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

Welcome Home

With spring comes the season for homebuying and homebuilding. I’ve noticed homes in my neighborhood have been selling more quickly than in the past few years. And several homebuilders I talked with for this issue’s cover story are optimistic about what this season will bring.

The Home Builders Association of East Central Illinois will have its Showcase of Homes in the Prairie Meadows subdivision in Savoy from June 12 to 22 — the first showcase in five years. I’m looking forward to checking it out and seeing the craftsmanship of area homebuilders.

Also in this issue, we have a profile of architect Andrew Fell, who has designed both single-family homes and numerous apartment buildings in our community.

Two University of Illinois professors are hoping they can influence the paper industry to be more environmentally friendly. They’re experimenting with making paper from native prairie grasses and agricultural waste. Read about them in the Innovation feature.

Enjoy this issue, and the spring season.

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