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Mapping Your Future

The One Move to Make in 2013 to Change Your Financial Future

Another new year, another set of resolutions. New Year's Eve has always been a time to reflect on your past and vow to make a fresh start towards better habits moving forward. In addition to popular goals like improving your health, quitting a bad habit, or improving the quality of life, most adults also have a financial goal. Maybe it's to pay down debt, or save for college, a home, or retirement. But if you really want to make a resolution that will have a lasting effect on your financial health, resolve in 2013 to stop throwing darts in the dark. This year, resolve to make and adhere to a plan.

The Financial Mistake We All Make
We usually don't think about planning until we are staring down the barrel at an immediate need. Whether it's saving for a bigger home when one is already needed, starting to worry about retirement when we are only ten years away, or beginning college savings accounts when our children hit high school, we are all guilty of waiting to address major financial issues. But that's the big mistake. In order to best reach your goals with the least amount of pain, you need the tincture of time.

The earlier you start, the more successful you will be. For example, if you put away $2,000 a year from the time you are 25, and receive 8 percent interest, by 65 you will have $560,000 waiting for you at retirement. However, if you wait until 35 to start saving, the amount you will have at 65 will be $245,000, or less than half than if you started ten years earlier. If you want financial freedom, do not wait another year to begin working towards your dreams.

Where to Start?
If you were a finance major and love watching financial channels or reading finance books, you may feel capable of handling your own portfolio. But even those who prefer to remain autonomous should periodically consult a professional to insure their plan is on track. For everyone else, hire help. It not only eliminates stress, but it also increases the likelihood of success.

While financial planning can be task centric, it is better to look at it as a comprehensive plan. This plan should include all aspects vital to financial health, like investments, insurance coverage and tax returns.

Finding a Financial Planning Professional
The reason why many people delay seeking professional help is the process of finding a trusted partner can be daunting. Here are some tips to help navigate the process.
  • Anyone can call themselves a financial professional. Avoid planners who don't have the extensive education and experience needed to truly be considered financial professional. Look for credentials like ChFC (Chartered Financial Consultant), CFP (Certified Financial Planner), CFA (Chartered Financial Analyst), CPA/PFS (Certified Public Accountant/Personal Financial Specialist), IA or RIA (Investment Adviser or Registered Investment Adviser), CIMA (Certified Investment Management Analyst), or CFS (Certified Fund Specialist).
  • Not all planners offer comprehensive services. If you want to make sure all aspects of your financial life is addressed, stick to comprehensive planners only.
  • Word of mouth, or a reference from a trusted friend or family member, is a great way to begin your search for a financial adviser. But make sure you interview more than one before choosing. One of the main components of a successful experience is finding an adviser who is compatible with you and your personal communication style. Never start a relationship with an adviser who either overwhelms you or does not ask you questions about your present finances, goals, or risk tolerance.
  • Ask how your planner gets paid. The three most common ways are fee-only, fee-based and commission-based. Fee-only planners are paid for the advice they give and do not receive commissions for the products they recommend. Fee-based planners can receive commissions on some financial products but are mainly paid advisory fees from clients. Commission-based planners are paid by the companies whose products they sell.
  • Know what to expect after your adviser is hired. Once your financial plan is established, what happens next? A successful relationship involves communication. Look for adviser's who suggest meeting annually to make sure your plan is on track or makes adjustments if life circumstances change.

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Resolve to make 2013 the year your financial goals and dreams take root. Whether you decide to hire a professional or go it alone, do not let another year go without planning for your future. A journey of a thousand miles begins with a single step. Take that step.

Cindy Diccianni is a certified long term consultant, a registered investment advisor and a registered representative with Leigh Baldwin & Company member FINRA and SIPC. She is thefounder, owner and  principal of Diccianni Financial Group, Inc., East Norriton, PA. You can contact her at Lawson is client manager with Diccianni Financial Group Inc.

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