5 Steps to a Sound Financial Plan

5 Steps to a Sound Financial Plan

The best way to get rich quickly is to do it slowly. Wiser words have rarely been said, or written. But sometimes, in the rush to achieve our financial goals, we skip fundamental steps that could pave a safer path to financial security.         

Were any of you fortunate enough to purchase shares in Apple when it first came public in December of 1980? Had you invested $2,200 to buy 100 shares then, after stock splits and rising prices, your initial investment would have skyrocketed to more than $500,000 today.

I didn’t do it either. But don’t feel guilty for not making serious bite into Apple. It took 35 years for Apple to get to where it is today and it’s never too late to make up for lost time.

I’m not a financial advisor, so don’t stop reading to call your broker and buy Apple based on past performance alone. But my recent guest on 77WABC’s Sunday night program Mind Your Business is one of the best in the business.

Jonathan Gassman is a co-founder of G&G Planning Concepts, a financial planning firm and one of New York City’s leading wealth management firms. His appearance followed closely on the heels of John Hewitt, CEO of Liberty Tax Service, who gave listeners sound advice to help save money on taxes.

But there are two types of savings. Tax planning enables you to retain more of your earnings, but if you want to build wealth, you need vision to make smart choices with your money.

Building wealth begins with constructing a sound financial plan. How many people actually have financial plans? Not too many, says Jonathan. “Americans, in general, spend more time planning their vacations, where they’re going to go, how they’re going to get there, which is the best airline. They go to Trip Advisor to look for the best hotel rates, but when it comes to handling their own finances, they hardly spend any time on it. We’re only here for a short period of time and we really want to maximize everything we can do.”

So if financial independence and security is a high-priority goal, get going today, with Jonathan’s five-step method:

1) Create a plan for yourself

What are your top five or ten financial goals? Identify them, and then break them down into simple little chunks that you can bite at every day and do something that will help you reach those goals. If saving for retirement is one of them, devise a plan to sock away money out of every paycheck.

2) Put it in Writing

Once you’ve set your goals, put them on paper. If you don’t put it into writing or tell other people, the probability of it happening is next to zero. You’re the leader and you have to be the captain of your own ship. Take that responsibility.

3) Make it Automatic

Set up systematic payroll deductions, or regular contributions to a savings account or retirement plan. Make them a no-brainer. Once you are funding your plan, reevaluate your results quarterly. Here’s where I was, here’s where I am now, here’s where I want to get to. Periodically tweak your asset allocation to fine-tune, course-correct and adjust.

4) Keep it Simple

“It’s always the simple that produces the marvelous,” says Jonathan. Picture a kitchen drawer, loaded with useless “stuff” like dead batteries and pens that long-since ran out of ink. Empty that drawer and start from scratch. Figure out what you have and what you don’t have, and what’s working and what isn’t. Fill in the blanks and throw out the trash that’s hampering you from reaching your goals.

5) Find a Trusted Advisor

Jonathan says he favors a PFS, or personal financial specialist, because they adhere to the highest professional standards, but barring that, find an experienced and trustworthy financial coach or mentor who can help you put those above four puzzle pieces in place, and then explain the various investment products and strategies that will help you advance from “Point A” to “Point Z.”

Bottom Line Action Step: Make a plan that makes dollars and sense for you.


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