Central Illinois Business Magazine
FINANCIAL PLANNING          February 2013

Financial strategies for success


Curt Anderson

By Curt Anderson
CIB Contributor

As we venture into a new year, the prospect of developing and adhering to a financial strategy can sometimes be overwhelming. However, it doesn't have to be complicated. When organizing your finances and planning for the coming year, consider taking the following three steps:

• Measure your current financial status.

• Identify your financial goals.

• Identify the steps to help you get there.

Measuring your current financial status can best be accomplished by preparing a personal balance sheet.

Goal setting is critical in creating a successful financial plan, but few people actually set clearly defined goals. Funding a child's education, increasing current income, reducing taxes, achieving retirement security and passing accumulated wealth to their families at death are all popular primary financial objectives.

Set aside enough reserve funds to cover emergencies or temporary unemployment. By planning ahead for large expenditures, you can prevent anxiety and save on finance charges. Many financial planners suggest you have three months' salary available in savings for the unexpected. Then take a look at your spending needs over the next year or two. Once you've determined how much you need and when you'll need it, you're ready to identify the steps to get you there.

Here are four points to include in your financial strategy.

Consistent saving.

Using a payroll deduction or automatic savings program is often more successful than simply trying to save on a less frequent basis. Automatic saving plans are easy to set up, result in consistent deposits and are available in a number of forms. Select one that meets your long-term needs and fits your budget.

Wise investing.

Investments come with risks, and ideally higher returns to compensate for those risks. Asset allocation, diversification and investment costs should all be taken into account as part of a wise investment strategy. Understanding the risks of price fluctuation, loss and inflation are necessary when creating your financial plan.

Adequate protection.

Periodically, you should review all your insurance coverage. This includes homeowners/renters, health, auto, disability and any umbrella policies. For peace of mind, make sure you have the right combination of coverage and deductibles. If you use insurance primarily for "catastrophic" coverage, remember that higher deductibles usually translate into lower premiums.

For life insurance, first evaluate how much you really need. If your family would need significant funds to replace your income, a larger policy might make sense. If you are single, perhaps a smaller policy (and smaller premiums) would be a more cost-effective option. Also, compare the benefits and costs of term and whole life policies. For younger, healthy individuals without need for permanent protection, a term policy may be better.

Use a qualified adviser,

if you need one.

In areas where you need or want help, find the right adviser. It may be an investment professional or financial planner who can provide guidance. Make sure he or she is qualified and that you can comfortably work with him or her. Do your homework. The more knowledgeable you are, the better you will be able to evaluate recommendations.

When considering an adviser, review qualifications and experience such as education, number of clients and professional references. Find an adviser with a competitive edge such as a CFP, CFA and/or CTFA designation. With extremely stringent academic, continuing education and examination requirements, these designations are considered to be some of the most difficult and prestigious to obtain.

Remember, your decisions will affect you and your family for a long time. Implementing a financial plan now will reap benefits for years to come.

Curt Anderson is executive vice president and managing director of Busey Wealth Management.



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Editor's Note

Made in Central Illinois

It was a couple of decades ago when Champaign-Urbana first was referred to as the “Silicon Prairie.” A tech consulting company — Pixo, previously known as OJC Technologies — formed around that time and is one of the success stories of the Silicon Prairie. Pixo President Lori Patterson said Champaign-Urbana has been a fertile ground for companies such as hers, and the community has now developed a “tech ecosystem” where activities at the University of Illinois and the Research Park provide resources for local tech companies.

You can read in this issue about what makes Pixo unique and how it has grown.

Champaign County is home to many manufacturers as well, and our February/March issue featured several businesses that made products here for customers worldwide.

That story has spawned a new feature for Central Illinois Business — Made in Champaign County. We’ve partnered with the Champaign County Economic Development Corp. to feature an area business in each issue and tell you a little about who they are and what they do. And we’ll venture outside Champaign County so you’ll learn about businesses in neighboring counties too.

Jodi Heckel is editor of Central Illinois Business magazine. She can be reached at 217-351-5695 or jheckel@news-gazette.com.