In my previous articles, I talked about clarifying those things in life that are truly important to
you - your values. I also discussed identifying those important milestones that require money
and planning to achieve - your financial goals. Now it's time to figure out where you are today.
Even if you know your destination, you can't take a trip until you know from where you are
Benchmarking your current financial reality will require you to gather all of your relevant
financial documents regarding your assets and liabilities into one place. You can hire a financial
advisor to help you, or you can do this yourself. Just like an airline pilot - you have to prepare
your checklist before you take off.
Financial Documents Checklist
If you are someone who has this information already organized - congratulations. If you are like
most, however, this information is scattered in many different places. Now is a great time to get
the documentation in order. You will feel great when you've completed this. Gather each
important document and centralize it in one file or 3-ring binder.
The items that you are looking for are such things as your most recent tax return, most recent
bank and mutual fund statements, and most recent retirement plan/IRA statements. You'll also
want to include your insurance policies and mortgage statements. If you have trouble finding the
current value of these, call the person who sold you the financial product. S/he will be able to
Where I Am Today" The Big Picture
By gathering all of your documents and being in touch with where you are today, you can begin
to determine if you've got the right amount of cash reserves for emergencies; too much debt;
have the right kind and the right amount of insurance to protect you and your plan; and have
allocated and invested your assets to give you the highest probability of achieving your goals.
We now have your basic financial "coordinates" on which to begin your journey: (1) your values
- those things in life that are truly important to you, (2) your goals - financial milestones that
require money and planning to achieve, and (3) your current financial reality - your point of
origin. You are now becoming aware of the `what,' the `when,' and the `why,' but what about
the `how'? You are also becoming aware of what you don't know about financial planning.
However, you now have what you need to begin the process of achieving your goals, either on
your own or with the help of a financial advisor.
Creating Your Financial Road Map
So, you know where you are (current financial reality), you know where you want to go
(financial goals), and you know why you want to go there (your values). Just as you need to
know where you are before you can begin your journey, it is also very helpful to chart your
course and have a road map to guide you. The Financial Road Map that I use is designed to put
things in perspective and to bridge the gap between where you are now and where you want to
be. It also creates a level of focus and clarity that will help you to make the right financial
decisions for you.
So by clarifying what's important to you, defining and prioritizing your most important financial
goals, and summarizing your current financial reality, the Financial Road Map provides the
guidance and inspiration for you to begin moving forward and doing what you need to do to
reach your goals - and ultimately to fulfill your values. Why have it any other way? You
Advisor is a registered representative with and offers securities through Linsco/Private Ledger Member NASD/SIPC