Navigating Your Financial Journey

Contributed by: Kelsey Arvai, MBA, CFP®

In a world where financial decisions can often feel overwhelming and complex, the role of a financial planner stands out as a guiding beacon, offering expertise and tailored strategies to help individuals achieve their financial goals. Whether you're aiming to buy a home, save for retirement, or planning for your children's education, a financial planner can be an invaluable asset in navigating the intricacies of personal finance. In this blog, we'll explore who financial planners are and what they do.

Who are Financial Planners?

Financial planners are professionals who specialize in helping individuals and families manage their finances, make informed decisions, and plan for their financial future. We possess expertise in various areas of finance, including investment management, retirement planning, tax strategies, estate planning, insurance, and more. Our primary objective is to understand clients' financial situations, goals, and risk tolerances and develop comprehensive plans to help them achieve their objectives.

What Do Financial Planners Do?

1. Goal Identification & Determining Net Worth: Financial planners begin by assessing clients' current financial status, including income, expenses, assets, and liabilities. We then work with clients to establish short-term and long-term financial goals, such as buying a home, saving for retirement, or funding a college education.

2. Financial Planning: Based on the client's goals and financial situation, planners develop personalized financial plans that outline strategies to achieve those objectives. This may involve budgeting, investment management, tax planning, risk management, estate planning, financial independence review or retirement income analysis, charitable planning, college planning, preparing future generations for wealth management, and coordinating with multiple advisors (i.e., CPA, attorney, etc.).

3. Investment Management: Financial planners help clients ensure their investments reflect their objectives, risk tolerance, and time horizon. We may recommend specific investment vehicles, asset allocations, and diversification strategies to help clients maximize returns while managing risk.

4. Retirement Planning: Planning for retirement is a significant aspect of financial planning. Planners help clients estimate retirement expenses, determine retirement savings goals, and develop strategies to accumulate retirement assets through vehicles such as employer-sponsored retirement accounts (e.g., 401(k), IRA), pensions, and other investments.

5. Risk Management and Insurance: Financial planners assess clients' insurance needs, including life insurance, health insurance, disability insurance, and long-term care insurance. We help clients select appropriate coverage to protect against unforeseen events and mitigate financial risks.

6. Estate Planning: Financial planners assist clients in ensuring their beneficiary designations are properly set up on accounts, including retirement, checking & savings, brokerage accounts, and life insurance policies. Estate planning documents (wills, durable power of attorney, health care power of attorney, and trusts) are drafted by an Estate Planning Attorney. Your Financial Planner will help to ensure that you work with an attorney when appropriate and that your estate plan is reviewed at least every 3-5 years.

7. Regular Reviews and Adjustments: Financial planning is not a one-time event; it's an ongoing process. Planners regularly review clients' financial plans and adjust as needed based on changes to your financial situation, goals, and market conditions.

Financial planners play a vital role in helping individuals and families navigate the complexities of personal finance, achieve their financial goals, and build a secure future. Financial planners empower clients to make informed decisions and take control of their financial well-being by providing expertise, personalized advice, and ongoing support. When choosing a financial planner, it's essential to consider their qualifications, expertise, and alignment with your financial goals and values. With the right planner by your side, you may embark on your financial journey with confidence and clarity.

Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc.® Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

Millennials Matter: To Rent or to Buy?

Contributed by: Melissa Parkins, CFP®

The infamous question – should I continue to rent or should I buy a house? The answer – it completely depends! The right answer for you will depend on a number of factors:

• How long you plan on living in the same location

• The prices of rent compared to buying in your location

• Costs such as maintenance and repairs, insurance, property taxes

• The inflation rate that rent will rise

See Matt’s blog for more considerations and details when contemplating buying a home. It is one of the largest financial decisions you will make in your life, and there are a lot of common misconceptions to also consider before pulling the trigger:

• Paying rent is the equivalent of throwing away money.

  • Either way, you have to pay to live somewhere, because of the way amortization schedules work, only a small portion of your monthly mortgage payments go towards building equity in your home (even smaller than you probably think!). Most of your monthly payments are going towards paying the bank interest, which can also be seen as throwing away money. Some say you are better off renting unless you plan on being in the home more than 5 years because of this reason. Plus there are added costs that come up when you own a home, like property taxes, insurance, maintenance, and repairs.

• You’re getting married. Time to buy a house together.

  • Give yourself time to get settled, decide on a location together, do you research, and especially, learn to manage your finances together before you jump right in to buying a home. There are enough changes going on at this point in your life, so don’t be in a rush to get in a house just because you think it is what you are expected to do next. Take the time to find a home you love that is in your price range and meets all of your other requirements. That being said, my fiancé and I bought our house together right before getting married, and it (hopefully?!) was the right decision for us.

• The real estate market is only getting more expensive. You must buy now.

  • You should really wait until the time is right for you, and not just buy because of the market. Do you have an adequate emergency fund saved? Have you saved to cover the down payment without depleting your emergency fund? Do you have other debts that should be paid off first? All of these factors should be worked out before you try and buy a home. When the time is finally right for you to buy, don’t fret…there will still be houses on the market!

