At Haddam Road Advisors, we approach financial planning with precision and care. Over the course of a few blog posts, I'll be diving deep into the "why," "what," and "how" behind financial planning and portfolio management. These are foundational questions to help you understand the importance of having a solid financial plan and how we implement it using our specialized Planning Grid.
It’s a good question and one I hear often. Many people believe they can manage their finances on their own, but the reality is that financial planning involves navigating a vast number of issues that arise throughout life. At Haddam Road Advisors, our Standard of Care outlines about 70 different financial issues you may face over the course of your lifetime. This includes everything from tax planning, retirement savings, and estate management, to portfolio diversification and risk assessment.
This extensive list of potential financial challenges isn’t comprehensive, but it gives you an idea of how intricate your financial landscape can become.
A proper financial plan takes into account both the present and future financial well-being of an individual or family. Net Cash Flow and Net Worth are the two primary metrics we focus on when designing a plan.
This is where our Planning Grid comes into play. It is a straightforward but powerful tool to break down your financial situation and categorize the essential components.
These two factors together create your Net Cash Flow metric. If your inflows exceed your outflows, you have a surplus—this surplus is crucial for saving and investing.
What You Own (Assets):
What You Owe (Liabilities):
These components together form the core of your Net Worth. While Net Cash Flow is your focus in the present, Net Worth becomes your focus for the future.
We begin with the Planning Grid to create a clear, step-by-step approach to addressing your financial concerns. This grid helps us break down complex financial planning issues and incorporate them into a cohesive strategy for you. Every financial decision you make—whether it's increasing income, managing expenses, or dealing with debt—fits into this larger picture.
Our goal is to provide a plan that doesn't just focus on your immediate needs but also sets you up for long-term success. Whether it's figuring out how to save more, determining how much risk to take on in your investments, or planning for retirement, our focus is on guiding you through these decisions in a clear, non-judgmental way.
To break it down visually:
The goal is to balance these two measures—cash flow and net worth—to create a stable and prosperous financial future. A positive cash flow feeds into your assets, increasing your wealth, while managing liabilities ensures that you are not weighed down by debt in the long term.
At Haddam Road Advisors, financial planning is not about quick fixes or one-size-fits-all solutions. It’s about a comprehensive understanding of your life, your financial flow, and the decisions you make to balance the present and future. With our Planning Grid, we help you focus on what matters now (Net Cash Flow) while preparing you for what lies ahead (Net Worth).
Stay tuned for future posts, where I’ll dive deeper into topics like income types, tax strategies, investment risks, and debt management. These insights will help you make informed, strategic decisions about your financial future.
We look forward to continuing this journey with you! if you would like to learn more about Haddam Road Advisors and how we can help you achieve your financial goals, please schedule a call below.