Financial Planning 101

By Joanna G. Burish

What is a financial plan and when is the right time to plan yours? Most resources on this topic start with “know your budget,” or, “how much do you make, and how much can you save?” Yes, these aspects are part of the plan, but they’re not where one should start.

My advice is to start financial planning today as the longer you wait, the more costly it can be as you age, and you may pay more in taxes overall than without a plan.

When I work with my clients, I encourage them to make smaller, wise decisions today, rather than waiting and having to make big decisions later. A financial plan is a helpful tool to track your progress, and keeps your emotions grounded and not reactive when the market becomes volatile. Your plan is not meant to be static — it changes as life changes. It is to be reevaluated after life milestones, such as getting married, having a baby, starting a new job or losing someone you love. A great holistic financial advisor will help you build this comprehensive plan today, and work with you when it needs to be updated.

HERE ARE THE SIX STEPS TO BUILDING YOUR PLAN:

  1. Ask yourself: How do you want to live your life in the next three years personally, professionally, and financially? Three years is far enough to set impactful goals, yet short enough to be agile as life changes. We start here because all other decisions and planning actions will come from these goals.
  2. Take inventory of all of your assets. This includes your income, savings capacity, retirement accounts, investments, home, any personal assets and your cash value life insurance.
  3. Know your budget. Factor in current monthly expenses, as well as saving for long-term goals. Below is a formula my clients love, the 50/30/20 budgeting model. It breaks down your take-home pay like this:
    a. 50% is for fixed costs — mortgage/rent, utilities, groceries, transportation, home, term life and disability insurance.
    b. 30% is for lifestyle expenses (variable expenses) — dining out, travel, shopping and hobbies.
    c. 20% is for your future retirement accounts and lifestyle protection like cash value life insurance.
  4. Debt reduction. Restructure good debt versus bad debt where you can, as every penny counts. What debt should you pay off prior to creating an emergency fund or investing?
  5. Understand how to protect your lifestyle. Plan for what you want, as well as the unexpected. If you’d like to learn how these strategies can work for your specific planning, or if you’re curious about a second opinion, my team and I are happy to coach you on what that looks like for you, your family, and business.
  6. Plan for retirement today — don’t wait!
    a. Retirement savings need to be a priority today versus an afterthought. If you can, allot 15-20% of your income to go toward retirement savings, or, budget for this level over time. Knowing how to build your holistic plan around this percentage will be the key to securing your future versus potentially running out of money when you need it most.
    b. Understand your risk tolerance. If you’d like to learn what yours is, email me for our Investor Profile analysis.
    c. Key goals: Include tax mindfulness, diversification and lifestyle protection so you can enjoy your retirement without worrying about running out of money, or not being tax efficient. These are only a couple of topics to consider among others.

To learn what your key goals are and the specific tools to integrate into your financial security and retirement strategy, connect with me and my team. We’re here to help!


Contact Joanna Burish directly at 608-658-3482 or [email protected]
joannaburish.nm.com/areas-of-expertise.htm | linkedin.com/in/joannaburish
The Brauds Network – Founder, Coach, COI, thebrauds.com

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities and life insurance with long-term care benefits) and its subsidiaries. Joanna Burish is an Insurance Agent of NM. There may be instances when this agent represents companies in addition to NM or its subsidiaries.

While links to other websites are provided for convenience and information, please be advised that except for information related to Northwestern Mutual (NM), the inclusion of, or linking to, other websites does not imply NM endorsement of, nor responsibility for, those websites.

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