During the summer after my sophomore year of high school, I got my first job at a local ice cream parlor. While I was delighted to be making my own money, I was surprised and somewhat dismayed when I looked at my first paystub and saw all of the various deductions being withdrawn from my paycheck! In addition, my parents made a deal with me that summer that if I saved a percentage of my earnings and contributed to a Roth IRA, they would match my contributions. The experiences of earning income, paying taxes, and saving for retirement were relatively simple and straightforward when I was 16 years old, but that would quickly change.
Once I began my first “real” job working for a bank after finishing college, the complexities of my financial life increased. Not only did I have to pay my bills and balance my checkbook; my employer offered a 401(k) plan with a company match and an array of investment options, as well as a pension plan and an employee stock ownership plan (ESOP). I had to select my own health, life insurance, and disability benefits, and so on. Then, I got married to someone who had his own assets and employee benefits, bought a house, moved cross-country, had a child – you get the idea. Typically, life only gets more complicated as we age!
While it’s easy to stay on top of our personal finances when we’re getting started, as the complexities of life increase, our financial lives can become more confusing, or even overwhelming. This is where financial planning can be tremendously beneficial. Whether it’s understanding a complex array of employer benefits, deciding what to do with an inheritance, determining whether it’s advisable to buy a vacation home, making sure you’re saving enough to retire comfortably, or making a decision regarding what you want your legacy to be, having a financial plan to guide you is tremendously beneficial.
At Transform Wealth, financial planning is an ongoing process, not a one-time event. We begin by helping you to understand your cash inflows and outflows, and how they impact the growth of your net worth over time. We analyze your existing assets to ensure that when we invest your portfolio, we are achieving appropriate diversification and asset location within different types of accounts. Tax considerations are also extremely important, as we analyze your tax circumstances to improve tax efficiencies. We also provide a thorough analysis of any type of insurance coverage you have, whether it’s personal or employer-provided coverage to ensure that you’re both sufficiently protected and not paying too much for unnecessary coverage. Finally, we work with you to plan and articulate your legacy so that your assets and values will pass efficiently and effectively to your loved ones. As changes occur throughout your lifetime, we will work with you to keep your financial plan up-to-date and working in a complementary manner to your investment portfolio.
The comprehensive financial planning process will help you develop your understanding of the interrelated relationships between your income, assets, taxes, insurance, and estate plan, as well as how to make good decisions based on this information. Achieving organization, control, and peace regarding your finances so that you can live your life in the most fulfilling way possible is the goal of financial planning, and why you should consider having a plan in place.
Clarissa R. Hobson, CFP®
Director of Financial Planning