ADVISORNEWS
Help Clients Spring-Clean Their Financial House When you help clients improve their financial literacy, you move them along the road to achieving their financial goals in every season of their lives. • Eddie Gill
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or many, spring is a time to refresh home and garden, but the turn of the season is also a great opportunity to assess your clients’ financial literacy. Every client has different needs and expectations when it comes to financial planning, whether it’s managing a monthly budget or planning for retirement. Providing clients with the guidance they need to improve their financial literacy will aid in their financial health and overall well-being.
Planning vs. Budgeting
Differentiating between budgeting and financial planning is an important distinction when it comes to financial literacy. While budgeting plays a part in financial planning, budgeting on its own is not a
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InsuranceNewsNet Magazine » April 2022
financial plan. Budgeting is an opportunity to list income and expenses and allocate the former to the latter, ensuring expenses don’t exceed income. When clients see where they are putting their money, they evaluate what is and what isn’t a necessary expense, which helps them make financially healthy decisions. Financial planning involves setting goals for different stages of life. For example, someone in their 20s might be saving for a wedding, while someone in their 40s might be paying for their children’s college expenses. Along with planning for life’s milestones, other important financial
considerations include insurance, investments, savings and retirement.
Cleaning Up Debt
Many clients think paying off debt must be their first priority when looking at their financial picture, but it doesn’t have to be an all-or-nothing proposition. Starting a savings or emergency fund and saving for retirement can be done in tandem with paying debt. A client’s emergency fund should include a month’s worth of take-home pay. This can provide a safety net in case of unexpected expenses. Incorporating
Incorporating a savings element into monthly budgeting as part of a long-term financial strategy will ensure that clients are on track to meet their long-term goals while they are tackling debt in the here and now.
