Everyone has dreams. Some dreams are born while sitting in rush hour traffic; a passing thought that begins with “what if?” Dreams come in all shapes and sizes, especially those relating to wealth: (I want to stop living paycheck to paycheck, I want to run my own business, I want to retire early, I want to pay for my child’s college education, I want to get out of debt, I want to leave a legacy for my family.) So, what is the difference between a dreamer and a dream-builder and how does it relate to financial planning?
The difference is the level of planning that a person is willing to do and the guidance they have along the way. Dreamers became dream-builders by setting goals, making plans, evaluating feasibility, and surrounding themselves with a team of advisors to turn dreams into reality. You have financial goals and aspirations. What steps are you taking to make them come to fruition?
When people think of financial advisors, they often get hung up on the realms of investing and insurance. While those may be products that come into play in your financial plan, a trusted advisor does not simply push products and meet with you once a year to change your investments or sell you insurance. A true advisor is one who understands the goals and needs of you, your business, and your family. With you, they build plans to make your financial dreams come true.
Of course, no one can be a fairy godmother, but your advisor should take an interest in you, not just your money. If you find that you are receiving recommendations without first reviewing your current situation and discussing your personal and professional goals, you may need to reevaluate your relationship. Your financial advisor should meet with you regularly to gather new data, analyze your needs, and present solutions. It is not a “set it and forget it” method; rather, as your life changes, so do your financial needs, and the resulting plans to achieve your goals.
Setting small and quantifiable goals is a good start to any financial plan. For example, assume that your goal is to pay for your child’s college education. An advisor can help you calculate how much you need to save on a regular basis, and how aggressively or conservatively to invest your money in a college savings account. They may help you realize whether or not you can reach the goal given your present situation. Can you save for part of the tuition and have your child apply for a student loan to supplement your savings? Or will you be able to cover it entirely? Another example is aiming to retire at age 60 and living on $50,000 annual income in retirement. In meeting with your advisor, you can request projections for the growth of your investments over time so you can see your predicted future income. Is $50,000 a good target income or will you need more or less? Does your projection fall short of your goal?
Knowledge is power, and knowing if a dream is reachable on your current path is half of the battle of financial planning. The point is, without a plan, dreams will only remain dreams. Take responsibility for your financial plan, surround yourself with trusted advisors, and be a dream builder.