• Buying a house is a good investment.

  • It takes years to build equity in a home. The market must cooperate. You will undoubtedly have costs coming up that detract from your “return.” Your primary home should not be looked at as an investment only.

So if you are looking to be a first-time homebuyer: take a step back, don’t be in a rush, and consider all of the factors. It is important to be sure that you are financially ready to buy a home, and if not, continuing to rent may be the best option for you for more reasons than one.

Melissa Parkins, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

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The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Opinions expressed are those of Melissa Parkins and are not necessarily those of Raymond James. Raymond James Financial Services, Inc. does not provide advice on mortgage issues. These matters should be discussed with the appropriate professional.

Millennials Matter: The Importance of a Budget

Contributed by: Melissa Parkins, CFP®

No one likes making a budget. It takes time to make, time to maintain, and it can provide some depressing information. All this considered, you still SHOULD make a budget! Actually, no matter your age or where you are in life, a budget is a critical piece to your financial plan. A financially successful future can depend on your actions today, and budgeting is an effective way to keep your actions in check.

Why budget:

A budget helps you best plan for your short term goals (like a vacation, or paying down student loans) and long term goals (like a home purchase, or a comfortable retirement). First you lay out your goals with specific amount and timeline, then you track your spending habits and monitor your progress, and before you know it, your dreams can become a reality! I know, easier said than done. But in all seriousness, a budget is one of the best ways to keep yourself accountable AND focused so that your goals can be met. It also forces you to realize your bad spending habits (the depressing part of any budget) and then work towards correcting them. First know what you earn and what you need to spend to live then determine how much you need to save to reach your goals. As you’ve heard many times before, don’t spend money that you don’t have! Especially if you already have unwanted debt (like student loans!). Even if you are currently comfortable with your income and spending each month, creating a budget is still helpful to identify unnecessary spending and redirect those funds to your priorities. I mean, do you really need to be spending $100 a month on lattes?! A budget will show you what little guilty pleasures actually add up to in the long run, and it may surprise you.

How to setup a budget:

Taking the time to start your budget is the hardest part.

• First, collect your paystubs and any other regular monthly income statements to determine the amount that comes in each month.

• Next, collect bank and credit card statements, and other monthly bills to figure out your fixed expenses, necessary expenses, and unnecessary spending.

• Compare multiple months of statements to determine on average how much you spend monthly.

• Break down your spending into categories (living expenses, household bills, debt payments, groceries, eating out, shopping, savings etc.).

• Analyze your spending categories to see which areas are your “bad habits” and you’d like to consciously make improvements.

• Review your goals and make sure you are appropriately saving for them.

Once you have done all this, you now have your bottom line, and it is just a matter of sticking to it. The way you go about maintaining and tracking your budget is a matter of personal opinion. Some prefer using an excel spreadsheet. Others find online tools such as Mint, Level Money, or You Need a Budget to be most helpful. There are also alternatives to the traditional budget like utilizing multiple checking/savings accounts at the bank to organize your spending and savings (opening different savings accounts and titling them for different goals like emergency fund, travel, etc. or having separate checking accounts for necessary spending and discretionary spending).

It doesn’t matter how you do it, you just need to find the way that works best for you. Creating and sticking to a budget involves discipline, and maybe some sacrifice at times, but it will break the bad habits and replace them with good spending and savings habits. At the end of the day, a budget can help you eliminate your debts and build your net worth quicker. If you have dreams of luxury purchases, traveling the world, paying down student loans quickly, or just having a happy retirement, you need a budget! It can help you reach your goals quicker and easier.

Melissa Parkins, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

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The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Melissa Parkins and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Millennials Matter: Paying Down Debt While Saving for the Future

Contributed by: Melissa Parkins, CFP®

If you missed it, last month I began a monthly blog series geared towards millennials, like me, with topics that are important and relevant to us. Chances are you are going to have debt at some point in your life—student loans, credit cards, new cars, or perhaps a mortgage—and let’s be honest, most of us millennials are drowning in student loan debt these days! Let’s say you finally have a steady income stream and want to start building your net worth… but have enormous student loan debt and maybe some credit cards to think about too. If you are like me, a big question on your mind is probably, “with extra money in my budget over my necessary expenses, do I pay down more debt, or invest more for the future?” The decision can be overwhelming and definitely not easy answer-- how do you decide the right mix of paying down debt and saving for the future?

Things to Consider:

• First, make sure you are able to at least make the minimum payments on your debts and cover all your other necessary monthly expenses. Then, determine how much extra cash you have each month to work with for additional loan payments and to invest for the future.

• Have an adequate emergency reserve fund established (the typical emergency fund should be 3-6 months of living expenses). If you don’t have a comfortable emergency fund, start building one with your extra monthly cash flow now.

• Take advantage of your employer’s 401(k) match, if they offer one.*  If there is a 401(k) match, contribute enough to get the matching dollars. You are not only saving for the future, but it’s extra money invested for retirement too!

