Dan Reiter, CFP®, CPA
"The only limit to our realization of tomorrow will be our doubts of today." - Franklin D. Roosevelt
This quote by Franklin D. Roosevelt perfectly captures the essence of navigating the post-divorce landscape. While uncertainty may loom, a well-organized financial plan can be the root that fosters your future security.
Components of a Comprehensive Financial Plan
It helps to first understand the components of a quality comprehensive financial plan:
It Begins With the Desired Outcome: A comprehensive financial plan begins with your desired outcome in mind. What is your ideal monthly income? What other intermediate or longer-term financial goals do you have? Is the current balance of your investments likely to be sufficient to meet your goals, or do certain adjustments need to be made for long-term financial security? Your plan should start by clearly answering all these questions.
It Optimizes Opportunities: A well-crafted financial plan goes beyond simply managing your current situation. It identifies potential financial benefits you may not have considered, such as tax deductions or investment strategies tailored to your unique circumstances. By exploring these opportunities, you can maximize your financial potential and work towards achieving your long-term goals. Think of it as unearthing hidden treasures in your financial landscape – resources that can accelerate your progress towards financial security and open doors to new possibilities.
It Minimizes Risks: Life after divorce can bring unforeseen circumstances. A financial plan should address how to anticipate and mitigate potential risks, such as unexpected expenses or market fluctuations. By incorporating strategies to address these risks, such as building an emergency fund and diversifying your investments, you can build a financial safety net that protects you and your future.
It Results In A Clear Plan of Action: Finally, a quality financial plan should be more than an assessment. It should be actionable. Once you are clear on your desired outcome, path to get there, opportunities, and risks – a good plan should leave nothing ambiguous. What are the specific and detailed steps to reduce risks or maximize opportunities? Which steps should be taken first?
Other Benefits of a Plan
Divorce can leave your financial future feeling blurry. A well-defined plan acts as a powerful tool to bring clarity and empower you to move forward with confidence:
Clarity and Direction: Imagine this: instead of feeling lost in a financial fog, you'll have a clear map that highlights your starting point, potential roadblocks, and most importantly, your destination. This newfound clarity allows you to make informed decisions and prioritize your financial needs with confidence.
Empowerment and Control: Financial planning equips you with the knowledge and tools to take charge of your finances. Understanding your financial situation and having a plan in place fosters a sense of security and self-reliance. As you navigate the post-divorce landscape, you'll be able to make informed choices aligned with your goals, without feeling overwhelmed by financial unknowns. Imagine the difference between feeling like a passenger on a financial rollercoaster and being the driver, steering your course towards a secure future.
How to Select the Right Advisor
You do not have to plan alone. Partnering with the right financial professional makes the process of both creating a working a plan achievable for anyone. Choosing a financial advisor is a crucial step. Here's what to look for to ensure you find the right fit:
Educational and Empathetic Approach: During a time of emotional and financial upheaval, having an advisor who takes the time to educate you is invaluable. Seek an advisor who can explain complex financial concepts in a clear and understandable way. Additionally, look for someone who demonstrates empathy and understanding of the emotional complexities that often accompany divorce. Imagine having a patient guide who not only maps your financial journey but also provides emotional support as you navigate the challenges.
Certified Financial Planner™ (CFP®): A CFP® designation signifies a rigorous professional qualification. CFP® professionals undergo extensive training and have years of experience in financial planning. This designation assures a strong foundation of knowledge and expertise to guide you through your financial journey. Think of a CFP® as a skilled climber who has scaled the mountain of financial planning many times before. Their experience and expertise ensure they can navigate even the most complex financial terrain.
Fiduciary: When choosing an advisor, prioritize those who are legally obligated to act in your best interests. A fiduciary advisor is required to put your financial needs before their own, ensuring you receive unbiased and ethical guidance. Imagine having a financial compass that always points towards your financial well-being, not towards the advisor's own interests.
Fee Only: Opt for an advisor who has a compensation relationship with you, not a product company. This structure avoids any conflicts of interest associated with commission-based advisors who may be incentivized to sell you products that aren't necessarily aligned with your goals. Think of a fee-only advisor as a trusted partner, working alongside you with a transparent fee structure that ensures their recommendations are solely focused on your success.
Conclusion
Divorce may be a challenging chapter, but with a well-defined financial plan, you can navigate uncertainty and cultivate a secure and fulfilling future. By taking charge of your finances and seeking professional guidance from a qualified advisor, you'll be empowered to turn doubts into possibilities. Remember, financial planning is an ongoing process. As your life and financial goals evolve, it's important to communicate regularly with your advisor and adjust your plan accordingly. With dedication and a proactive approach, you can build a strong financial foundation for your next stage of life.
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Investment advice, financial planning, and retirement plan services are provided by Prosperity Planning, Inc., an SEC registered investment advisor. The information contained herein, including but not limited to research, market valuations, calculations, estimates and other material obtained from these sources are believed to be reliable. However, Prosperity Planning, Inc. does not warrant its accuracy or completeness. The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or to participate in any trading strategy. If an offer of securities is made, it will be under a definitive investment management agreement prepared on behalf of Prosperity which contains material information not contained herein and which supersedes this information in its entirety. Any investment involves significant risk, including a complete loss of capital and conflicts of interest. The applicable definitive investment management agreement and Form ADV Part 2A will contain a more thorough discussion of risk and conflict, which should be carefully reviewed before making any investment decision.
