Building on the previous articles that focus on short-term financial matters like budgeting and navigating mortgage challenges, in this article, we will explore how a long-term strategic financial plan can help alleviate stress and provide a roadmap to a more secure future.
Financial stress can weigh heavily on anyone, regardless of their situation. A robust long-term financial plan is often more beneficial for those with substantial assets or those approaching retirement, as they tend to focus on stressors not usually associated with day-to-day financial management.
As an example, two common questions I frequently address for our new clients are:
- "I am in my 50’s. Do I have enough money to retire securely now? When will I have enough?"
- "I’d like to support my adult children through education or help them purchase their first homes. How much financial support can I offer without compromising my own financial security?"
Whether you’re approaching retirement, have a considerable asset base, or simply want to optimise your financial wellbeing, a well-crafted long-term plan can be significantly beneficial.
What is a Long-Term Financial Plan?
A long-term financial plan is a comprehensive evaluation of someone’s current and future financial circumstances, combining their aspirations with existing and potential financial scenarios. It involves a detailed analysis of present and projected income, expenses, investments, and savings, as well as critical life elements like family responsibilities and future aspirations.
These aspirations include financial targets, – like calculating the point of financial independence – and non-financial aspects such as envisioning a long, healthy life filled with enjoyable experiences. In essence, a financial plan aligns your aspirations with the financial strategies required to achieve your life goals.
Creating a financial plan can be a complex task requiring a firm understanding of financial products and markets. While online tools can assist with certain aspects of this process, many individuals opt for the guidance of a financial planner or adviser to create a custom plan tailored to their specific needs and objectives. The role of a financial adviser goes beyond simply offering advice – they help you stay committed during market volatility and adjust your plan as your life circumstances and market conditions change.
Where to Start?
Starting the process of long-term planning can seem daunting. You're not only trying to foresee your future lifestyle and the associated costs but also grappling with the unpredictable nature of financial markets and other external factors. Fortunately, you don't have to face this challenge alone. Numerous online tools and resources can help navigate the complexities of retirement planning.
Sorted.org.nz is one such resource. The Sorted website offers free, independent money guides, tools, and calculators to assist people in managing their finances throughout their lives. These tools can aid in understanding your current financial situation, project future scenarios, and strategize to meet your long-term savings goals.
For instance, using Sorted's calculators can help forecast your retirement income or determine how much you should be saving. They are an excellent starting point, though generally not substitutes for professional advice.
It’s important to solve any immediate financial issues first, like creating a budget, but a strategic long-term financial plan can also reduce stress. By focusing on your unique circumstances and long-term goals, a tailored financial plan offers clarity, confidence, and peace of mind. Online resources like Sorted.org.nz can help gain clarity about aspects such as retirement savings, and working with a trusted financial planner can offer valuable insights tailored to your needs.
Disclaimer: This is general information only, is not intended to constitute financial advice, and does not take your individual circumstances and financial situation into account.