence occurs
when the last kid is out of the house and the dog dies. You laugh. It’s
the truth. Sam, if he’s the typical person in his age bracket, probably
has done little to prepare for retirement other than sock money away in
a company sponsored retirement plan. He may have a 30 year mortgage and
ten years or so left in his career. His financial plan might focus on
risk transfer strategies, like how long term care expenses will be paid.
His investment strategy might have been focused his current investment
asset allocation.
A
third type of person could be the 35 year old single mom with two kids
to support. Jessica has cash flow issues, and investment concerns
(particularly how to get her ex-husbands 401(k) transferred to her IRA).
She wants to make sure that her money strategy is optimized for maximum
results each month. She needs to set money goals for herself. Plus, she
probably doesn’t have enough time in her day to plan.
A
financial plan does not need to be a complicated and costly 400 page
document. There is of course a time and place for such a plan. More
often than not, a financial plan can be drafted for less than $200 and
might consist of about four pages of material. Sometimes, it’s just
about getting a married couple on the same page from a goal setting or
money management perspective. A boat travels easier when everyone is
rowing in rhythm and in the same direction.
Regardless of the form, a financial plan consists of specific goals, a
time period by which to achieve them, a desired outcome and a method of
accountability.
There
is an ancient proverb: “If you don’t know where you are going, any road
will take you there.”
If
you have been hesitant about getting your financial plan done, give us a
call. If you need a second option regarding your investments, please
contact us. If you haven’t had an insurance review in a couple of years,
call to set an appointment.
I’m
sure you will enjoy the time spent with us. Our phone number in Jenison
is 616-457-7526.
The
mission of West Michigan Wealth Management is to assist our clients in
the achievement of financial success and independence. We use a variety
of strategies to help our clients accomplish their retirement; college
planning; legacy planning and asset accumulation goals. We can be found
on the web at
www.WestMichiganWealth.NET.
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