YOUR TAX RETURN CAN HELP YOU TO ATTAIN YOUR FINANCIAL DREAMS
Neal A. Deutsch, CFP®
Published in Rivertown Journal, September 2006
With tax returns completed and mailed, most people breathe a sigh of relief
and forget about the IRS for another year. However, the information you gathered
to satisfy Uncle Sam might be just what you need to begin realizing your financial dreams.
Developing a personal financial plan begins with accumulating much of the
same data needed to prepare your income taxes. It is the perfect time to start
on a financial plan. While the compilation of pertinent information is necessary
to fully define your goals and objectives, taxpayers can use their income tax
information to form the plan’s foundation.
First, you will need lists of assets and liabilities, copies of tax returns,
insurance policies, wills, trusts and pension plans. This assists in getting
a handle on where you are presently in your financial life before you plan
for where you want to be.
The second step in the financial planning process is identifying both financial
and personal goals. The three objectives cited most often are security in retirement,
providing for children’s education, and developing an estate plan. While
these are a little vague, they’re a start. Certainly, each individual
or family objectives will vary.
The third step is identifying problems that might prevent financial independence,
such as too little or too much insurance, a high tax burden, inadequate cash
flow or current investments that may be improperly positioned, or are losing
money. It is important at this point to have a professional financial advisor
review your accumulated data and assist in developing a plan. A professional
advisor can provide objectivity and expertise. It’s difficult for people
to be objective regarding the analysis of their own finances, and most do not
have the financial experience necessary to make wise decisions.
The fourth step is structuring a plan to meet financial needs and objectives,
followed by implementation of agreed-upon recommendations. A financial advisor
can help develop and implement the plan, but the decision to implement, modify
or reject recommendations remains the individual’s ultimate responsibility.
Many advisors provide a checklist to help clients implement their plans themselves.
A final, and often most important step is to periodically review and revise
your plan to account for changes in personal and economic conditions. The advisor
and client can together review goals and problem areas and fine-tune the plan
as needed.
Be sure to check with your financial advisor as to how your tax return can
serve as your starting point and progress report toward achieving your financial
planning goals. Knowledge is power- isn’t it time for you to take control?
Neal A. Deutsch is a Certified Financial Planner™, Registered
Securities Principal and President of Chestnut Investment Group in Suffern,
NY, helping people with financial planning since 1984. Please feel free to
call Neal at 845.369.0016 or email him with your questions at neald@chestnutinvestment.com
Feel free to visit his website at www.chestnutinvestment.com
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