Developing and implementing a financial plan should be realistic a definitive timeline. For example, assume that Jennifer age 26 earns $28,000 annually and wants to save $15,000 for a down payment on a home within the next three years. She needs a specific financial plan to attain her goal. In this case, Jennifer has $250 deducted from her salary each month, which I s automatically deposited into a savings account. She has also cut back on the purchase of clothes, entertainment, and vacations and saves the money instead. She avoids impulse buying and pays off her credit card balances each month to avoid paying exorbitant rates of interest. ln addition, Jennifer used to spend an average of $5 daily to buy lunch at a nearby restaurant; to save money; she now takes her lunch to work (“brown bagging”) rather than eating out. At the end of three years, Jennifer has accumulated $15, 000 and has attained her goal. Her success is due to a realistic financial plan with a definite time limit.
In the preceding example, we discussed only one financial goal. A more comprehensive financial plan with numerous financial goals may require the assistance of professionals. A Chartered Life Underwriter (CLO), Certified Financial Planner (CFP), or Chartered Financial Consultant (ChFC) can provide valuable assistance to help you identify your financial goals and to develop effective strategies for attaining such goals. Competent insurance agents can recommend the right type and amount of life and health insurance, disability income insurance, homeowners insurance, and auto insurance to meet your insurance needs. A competent and ethical account executive of a brokerage firm can provide valuable advice on the various types of investments to meet your investment goals. Finally, you may need an attorney to draft a will or other trust documents, especially in estate planning.