By Steve Zeller

Steve Zeller

Many people want to retire early or send children to college, but not everyone has a plan to reach these goals. A financial plan is a road map that you develop and follow to reach your financial goals. It is a process of making all your assets work for you, so you can afford the things you want in life.

But a financial plan is more than saving and investing. A well-rounded plan accounts for factors such as inflation, estimated investment returns and the level of financial risk you are willing to assume. Financial plans increase your chances of meeting your financial goals when you want to meet them.

Anyone who has a goal like retirement or saving to build a dream home should have a financial plan.

For it to be effective, it needs to account for all of your assets, including those of your spouse. It should also include any assets your dependent children may have, such as a custodial account or savings account.

Before you visit your financial adviser to establish your plan, you will need to gather information and documents concerning your finances, such as your W-2 forms, life insurance policies, any brokerage firm statements which show mutual fund, stock or bond holdings, a copy of your will or trust and recent bank statements. It might be a good idea to discuss your plan with your financial adviser after you file your tax return, since you will already have the paperwork together. This way you don’t have to collect your paperwork twice.

Your financial plan should be reviewed at least once every three years. You might want to make changes to your beneficiaries or your overall goals may have changed, so you need to change your financial plan to reflect those changes. In addition, over the course of three years, the value of your assets and liabilities may have changed considerably, not to mention any changes in employment. Any new money needs to be included in your financial plan and will most likely help you reach your goals faster. Also, by reviewing your plan at regular intervals, you can see how you are progressing in meeting your goals and make any adjustments such as saving more or changing your investment mix.

One of the most important things to evaluate when establishing your financial plan is how much risk you are willing to take with your money. Two people with exactly the same amount of assets and the same financial goals could have two completely different financial plans because of the amount of risk they are willing to take.

A solid financial plan is a total investment strategy that can potentially provide you with years of tax savings as well as an investment portfolio, which provides you with a risk profile that matches you and your goals. In addition, it can give you an appropriate insurance protection and an estate plan to continue your financial legacy. All of these benefits will provide better security for those dependent on your income as well.

Good financial planning allows one to build a nest egg for retirement, accumulate money to send your children to college or even fund a plan to take care of elderly parents. Talk to your financial consultant about establishing a financial plan. It could help you achieve your dreams.

Steve Zeller is a financial consultant with A.G. Edwards & Sons, Inc ., member SIPC , 379 Lytton Ave., Palo Alto 94301. The phone number is 326-5010.