Why do we need to have a financial plan?

There are many things in your future over which you have no control. You can't predict exactly what will happen. You have no control over the economy, government policies, or the medical problems that will strike your family. 

For example:

• We do not know how long we are going to live.

• The government may reduce or even eliminate Social Security benefits.

• Dental and Medical costs increase both with inflation and age.

• The need for drugs increases with age, and they are more expensive and most often uninsured.

• That old automobile won't last for eternity. Nor will your dishwasher, washing machine, hot water heater, computer, and so forth

• No one can predict what future inflation rates will be. A few years of high inflation wipe out the value of a pension, annuity, CDs, bonds, and so on.

• The government can change the income tax rules.

• There will be major repair costs on your home: roofing, furnace replacement, remodeling, painting, and the like.

• You don't recover from severe market drops and can't risk buying after the drop.

Some weak hearted people use this uncertainty as an excuse for not planning for the future. That kind of ostrich mentality is almost surely going to lead to disastrous results. It's better to have some plan than not have any at all.

It could be that financial planning confuses a lot of people. Few of us have any training in investments, economics, insurance, taxes or law. You’ve never heard of Harry Markowitz, you don’t know about the efficient frontier, you have trouble spelling amortization (let alone explaining it), and you can’t explain the difference between a testamentary trust and a springing power of attorney. Yet you’re faced with decisions pertaining to these things. You know you have to make financial decisions, and you are correct in thinking that the wrong decision could cost you and your family huge amounts of money. No wonder you feel as though you’re in over your head. How can you conquer the field of personal finance and obtain financial security for yourself and your family?

The best way is to simply approach the topic of financial planning exactly as you do the field of medicine. After all, you might not be accustomed to working with a financial planner, but you’ve been to the doctor. Approach both in the same way. The planner will ask you questions about your income, expenses, assets and debts. He’ll poke into your real estate, mortgage, employee benefits, and then he or she will get really intimate. If you think taking your clothes off in front of a doctor is awkward, wait till you tell your planner about your marriage and family circumstances, your career, your goals and, gulp, your fears. How do you feel about risk? What’s your need for liquidity? Your answers will enable your financial planner to determine what tests need to be conducted before he or she is able to offer recommendations to you.

If you hesitate delegating such responsibilities to the expert, well, that’s exactly how you work with your physician, isn’t it? And the best part about this process is that you are the expert, too: You are the expert on your symptoms; nobody knows your symptoms as well as you do. You know about your income; you know how much you spend; you know what’s going on in your family; you know your goals; and you know what’s concerning you. You know where it hurts. Stop right there because that’s all you need to know. You don’t need to know more about money than you do about pharmacology.

And if you’re worried that your financial planner will make bad recommendations, well, that’s what second opinions are for.

You see, you know a lot more about the financial planning process than you thought. Call us for a financial physical today.

Procrastination is the greatest obstacle to success. Goals won't do you any good and financial problems won't go away unless you take action. We can help by providing you with easily understood recommendations and specific instructions for implementing a plan, which will enable you to reach your goals and solve your financial problems.

Call us today at (540) 318-6768 or inquire to find out more about how a fee only financial advisor at Sunrise can help you with your financial and investment needs.