- Written by: Michael Agorastos, CFP®
- October 23, 2023
With 2023 winding down and the holiday season fast approaching, it may be time to pause and check the status of your financial situation. October is observed nationwide as Financial Planning Month and can be just the incentive you need to refresh your financial plan or consider having one put in place. Financial planning encompasses many areas with varying degrees of importance to different individuals or households. These include retirement planning, tax planning, investing, or something as simple as creating a budget or establishing goals. This month’s article aims to highlight a few components of a comprehensive financial plan and the importance of each.
Identifying & Setting clear goals:
This first part seems simple enough, but many are surprised during their meeting with a financial advisor about how much they have not actually considered. Planning for big life events such as retirement, home renovations, a wedding or paying for college are just a few common examples of goal-based planning. Identifying goals that are important to you and then developing and implementing a plan is essential to obtaining peace of mind that you are on the right track.
Budgeting & Cash Flow:
We are all experiencing inflation and the cost increase of maintaining your current lifestyle. Analyzing your monthly cash flow and segmenting your expenses from monthly bills and discretionary expenses will allow you to understand if you are running at a monthly deficit or surplus. If you are running a surplus, it is time to evaluate if you are using your cash reserves in the most beneficial manner and start taking advantage of all your employer benefits. If you are running a deficit, identifying your non-essential expenses can allow you to determine where to cut back on your spending.
Retirement Planning:
There is no better time than now to think about when you would like to retire, and once you are retired, what retirement may look like to you. This second part may not seem important, but many recent retirees often find themselves spending more in the early years of retirement than they did when they were still working. Understanding and planning for the years is essential to ensure you don’t have to alter your lifestyle later in life. At the minimum, make sure you are taking advantage of all employer benefits. Whether it is as simple as putting money into a company retirement plan or establishing an HSA (health savings account) for future medical expenses, you will want to review what is offered during open enrollment to make sure you are taking full advantage.
Tax Planning:
Even though financial advisors don’t typically carry the CPA designation, they often will take a more proactive approach to tax planning. Most common planning strategies may not provide an immediate benefit but will provide tax savings over your lifetime. Whether that is understanding a Roth 401k vs. Pre-tax 401k deferral, utilizing after-tax contributions in your 401k plan, understanding Net Unrealized Appreciation (NUA) for those with company stock, or what is the ideal way to give to a charitable cause you support while lowering your tax burden today, a financial advisor will be able to help you reduce your future tax bills.
While this article does not encompass everything necessary to create a comprehensive financial plan, it is a good jump start for those who have put financial planning on the back burner for too long. If you are ready to get on the road to financial freedom and get serious about financial planning, contact us today in either our Houston, TX office or San Ramon, CA.
Written by,
Michael is a comprehensive, fee-only financial planner who began his financial services career with Insight Wealth Strategies in 2013. His primary areas of expertise cover retirement planning (e.g. cash flow analysis, developing retirement income strategies, stock option planning, corporate benefit analysis, etc.), investment planning, and high-level income tax reduction strategies for individuals and small business owners.
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Insight Wealth Strategies, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Insight Wealth Strategies, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Insight Wealth Strategies, LLC unless a client service agreement is in place.
Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
