Some people avoid financial planning because they feel overwhelmed by all the numbers. Whether you suffer from the very real condition of arithmophobia or you simply don’t feel like you understand enough about finances to tackle your own, then this article is for you. We’ll look at financial planning through the lens of an artist painting a masterpiece. Each stroke of the brush, each color choice, and each stroke of genius adds depth and life to the canvas, and in the realm of finance, every financial decision and strategy contributes to the complex tapestry of your financial life. The key to creating this kind of masterpiece for yourself is to build a solid financial foundation, a base that supports and enhances everything else. Below, we’ll discuss how to begin.
Building a Solid Financial Foundation: Understanding Why It Matters
Imagine building a house without a strong foundation. You wouldn’t, would you? The structure wouldn’t last, and it would be vulnerable to even the smallest of tremors. Financial planning is no different. The foundation is where financial security begins, and resilience against unforeseen circumstances is built.
Budgeting: The Cornerstone
Budgeting is the cornerstone of financial planning and the best way to begin building a strong financial foundation. It provides you with a clear understanding of your income and expenditures, helping you allocate funds wisely and avoid unnecessary debt. Budgeting is like the canvas on which you’ll paint your financial future.
Start by tracking your spending and categorizing it into essentials (like housing, food, and utilities), debt repayments, savings, investments, and discretionary spending. This provides a clear picture of where your money is going and where adjustments can be made to better suit your goals.
Emergency Fund: Your Safety Net
An emergency fund acts as a safety net, shielding you from the unexpected storms of life, which we all face from time to time. It’s the savings that will cover unexpected medical expenses, car repairs, or sudden unemployment without having to dip into your long-term investments.
Financial experts recommend having at least three to six months’ worth of living expenses set aside in an easily accessible account. This cushion can help you weather financial challenges without derailing your long-term financial goals. Check out these tips from the Financial Consumer Protection Bureau on building a strong emergency fund.
Debt Management: Laying a Strong Base
Many people have debt, and there’s nothing fundamentally wrong with that. It’s normal to have a mortgage payment or, perhaps, a student loan payment. These kinds of debts can be viewed as investments in your future. The problem is with bad debt – the kind that can weaken the foundation of your financial structure. If you’re working on building a solid financial foundation, aim to manage and reduce your debt burden as much as possible. Prioritize paying off high-interest debts, like credit card balances, while making minimum payments on other debts.
Building a Solid Financial Foundation: Framing the Structure
With a solid foundation in place, you can now start constructing the frame for your financial future. This includes investing wisely, planning for retirement, and securing your loved ones’ financial well-being.
Investment Strategy: Adding Color and Texture
Just as artists carefully choose colors and textures to create depth and vibrancy in their artwork, you need to choose investments that align with your financial goals and risk tolerance. Diversify your investments to spread risk and optimize returns. Consider consulting a financial advisor to craft a well-rounded investment strategy that meets your unique needs.
Retirement Planning: Creating the Main Frame
Your retirement plan is like the main frame of a painting, providing structure and focus to the overall piece. Contribute regularly to retirement accounts such as a 401(k) or an Individual Retirement Account (IRA). Take advantage of employer matching contributions, if available.
Insurance: Protecting Your Artwork
Insurance acts as a protective frame for your financial masterpiece. It shields your assets, loved ones, and your future financial security from unforeseen circumstances. Ensure you have adequate coverage for health, life, disability, and property insurance.
Building a Solid Financial Foundation: The Final Touches
As you near the completion of your financial artwork, focus on fine-tuning and adding those final touches.
Review and Adjust: The Artwork Evolves
Building a solid financial foundation isn’t a one-time event. Regularly review your financial plan to ensure it continues to align with your goals, lifestyle changes, and economic shifts. Make adjustments as needed to stay on track to meet your goals.
Professional Guidance: A Masterpiece Needs a Mentor
If you don’t feel confident about your own financial knowledge, consider working with a financial advisor. They bring expertise and experience to help you refine your financial masterpiece and achieve your unique vision of financial success.
Do You Need a Partner in Building a Strong Financial Foundation?
In the art of financial planning, creating a masterpiece is a journey, not a destination. It’s about continuous growth, adaptation, and creating a life enriched with financial security and opportunities for yourself and your loved ones. If you’re looking for a professional partner to guide you toward the financial security you desire, we can help.
If you’d like to discuss how our financial planning services may help achieve your goals, give us a call at (540) 720-5656.
Sources:
- [1] https://my.clevelandclinic.org/health/diseases/22545-arithmophobia-fear-of-numbers
- [2] https://www.consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/#:~:text=Create%20a%20system%20for%20making%20consistent%20contributions.&text=It%20may%20also%20be%20that,your%20savings%20grow%20even%20faster.
Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.