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Set It And Revisit Why It’s There

Set it and Revisit Why it’s There

As young professionals with competing priorities and demands, financial planning can feel overwhelming. From daily expenses to buying a new car, getting married, buying a home, having kids, saving for college, growing your business, saving toward retirement, taxes, charitable giving, the list goes on! While it may seem like financial planning is yet another task that you’re not ready to take on, it could be the one that eases the financial burden of life’s other demands. By investing early and starting conversations to educate yourself on financial planning, you can avoid mistakes and behaviors that will cost you money down the line when you may need it most.

The two most common financial planning mistakes are neglect and impulsive action. In other words, avoiding the process altogether or doing anything just to get it over with. The good news is that there are simple ways to avoid these traps.  We “in the biz” call this process creating an investment policy statement, or documenting objectives and next steps. In the construction of your financial “house,” it is the equivalent of laying your foundation.

We in "the biz" scene from The Break Up

As part of your investment strategy, we want to determine acceptable investment risk levels and return expectations given your time horizon, tax situation, liquidity needs and any unique or legal circumstances.

Make sure to write these details down!

We have all heard it, but Dr. Gail Matthews, a psychology professor at the Dominican University in California, actually conducted a study that supports the idea you become significantly more likely to achieve goals after writing them down. In fact, as financial advisors, the most heartening part of the study was that the most successful group not only wrote their goals down, but was asked to articulate the goals, track them and then report on them. Literally exactly what we help members do as advisors!

Once you have a clear investment strategy, it’s time to document and clearly identify action items. Are you going to dollar cost average into the market? Make annual IRA contributions? Increase your 401k percentage each year? How much will you contribute toward the 529 (college) plans? Let’s get this all written down so that you can set clear goals, create next steps, track progress and hold yourself accountable for your financial success.

This exercise and strategy will prevent you from making impulsive decisions in search of returns that conflict with your written goals. Life has a crazy way of changing quickly on us. Revisiting your plan at least once a year will ensure you stay on track to achieve your objectives. Considering making a change to your investments? Pause… Take the opportunity to review your plan and ask yourself if the change you plan on making aligns with your written objectives. You will avoid so many detrimental investment decisions by this simple action.

Having a tangible plan that reminds you why you are invested a certain way will go a long way in preventing the common actions, or inactions, that lead to missed goals and opportunities.

Talk to us today to create a plan and take control of your financial future.

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