As we all know, when life doesn’t go as planned, it can create a tremendous amount of financial stress. Any unexpected change in personal circumstances such as a job loss, divorce, or illness can disrupt your sense of security. For some, extended periods of volatility in the financial markets can also contribute to financial stress.
These rocky periods can lead to financial anxiety that manifests in many forms, including obsessive behavior like constantly checking your financial accounts or being frugal beyond reason, sleepless nights, feeling depressed, or even in some cases hoarding. If you feel stressed about money, you’re not alone. A 2022 Stress in AmericaTM survey by the American Psychological Association found that 72% of Americans reported stress about money.
A Comprehensive Financial Plan Is Full of Knowledge
As financial advisors, we believe that having a comprehensive financial plan is an important way to cope with financial stress. While a financial plan can’t eliminate the underlying problems causing worry, it can help put you in control.
One of the gifts of a comprehensive financial plan is that it is full of knowledge. As you know, knowledge is power. This empowerment is what ultimately helps manage financial anxiety.
The plans we create for our MPPL Financial clients act as both a roadmap and a powerful, dynamic decision-making framework that keeps them informed of the tradeoffs and implications of critical decisions they face.
For example, financial plans help answer important questions:
- Where you stand relative to important life goals, such as when you can retire, whether you can afford a vacation home, or the best ways to help pay for your grandchild’s college education.
- What your financial future may look like. How much financial flexibility do you have to sustain your desired lifestyle as circumstances change?
- How to pivot when circumstances change. We help clients determine how to adjust their finances after job loss, loss of a spouse, or divorce. Sometimes the pivot entails a change in investment strategy; other times we work with the client to adjust their spending.
Using a Financial Plan as a Decision-Making Tool
We use dynamic financial planning software that allows us to easily conduct real-time scenario planning showing clients the potential impacts of different assumptions. The types of assumptions we can adjust frequently include things like changes to the average growth rate of your investments, amount of your spending, and amount you save. The financial plan helps assess the implications of taxes based on current law and is always updated to stay current on inflation rates.
When it comes to inflation, one common thing MPPL advisors are doing just now with clients is running scenarios using various assumptions for long-term inflation rates. This shows them their financial flexibility if inflation persists for extended periods at different levels. Our clients tell us it’s been a reassuring exercise.
The dynamic nature of the financial plans we create also lets us show clients the impact of strategic decisions such as paying down a mortgage sooner rather than later, or the potential benefits of a Roth conversion.
For clients with asset surpluses, scenario planning can highlight potential benefits of various estate planning moves, such as accelerating giving to family or accelerating charitable giving from bequests to lifetime gifts. For example, one benefit of accelerating gifts is the opportunity to see their impact while you are living.
In a nutshell, the knowledge gained from the scenario planning is intended to give you perspective so that you can make the best possible decisions with your goals in mind.
Times of turbulence remind us that financial stress and risk are real concerns everyone needs to address. By having a comprehensive financial plan and working closely with a trusted financial advisor, you will be able to focus on the things you can influence and control in your life. Ultimately, the knowledge and confidence you gain to make informed decisions can help you achieve peace of mind about your finances and enjoy the beauty of life.
MPPL Financial has offices in Duluth, MN, Grand Rapids, MN, Wausau, WI and Crystal Lake, IL. While we’re located in the Midwest, we work with clients across the entire U.S.
Investment Advisory Services offered through Midwest Professional Planners, Ltd. (“MPPL”), 2610 Stewart Ave., Ste. 100, Wausau, WI 54401, 1-800-236-6775, an SEC-registered investment advisor. Certain representatives of MPPL are also registered representatives of, and offer securities products involving commission or transaction-based fees through APW Capital, Inc., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866, 1-800-637-3211. Member FINRA/SIPC/MSRB. MPPL is independent of APW Capital, Inc. Registration with the SEC or State Regulatory Authority does not imply a certain level of skill or expertise.