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sound plan should cover a broad range of topics that relate to your present security, as well as to your future well-being. It should include an analysis of your net worth, investable assets, commitment to goals, and a time frame. The successful plan is balanced, pinpoints your particular needs and goals, creates an integrated strategy to help meet them, and encompasses these six cornerstones:

ExamineYour Present Situation In order for your financial advisor to guide you along the path to achieving your goals, he or she needs to have a clear understanding of where you stand presently. This means figuring out your net worth and liquid net worth, examining your cash flow, and determining your cash reserves.

Cash reserves are a vital part of your financial well-being. For instance, let’s say you have $50,000 in your savings account and $3000 in your checking account. You want to invest the $50,000 so that it potentially earns more than it does in a regular savings account. Now, I recommend keeping three to six months worth of expenses as a cash reserve. Therefore, if you find that your monthly expenses, after taxes, are $2000, then the $3000 in your checking account isn’t going to cut it. You should have at least $6000 as a cash reserve.

By analyzing your current situation, your advisor may find ways to help you save money and reach your goals faster than you may have known. Redirecting some of your money could help you put money away for retirement, or achieve another goal, without it seem- ing like you are spending any more money than you currently are.

Have Adequate Protection Protecting yourself from the unexpected is a vital element in finan- cial planning. As time goes by, you change, and so do your protection needs. Having adequate protection means a number of things, such as providing for your family after your death or replacing earning power after a disability. Protection means insurance, and while many people dislike the thought of insurance, it is terribly important.

Many of my clients are already retired and older. They don’t need any disability insurance since they aren’t working, and for many of them, life insurance really would be a waste of money. However,

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