BEST
PRACTICES

BEST
PRACTICES

SET MEASURABLE GOALS

  • Understand the effect your financial decisions have on other financial issues.
  • Re-evaluate your financial plan periodically.
  • Start now – don’t assume financial planning is for when you get older.
  • Start with what you’ve got – don’t assume financial planning is only for the wealthy.
  • Take charge – you are in control of the financial planning engagement.
  • Look at the big picture – financial planning is more than just retirement planning or tax planning.
  • Don’t confuse financial planning with investing.
  • Don’t expect unrealistic returns on investments.
  • Don’t wait until a money crisis to begin financial planning.

HOW TO MAKE FINANCIAL PLANNING WORK FOR YOU

You are the focus of the financial planning process. As such, the results you get from working with a financial planner are as much your responsibility as they are those of the planner. To pursue the best results from your financial planning engagement, you will need to be prepared to avoid some of the common mistakes by considering the following advice:

Set measurable financial goals.

Set specific targets of what you want to achieve and when you want to achieve results. For example, instead of saying you want to be “comfortable” when you retire or that you want your children to attend “good” schools, you need to quantify what “comfortable” and “good” mean so that you’ll know when you’ve reached your goals.

Understand the effect of each financial decision.

Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child’s education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated.

Re-evaluate your financial situation periodically.

Financial planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your long-term goals.

Start planning as soon as you can.

Don’t delay your financial planning. People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.

Be realistic in your expectations.

Financial planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your financial planning results.

Realize that you are in charge.

If you’re working with a financial planner, be sure you understand the financial planning process and what the planner should be doing. Provide the planner with all of the relevant information on your financial situation. Ask questions about the recommendations offered to you and play an active role in decision-making.

Read answers to common questions about financial planning.