Personal goals control financial plan

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This week is Financial Planning Week, so I asked several local financial planners for their top tips. You might think that their suggestions would involve cold, hard numbers such as make sure your debt is less than X percent of you income, or try to save at least $XXX a month. Many people think finance is very rule-based, but it involves much more.

In fact, Robin Jones of First Command Financial Services cautioned against using generic rules. Financial planning has become more complicated because of increased longevity, rising health care costs, uncertainty about government policies such as Social Security, and more personal responsibility for financial matters. These variables cannot be condensed into a single figure appropriate for everyone.

As Ted McLyman of Apexx Behavioral Financial Group said, "If it were that easy, everybody would be financially well off!"

Will Rogers of Ameriprise Financial Services said a financial plan must be consistent with a client's individual values. That means there is no cookie-cutter plan.

Will Caywood of Fehrman Investment Group also emphasized having a plan. Plans generally start with attainable short-term and long-term goals. These would include retirement, but also much more.

Eric Swierski of Valic Financial Advisors said short-term goals might include vacations and new cars, while long-term goals include life insurance, college education and debt reduction. Having attainable goals makes saving enjoyable, Caywood said.

Once goals have been set, an action plan is needed. It is easy to say "save more, spend less," but as anyone who has tried to lose weight by "exercising more, eating less" knows, you need to know how to save more or spend less. Caywood suggested using a reverse budget, saving the amount needed to reach a goal, then spending what's left.

The vehicle used for saving might involve an alphabet soup of investment options, such as 529 plans, 401(k)s, or MMDAs. These vehicles offer a variety of expected returns.

Jones said most people focus far more on returns, neglecting the time of their investment or the amount they invest.

In fact, Caywood said, studies have found that investor behavior has more to do with accumulated saving than fund performance.

So the main conclusion from our collection of experts is that personal finance is very behavioral. McLyman said, "It's not about the financial stuff; it's all about you."

Simon Medcalfe is a professor at Augusta State University.

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corgimom 10/03/10 - 09:28 pm
Have a 1 year, a 3 year, and

Have a 1 year, a 3 year, and a 5 year goal plan.

If you don't know what direction you're headed in, you will get lost.

Little Lamb
Little Lamb 10/03/10 - 09:36 pm
So all of perfesser

So all of perfesser Medcalfe's article can be condensed into the following sentence:

Personal finance is all about you.

Why did the Chronicle waste the ink and the electrons and the iron oxide to publish the rest of the clap trap?

omnomnom 10/04/10 - 02:31 am
LL, not to mention the paper!

LL, not to mention the paper! i do hope perfessor medcalfe's area of expertise isn't journalism.. and if he's into finance or the economy, why is he getting everyone and their mother's opinion about financial planning? not much of his own thoughts put in here.

Chillen 10/04/10 - 08:57 am
Simple financial advice

Simple financial advice everyone can use.

*Spend less than you make.
*Don't spend money on frivolous items (manicures, upscale salon visits, new cars) unless you have a VERY good income.
*Don't use credit or credit cards - or at least pay them in full every month.
*Pay cash for your car. If you can't afford to pay cash, wait to buy one until you can.
*Have a 12 month emergency fund.
*Contribute 10% to your retirement account each year.
*Live with family or friends if you are having trouble making ends meet. Or get a roommate to help with rent & utilities.
*Don't buy a house unless you can afford the payment PLUS the upkeep and utilities.
*Only buy clothing, shoes, etc on sale. Never pay retail.
*Shop grocery store sales. Stock up on buy one get one free items that you regularly use.

Last but not least. Be a mature adult. The "buy it now", "have it now" mentality is for children.

chascush 10/04/10 - 09:19 am
‘So the main conclusion from

‘So the main conclusion from our collection of experts is that personal finance is very behavioral. McLyman said, "It's not about the financial stuff; it's all about you."’
Hussein and the DUMocrats will not like this article. They believe we are too stupid to make our own decisions. But I have to admit most of the Hussein voters are.

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