Make a Financial Plan With These 7 Steps By Fern LaRocca At Isnare.com Ezine Articles

You may have a good investment plan or estate plan or retirement plan but without coordination of these plans, you are most likely to lose out on making money. The reason why is that all of the 7 steps in a financial plan will get you the goals that you want, in the time that you want and with tax advantages and with a comfortable amount of risk. Most people target just the investment plan or retirement plan and lose focus of the big picture. Here are the 7 steps that you will need for success in creating financial independence:

1) Emergency Cash Reserves. You should have 3- 6 months of salary in an account that is easily accessible without penalty. Use this cash, not credit cards when the water heater needs replacement or for other short term unexpected expenditures.

2) Risk Management. Insurance is a necessary evil. We must insure our car, home, and other large assets. You also may need life insurance to replace lost income and pay off debts in case of a death. Protect what you have acquired with the right type of insurance for the right amount of coverage and affordable too.

3) Estate Plan. The basic necessary documents of an estate plan are a will, durable power of attorney for financial care and durable power of attorney for medical care. For larger estates, a living trust, marital trusts, and charitable trusts may be suitable. These documents will help keep more of what you have earned in your family for future generations.

4) Goal Setting. This is the glue that holds it all together. When you get that tempting offer to invest in a friend's business, you can go back to your financial plan and remember that an investment like that may not help you reach your financial goals or may add unnecessary risk. Your commitment to your goals will keep you on track for success over the long run.

5) Investments. You have the proper asset allocation plan to meet your goals and you understand and are comfortable with the risk you are taking to get there. Without an investment plan that is goal based, you will be investing on the whims of the news and the economy instead of what you need.

6) Retirement Plans. Your base of income that will supplement your social security will come from defined contribution plans like the 401K and from defined benefit plans. Make maximum contributions to these plans every year. They grow fast because of the tax deferral and are painless since they come right out of your paycheck.

7) Tax Planning. A good tax plan means taking all the deductions that you are legally allowed. It also means taking advantage of tax deferred plans, and utilizing tax credits whenever you are eligible. Every dollar saved in tax is money in your pocket. Don't overlook these strategies.

Feel like you can't do this alone? Find a fee-only financial advisor to make a comprehensive plan for you or a financial coach to guide you through what you have and what you need. Your financial future depends on coordination of these wealth building steps.

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