How to maintain Strategic Financial Plan
What is Strategic Financial Planning?
Financial planning allows you to assess your present condition and plan for your financial future in life so you don’t make the same mistakes you made in the past. You may have more control over your finances by creating a strategic financial plan. You make money work for you rather than the other way around.
Strategic financial planning is, by its nature, forward-looking. What counts is where you are now and what you will do in the coming months and years. That said; there’s good reason to pause and take a look over your shoulder to see how far you have come. Why? Because taking stock of what you have achieved so far can spur you on to even greater things in the future.
Aside from congratulating yourself for having taken professional advice and working to a plan, pause for a look at where you’ve come from. It also provides an opportunity to review your current circumstances. Even the best laid plans need some tweaking to make sure they are optimised for the next few years.
Don’t have a strategic financial plan in life? In that case, it is well worth looking at what you may have missed out on and deciding to take action and do something positive about it.
Has compounding been working for you?
Much of our future financial planning, particularly financial security, relies on regular savings coupled with the power of compound interest. For example, if you set up a savings plan two years ago with an initial deposit of $10,000 plus weekly contributions of $100, and assuming an after-tax return of 6% per year, by now you will have earned $1,892 in interest.
Underwhelmed? If you’d had that same savings plan running for 10 years, the interest compounded to a more impressive $27,200, saving you a nice nest egg of $89,000. Keep going and the interest component will continue to accelerate.
Maybe you have done better in your financial planning than that, increasing your savings as your income has increased. But if instead you are thinking about what might have been, remember that the sooner you start, the sooner you will reap the rewards.
Are you protected?
A strategic financial plan is about more than savings. Protecting what you have is critical to your family’s security.
Over the years, have you enjoyed the peace of mind of knowing that your loved ones would have been financially secure if you had died or been unable to work? Now may be the time to review personal life insurance and start financial planning. As children become independent and savings grow, you may find yourself paying for insurance you do not really need. Conversely, if your family is growing or you have taken on more debt, maybe your life insurance needs a boost.
Where to from here?
So, how do you feel about the last five, ten, or twenty years? Can you pat yourself on the back, or do you feel like giving yourself a kick in the pants? Are you glad you took advice and started financial planning, or regret that you did not?
Whether it’s time for a review and a tweak or laying the foundation of a brand new plan, as a professional financial adviser, we are ideally placed to help you make the most of the coming years and decades.
