Sunday, January 23, 2011

Financial planning is not a Wayfarer game!

21 January 2011 by Mike Branham, CFP ?


I've always been a bit of a wanderer. From the day that I received my driver's license, I have enjoyed simply strapping on the driver's seat, and find a new territory. I started to learn some of the back roads in the area where I live, driving through the countryside for hours. Since then I am cruising back roads in remote areas of Northern Minnesota looking for things that I haven't seen before. Guided activities like how do I get in my daily work life, something to explore involved in travel outshines the thought of which could be the final destination.

This kind of wandering is not without its drawbacks. I was lost, blocked and high centered on registration paths, miles from home. As a teenager, a friend and I slid into a ditch in the midst of winter on a forest road and thought we could spend the night, finally getting pulled out, as the Sun went down. A solo trip on another way remote vehicle weight was too much for some ice on a big puddle of handle, and I ended up knee deep in degree 33 water pulling "iceberg" out from under your car before a request for help given relief. Obviously none of these occurrences resulted in disaster, and none have dampened my mindset of explorer.

But there are some situations in life where "Wanderer" is less attractive, and financial planning is an example. You don't have to have a map that every financial decision, or target, the details in your financial future. In fact, flexibility and adaptability is essential for any plan, as life has a way of throwing in some key inflection points that will test your original action plan. But it helps to have a general sense of why you are in the first place, or more briefly, what you consider to be the goals of your life.

Goal setting is the first phase of every good financial plan. If you are working with a planner, or choose to DIY, develop your key strategies and tactics will be based on some consideration to what your short-, mid-, and long-term goals. They could be as specific as "I want to send my child to a College of elitist in 12 years," or as General as "I want to be financially independent in my early fifties".

Objectives vary widely based on personality and lifestyle. For those who are married or have a partner, deep conversations with your significant other can be messy and enlightening at the same time. It is not unusual to find a husband and wife, while discussing the objectives in their initial meetings, to have different visions of their common future. In fact, one of the spouses often feel more like an objective which should surprise them. But this exercise is essential to further understand really what is important in life. Whatever your situation, do not calculate savings requirements, valuation of life insurance or statement must respect without due for goal setting.

Incredibly, most customers, who we meet with haven't given much thought to what they really want from their futures. Too often we find people giving answers "envisaged while not really fleshing out means that" retirement "or" financial independence ". It is surprising to me is the lack of imagination shown when we talk about what makes really a happy and are arranged as "settle" or sell yourself short in these discussions. Don't be afraid to dream in your pursuit of goal setting and sometimes to dream with guts!

As clich? as it might seem, the money is a means, not an end! It is up to you to dream and to define what that might be and shape the financial plan and the financial resources, to achieve the goals of your life. If you wander through the financial landscape, you may reach the Valhalla accidentally, but that is not a journey that offers the greatest chance of success. Take the time to find and set your goals and you increase your chances of success.

Oh and keep that phone handy! I need me pull off a hard place on my next adventure.

Mike BranhamMike Branham, CFP ?
Financial Planner
Cornerstone wealth advisors, Inc.
Edina, MN

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