Are You Saving With a Financial Plan?
June 6, 2016 | Your Finances
A successful commercial real estate broker for decades, Ron Burkhardt was always diligent about saving for the future. But he, like many Americans, wasn’t always confident he was doing the right things financially. In fact, according to the 2016 Northwestern Mutual Planning and Progress Study, 66 percent of Americans believe their financial planning needs improvement.
“I knew I should be doing something with my money,” he said. “I had investments but nothing that made me feel comfortable about my financial security.”
It’s a sentiment Brandon Matloff, Burkhardt’s wealth management advisor with Northwestern Mutual, sees often when he starts working with clients. “People are saving, but they aren’t sure how all the things they’re doing financially fit together and whether what they’re doing will get them where they want to go,” Matloff said.
Matloff believes that in order to go from simply saving your money to saving as part of a financial plan, you should take the following steps:
1. Set your goals. “I think it’s important to step back and understand what you want your money to do for you. What’s important to you?” said Matloff. “Once you’ve answered that question, we can help you coordinate and synchronize all aspects of your financial life into one plan that considers all of your objectives.”
In Burkhardt’s case, his income is entirely commission based, so saving for a rainy day was important. “My business is very volatile. My salary is 100 percent based on commissions. I have no idea today what is going to happen next year or the year after that,” he said.
He also wanted to protect his income in case something happened to him and to accumulate wealth for retirement.
2. Get organized. “People have stuff all over the place,” Matloff said. He finds that people often haven’t taken the time to look at a balance sheet to see their total financial picture. Simply taking the time to put everything together in one place is critical. This can also help you identify any gaps in your planning.
3. Look at your whole picture. Once you’re organized, a financial advisor can help you figure out whether you’re on track to achieve your goals. Your advisor can also help you see how everything you’re doing—from a financial perspective—works together. A financial plan should include elements that allow you to protect and build wealth throughout different stages of life, explained Matloff.
Burkhardt was able to use permanent life insurance to tackle three goals at once. The death benefit can provide income for his fiancée if something should happen to him. But his life insurance is also accumulating cash value, which he can access if he needs emergency funds or someday use to supplement his retirement income.
When looking at the whole picture, Matloff typically works with a team of professionals, including certified public accountants, estate planning attorneys, tax attorneys and others. “We have access to a network of professionals, so it’s easy to bring together the right team,” he said. “And a financial plan is an ongoing, breathing document that changes from year to year.” So once you implement your plan, it’s important to revisit it on a regular basis.
Since he started working with Matloff, Burkhardt is more confident about his finances. “I have a plan, and I know how it’s helping me achieve my goals,” Burkhardt said. “I certainly sleep better at night.”