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Plan and Win

Keith J. Hardman
Published on April 7, 2023

“Have a plan. Follow the plan, and you’ll be surprised how successful you can be.”
– Coach Bear Bryant

While hyper-competitive athletes sometimes use the phrase “play to win,” at PMA we like to say “plan and win.” By this we mean that, whatever stage of life one may be in, having a plan is an essential aspect of managing personal finances. A good financial plan involves understanding your current financial situation, setting realistic goals, and developing strategies to achieve those goals over time. The following will detail how PMA can help clients develop an effective financial plan.

The first step involves assessing your current financial situation. To do so, planners should carefully review and understand what they earn, own, owe and spend. This personal balance sheet gives an idea of overall financial health.1 It is also a good idea at this stage to review your credit report. Check your credit report to make sure there are no errors or fraudulent activity. The next step involves assessing whether there are actions that can be taken to improve this personal balance sheet. Opportunities to do so may include reducing expenses, increasing income, or paying off debt.

Now a client is ready to evaluate what perhaps is the most important step in creating any financial plan – determining what your goals are for the future. This requires a frank consideration of what you want to achieve with your wealth and how you will do so. When setting financial goals start by defining your priorities. Identify what’s most important to you and what you want to achieve financially. Your priorities may include paying off debt, saving for retirement, buying a home, supporting a non-profit institution, or starting a business. Goals should be specific, measurable and realistic. For example, instead of saying “I want to save money,” set a more precise goal to save a specific amount of money each month.

The third step in forming a financial plan is developing a budget to ensure you are spending within your means. Regular budget review can help make sure you are staying on track and making progress towards your financial goals. A component of budgeting involves building an emergency fund. An emergency fund is a savings account that is set aside for unexpected expenses such as medical bills, car repairs, or job loss. This fund enables one to get through a crisis without incurring new debt and also provides peace of mind knowing that there is a financial safety net in place. The fund should be sufficient to cover about 3-6 months of regular living expenses.

With a budget and an emergency fund established, paying off debt is the next step to achieving financial success. This step involves identifying debts, prioritizing them based on interest rates, and developing a strategy to pay them off over time. Advisors at PMA can help clients identify areas where expenses can be reduced to free up money to put towards debt repayment. Forming a plan to pay off debt is important as it can be a major burden on one’s personal finances.

The next step as we build a financial plan is investing for the future. Investing for the future is an important part of any long-term financial plan. This brings to mind the old proverb, “The best time to plant a tree is 20 years ago. The second-best time is now.” That is to say, the earlier you start investing, the more time your money has to grow. Even small sums of money invested regularly over a long period of time can add up to quite a significant amount.

An effective financial plan requires an individual to review and adjust the plan as needed. As important as it is to establish a financial plan, remember that this is not simply “set it and forget it.” A financial plan is never set in stone. It is an ongoing process that needs to be reviewed and updated periodically to reflect changes as they occur in life and in financial circumstances. It would be prudent to set a regular schedule to review your financial plan, such as once a year or after major life events like a job change or a new addition to your family. This can involve revising your savings goals, adjusting your investment strategy, or reviewing your spending habits. If there have been any significant changes in your life, such as a change in income or a major expense, update your financial plan to reflect these changes.

If you are unsure about how to adjust your financial plan, consider working with an Advisor at PMA who can provide guidance and expertise. At PMA we utilize sophisticated financial planning software to help with the process of building out plans and stress testing those plans through a variety of scenarios.

Keep in mind that financial planning advice can vary based on individual circumstances. What I have outlined here are some of the basic steps – you may find yourself in any stage along this planning continuum. Creating a personal financial plan can be a daunting process, but it is an important step in taking control of your finances and working towards a more secure financial future. If you are not sure where to start, consider reaching out to us at PMA. We would love an opportunity to guide you through the process.

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    It is also a good idea at this stage to review your credit report. Check your credit report to make sure there are no errors or fraudulent activity.
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