The beginning of the year is a perfect time for advisors to help consumers ensure that their financial resolutions become reality. In Part 1 of this post, we look at four critical moves that can help most consumers achieve better financial success in 2008:
- Build Adequate Liquid Savings – There are several things that can ruin a good financial plan, and one of them is not having the cash necessary in an emergency. A rule of thumb to share with clients is to have 3-6 months earnings in liquid savings. However, if their income fluctuates or their job may be at risk, they should save even more.
- Minimize Expensive Debt – We have had the advantage of enjoying an easy money environment where interest rates have been low and it has been easy to borrow money. That isn’t always going to be the case. Before they get in a pinch with too much debt, encourage your clients to lower their non-tax-deductible interest payment debt.
- Have Financial Vision – What has to happen in the next year for your clients to look back at 2008 and feel good about their financial situation? Once you help them figure that out, help them begin to do it … now!
- Update Financial Plan – It is key to ensure clients have a plan that recognizes where they are, where they want to be and how they can get there. Encourage consumers in your community to set up a financial plan, or take time to make sure their current plan is in line with their situation and objectives.
In Part 2 of this post, we’ll discuss how we can help clients avoid four of the most common financial planning mistakes.
