By Kyle Louvar, CFP®, AIF®
Happy New Year to you and your family!
A new year is often a time for fresh starts, intentional planning, and renewed motivation to conquer goals and accomplish things that are important to you. We can’t wait to hear about what you want to accomplish this year. If you’re not sure where to start, creating or reevaluating your current financial plan can be a great way to set yourself up for success in 2023 and beyond.
Let’s go over a few tips to help you better understand financial planning and how our proprietary process, The Paradigm FORMula, can help you achieve your new year goals.
What Is Financial Planning?
Financial planning is a comprehensive process to evaluate your current financial situation, understand your goals and objectives, and provide a vision of your path toward success in the future. It is not a one-time event, but rather an ongoing process that should happen at least annually as your life unfolds and your needs evolve. It incorporates every aspect of your financial situation, including cash flow, insurance review, retirement planning, education planning, tax strategies, investment management, and estate planning.
In our experience, many people become overwhelmed by the idea of financial planning. It encompasses so much that it can be difficult to wrap your head around. But there are tangible ways that a comprehensive plan can help you increase your retirement savings, reduce risk, minimize taxes, and improve your overall financial health and well-being.
Here are just a couple ways a financial plan can be utilized in your new year planning.
1. Identify What’s Most Important to You
So far, the 2020s have been challenging for many, so it’s always nice to start the new year by thinking of what you’re thankful for. Whether it’s your health, your job, or your family, being thankful is a cornerstone to happiness and financial success. Try taking some time to acknowledge that you’ve weathered a tough storm and give thanks for the good things in your life. It’s also a good idea to identify what’s most important to you.
For some, it may be prioritizing time with family and working toward financial independence so you have more time to spare. For others, travel and leisure are important aspects of a fulfilling life that require diligent saving and planning to accomplish. Still others are passionate about giving back to important causes in both time and money. No matter what it is for you, a financial plan can help. The first step is understanding what you want to work toward.
2. Prioritize Goals and Objectives
Now that you have a clearer picture of your values, it’s time to define and prioritize your goals and objectives. You have an overarching view of the type of lifestyle you want to achieve, but what are the specific details that need to be accomplished along the way? When would you like to retire? How much will you need in your retirement account to afford this quality of life?
Retirement is a big part of financial planning, but don’t forget to include all your short-term and long-term goals. Want to buy a lake house in 10 years? Pay for your children’s education? Donate to charities? Once it’s all written down, we can begin to put together a path toward success. We can assess your goals and prioritize them as necessary to improve your chances of achieving them.
3. Assess Potential Risks and Solutions
As great as it sounds to set goals and build a path toward success, no plan is complete without identifying the potential pitfalls along the way. There are many risks to a financial plan that must be accounted for. What if you lose your job or become ill or incapacitated? What happens if you need long-term care in retirement? How will your plan adapt if the market doesn’t perform according to our best-case-scenario wishes? These are the types of questions our Paradigm FORMula process can answer. We create a plan that not only works based on your current circumstances, but can also adapt to changing circumstances so that you are never too far from the path.
4. Define Investment Objectives
Unfortunately, stockpiling your savings under your mattress won’t get you very far. Inflation means things get more expensive each year. We’ve seen that firsthand in 2022. But this means your long-term savings needs to pace the cost of goods to ensure you don’t lose purchasing power in retirement.
The key to achieving your financial goals is creating an investment portfolio strategically diversified to meet your personal needs. The earlier you get this started, the more you’ll benefit from the exponential power of compound interest. At Guided Capital Wealth Management, we can help you assess your investment objectives and align your portfolio with your overall financial plan. Whether you are looking for income replacement, capital appreciation, or principal protection, we can design a portfolio to help you get there.
5. Minimize Taxes
The last part of your plan is creating exit strategies for each goal. You need to be able to access your money when you need it. If you skip this step and just dump all your savings into retirement accounts, you’ll be in for an unpleasant tax surprise when you want to pay for the aforementioned lake house or college education. So understanding when you’ll need access to your money and which accounts to utilize to best match the timing of that need is an important process our Paradigm FORMula can address. Our goal is to help clients keep more of their wealth, both before and after retirement, so they’re not losing hard-earned savings to the IRS.
6. Identify the Legacy You Want to Leave
After everything is said and done, what type of legacy do you want to leave behind for your friends, family, and loved ones? How do you want to be remembered and what can you do to prepare for that now? This is a commonly overlooked step in the financial planning process. With our Paradigm FORMula, we can help you understand the best ways to leave wealth for the next generation and how to avoid inadvertently creating a huge tax bill for your beneficiaries. We can also incorporate your philanthropic goals, so that your legacy can continue to make an impact for years to come.
7. Schedule Check-ins With Your Advisor
At this point, you’ve set up your plan, but your work is not quite finished. Now it’s time to maintain. You’re bound to experience many life changes throughout the year and you may need to adjust your plan accordingly. At our firm, we meet with our clients regularly to discuss any life changes and make sure their financial plan can adapt with them. These check-ins are built into our proprietary financial planning process, The Paradigm FORMula, to help you create a dynamic plan to reach your financial potential and keep you on track toward achieving your goals.
Ready to start 2023 off on the right foot? Schedule a FIT meeting with Guided Capital Wealth Management by contacting us at (832) 975-0711 or by email at email@example.com to learn if we are the right people to guide you on your financial journey.
Kyle is a CERTIFIED FINANCIAL PLANNER™ professional and holds the Accredited Investment Fiduciary® certification. Kyle Louvar is the CEO and Wealth Management Advisor for Guided Capital Wealth Management, a fiduciary financial advisory firm offering fee-based advice, guidance, and education. After seeing the impact that the 2008 financial crisis had on families, Kyle became fully committed to helping his clients develop a financial plan that changes as their lives unfold and their needs evolve. Spending nine years working for one of the largest brokerage firms on Wall Street, Kyle holds a high value for process, expertise, objective advice, and customized solutions. His goal is to help his clients experience confidence in their financial future through a disciplined process of financial planning, investment management, and sound financial decision-making.
Kyle graduated from New Mexico State University, where he was a proud 4-year letterman in football for the Aggies and where he’s sat as an NMSU Foundation board member since 2015. When not helping his clients, Kyle enjoys spending time with his wife, Nicole, and their two daughters. You can often find him coaching his daughters’ softball teams, playing golf, cooking, and traveling. To learn more about Kyle, connect with him on LinkedIn.