Financial Planning 101 | Chattanooga Times Free Press

Financial Planners

“If you don’t plan, you plan to fail.” This essential Ben Franklin maxim was borrowed by Winston Churchill and others, and has been used by thousands of financial planners ever since. has been regurgitated by But there is wisdom in the idea that financial success, like life, goes hand in hand with planning and preparation.

The process of creating a comprehensive financial plan can seem a little intimidating, but there are many talented professionals who can guide and assist you in preparing and executing your long-term plan. But even if you’re not ready or willing to seek professional help, just make sure you’re on the right track until the situation calls for a more comprehensive analysis. There are steps you can take to

It is helpful to break down the process that professionals apply to financial planning into a few broad elements. Whether you do it yourself or hire a professional, you may need to focus on these topics and make difficult choices to control your financial direction.

Set goals. The first step in any journey is identifying your destination, including any stops you plan to make along the way. Identify key objectives such as retirement, college funding, philanthropy objectives, and quality of life. Try to be as quantifiable as possible. Don’t worry too much about feasibility at this stage, as we’ll come back and adjust it later.

Identify your current location. Next, create a personal financial statement that lists all your assets (what you own) and liabilities (what you owe). The difference between assets and liabilities is the current net worth. If you’re just starting out, you can go negative until you build more wealth and pay off your debts.

Make a budget and start working. At first, carefully document everything you’ve spent over the months and write down your fixed expenses to compare with your income. This process will help you understand how much disposable income you have left to save and invest, and what you need to consider prioritizing or removing as needed to meet your goals. Helpful.

Evaluate your debt. Paying off high-interest loans should be your top priority, as excessive debt is often the biggest obstacle to achieving financial stability. Keep paying off your student loans with a special focus on your biggest debts, like credit card balances and consumer loans. Don’t think your student loans will be forgiven. Probably not. Even if you don’t have a comprehensive financial plan, the best thing you can do is get out of debt.

Invest in your retirement life. If your employer sponsors a retirement plan, take the time to understand it and maximize your benefits as much as possible. Defined contribution plans, like the 401(k) plan and her 403(b) plan, impose savings obligations on employees, but often incorporate partial employer matching of contributions. I’m here. Try to donate at least enough to maximize the use of free funds from your employer.

If possible, consider the Roth option, which allows you to withdraw your income tax-free when you retire while making after-tax contributions. Unless retirement is imminent, choosing the Roth option will likely increase your after-tax net worth and will not impose mandatory withdrawals.

If your employer does not have a plan, other options are available, such as a Roth IRA with the same tax benefits.

crisis management. This includes protecting assets from unforeseen dangers and includes life, property, liability and, in some cases, long-term care insurance.

It also means building an emergency fund to cover unexpected expenses like car repairs, medical bills, and long-term unemployment. Aim for 3 to 6 months of living expenses.

tax planning. Instead of rushing into TurboTax once a year, tax planning should be incorporated into financial planning to inform investment decisions throughout the year. It also includes recovering losses during year-end portfolio rebalancing and guides decisions about whether to hold certain assets in taxable or retirement accounts.

real estate plan. Complex family situations can require complex strategies, but even young individuals and families need to have up-to-date inheritance planning. At a minimum, it should contain an up-to-date will, but should also incorporate powers of attorney for medical and financial decisions in the event of incapacity. Do not ignore this point until it is too late.

Luckily, there are many online resources to help you get started. is a financial resource with many built-in tools for budgeting, retirement estimates, mortgage and car loan evaluations, and debt management advice.

Government sites such as,, and offer financial education, calculators, and fraud protection advice.

Most financial services companies such as banks and brokerage firms also offer a range of planning tools and education. The American Institute of CPAs also runs a very useful website, 360 Degrees of Financial Literacy (, which offers dozens of calculators and planning tools to help you get started.

Most families would benefit from qualified professional advice at some point. But having no plan at all is the recipe for failure. There are many steps you can take to get yourself started on the right path. The great philosopher Yogi Berra once said: “If you don’t know where you’re going, you’ll end up somewhere else.”

Christopher A. Hopkins is a certified financial analyst and co-founder of Apogee Wealth Partners.

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