• Make deductible IRA contributions – who doesn’t like saving for the future while saving on taxes? If you have earned income and are not covered by a retirement plan like a 401(k) through work, you are eligible to make deductible IRA contributions up to the annual limit. If you are covered by a retirement plan at work, the deduction on IRA contributions may be limited if your income exceeds certain levels.

• Make high interest rate debt a priority. Take inventory of your debts and their corresponding interest rates and terms. It is a good idea to pay more than the minimum due on high interest rate debt so you are reducing your interest paid over the life of the loan. You can do this by increasing your monthly debit amount or by making more than one payment a month. Also, check with your lenders for discounts for enrolling in auto payments – many offer a small rate reduction when payments are set to be automatically debited each month.

• Remember that interest you pay on some debt is tax deductible, like student loan interest (if your income is below certain levels) and mortgage interest (if you are itemizing your deductions). So at least some of the interest payments you are making on your loans go towards saving on your taxes.

• Lastly, don’t forget to consider what short-term goals you have to pay for in the next 1-2 years. Are you looking to buy a home and need a down payment? Wedding to pay for? New car? Or maybe you have just been working hard and want to treat yourself to a vacation! Lay out these larger short-term goals with amounts and time frame, and see how much of your monthly extra cash should be going to fund them.

Ideas and Tools to Help

• Technology – Consider the use of budgeting apps like Mint or Level Money to keep your spending in check and your goals on track

• Social Media – Look to your Twitter feed for inspiration and helpful tips (personally, I like to follow @Money for motivation).

• Do you receive commissions, bonuses or side income above your normal pay? Instead of counting on that as typical cash flow, each time it comes in put it towards paying off high interest rate debt (I do this and I promise, the feeling is rewarding!). You can also do this with your tax refund each year.

• When you receive a pay increase at work, instead of increasing your spending level, use it to increase your savings (have you read Nick’s blog on his “One Per Year” strategy?)

• Call us! We are here not only as financial planners, but also as behavioral coaches to help you effectively achieve your goals!

Ultimately, how do you feel about debt? Your balance between paying down debt and saving for the future will depend on your personal feelings about having liabilities. It is a good idea to start saving as early as possible because of the power of compounding over the long term. But that doesn’t mean you can’t be aggressively tackling your debt as well. Create a plan that you are comfortable with, review it often to make sure you are staying on track, and make adjustments as your cash flow changes over time.

Continuing on with the topic of debt… read next month about student loans and what you can  be doing to be more efficient with them. Don’t forget to look for more info on our upcoming webinar in July as we’ll be going into more details about student loans!

Melissa Parkins, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.

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*Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor or your retirement

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Melissa Parkins and are not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax matters. You should discuss tax matters with the appropriate professional.

Millennials Matter: An Intro

Contributed by: Melissa Parkins, CFP®

The generation known as Millennials is made up of those born between 1980 and 2000, currently putting us between the ages of 16 and 36. I happen to sit dead middle of this range, making me a true Millennial, I guess! We are savvy, independent, and a little skeptical. I’ve even heard we are overconfident and self-entitled (I may or may not find that hard to believe!). Some of you may be surprised to also hear that research suggests we are way more conservative than you might think.

The Millennial generation is the biggest in US history thus far, even bigger than the Baby Boomers. There are currently over 92 million Millennials, says Goldman Sachs Investment Research. According to The Brookings Institution, by 2025, Millennials will make up 75% of the workforce and will account for 46% of the nation’s income. This means that we are going to have huge impact – so watch out! Growing up with technology has armed us with information and the ability to research, communicate, and compare before making decisions. With our fluent use of social media, we have the ability to capture a large audience for whatever it is that we are trying to communicate. We have grown up in a time of rapid change, giving us a set of priorities and expectations very different from previous generations.

Millennials should not be overlooked. We are currently or soon will be entering the prime of our careers. We want to build credit and savings. We want to travel, buy nice houses, and have nice things. Sure, we may have a ton of student loan debt, but these are things that we as financial planners can help with now, and start lifelong relationships embarking on the journey to financial achievement together.

So how do new millennial investors fit into the “traditional” financial planning relationship? We have different interests, needs, goals, and ideas. That is why The Center has started a new Wealth Builder program geared specifically towards servicing these new financial planning clients! With my new blog series, I hope to engage my fellow Millennials with topics that are important to us – student loans, saving for weddings or children’s educations, purchasing homes, starting new jobs, budgeting, building safety nets… whatever it may be. We may not fit the traditional financial planning client mold at this point in time, but we will soon, and for the time being, we have different needs to be serviced. We have the desire to be financially successful and we are oriented toward the future, so I have no doubt that these goals will be achieved. So shoot me an email, a LinkedIn message, or a Tweet and let me know what you would like to hear about. In the meantime, stay tuned for my next blog!

Melissa Parkins, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.

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Any opinions are those of Melissa Parkins and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.