Broker Check

Building a Financial Plan

December 20, 2020

Hey Everyone! Today we are going to discuss some financial considerations to review annually and especially during an economic crisis. The first consideration is to track your spending. People are often shocked when they see where their money is actually going. Start by looking at your bank and credit card statements for at least three months and record your expenses on a worksheet. 

Number two, make a spending plan. If you are spending more than you have coming in or you aren’t saving enough to reach your goals, you will need to reduce some of your expenses. Like a diet, a budget is only good if you stick to it. 

Number three, check your insurance coverage. Make sure you not only have enough auto and homeowners or renters insurance but also consider an umbrella liability policy especially if your assets exceed the liability coverage provided by your other property and casualty policies. See what coverage you get for disability and life insurance from work and social security and purchase supplemental coverage if you need more. If you’re in your mid 50’s and 60’s and have $200,000 to $2,000,000 in assets outside of your home, you may want to consider purchasing long term care insurance. 

Number four, update your estate planning documents. Draft an advanced healthcare directive and a durable power of attorney to make health and financial decisions respectively if you’re incapacitated. In addition to who inherits your assets, you’ll also want to designate who could become the guardian of your minor children. Also check to see the beneficiaries on your retirement accounts and life insurance policies are up to date. You might also want to hire an estate planning attorney to at least review and update any documents you do yourself or to draft a trust if you still have a lot of assets that will pass through probate. 

Finally, build up an emergency fund. Ideally, you’ll want enough in cash reserves to cover necessary living expenses for at least 3 to 6 months. These are just a few of the many things we consider for our clients when building and maintaining a comprehensive financial plan. Please call our office today to get started on your financial plan.