CPA Chris Gamble of Kroner Gamble & Company discussed the importance of having a solid financial plan and how to put one together Monday on News 8 at Sunrise.
“Financial planning is the ongoing process of having short-term and long-term goals, and that helps you make decisions on how you’re going to spend your money,” said Gamble. “Good financial planning helps you avoid financial setbacks, can help to deal with major life changes, and can help avoid credit or debt problems.”
Having a solid financial plan includes avoiding financial setbacks. “Probably the best thing that you can do is to assure that you have adequate savings, and the tool to use to make sure you’re saving is to develop a budget for yourself,” Gamble said. “List out your income. List out your expenses, your savings, and your investments. What we like to tell people to do is to pay themselves first, and what that means is to first determine how much you want to save, subtract that amount from your income, and what’s left is available for lifestyle, like housing, dining, or car – those type of things.”
Gamble also addressed the need to be prepared as best as possible for the unexpected. “We all know that life is full of surprises, and that we can’t anticipate everything, but when you’re financially prepared, it makes dealing with those things easier,” he said. “An important consideration here is reviewing your insurance. You want to review your life insurance, your health insurance, disability insurance, homeowners, auto insurance, maybe an umbrella policy, and even long-term care insurance.”
Saving for retirement is another component of a solid financial plan according to Gamble. “Retirement is the one thing that you can not borrow for,” he noted. “It’s kind of all on you, so taking advantage of employer sponsored plans like a 401(k), a 403(b), or if you’re self-employed, setting up your own type of retirement plan. When you save early, that money grows substantially.”
Gamble also addressed the formula for avoiding debt, which works against any financial plan. “It’s really not that difficult,” he said. “If you can’t afford to pay for it right away, or in the short-term, then you shouldn’t buy it. There are some exceptions like a house or a car, but for most other things in life, if you’re not ready to pay for it in a very short time period, then build that into your budget, save for it, and then when you’re ready, and have the funds, then buy it.”
For more information on this subject, visit the New York State Society of CPAs website, click here.