Your Financial Plan and the Role of Insurance

Creating a Financial Plan

Having a rough idea of what your future should look like isn’t enough to secure a comfortable retirement. A financial plan won’t guarantee that you’ll enjoy your golden years, but it can help you work toward making that happen. So what is this magical financial plan? It’s a comprehensive assessment of your current financial status, an overview of your short-, mid- and long-term goals and a strategy that will help you reach them.

Set Financial Goals

The first step in developing your financial plan is to know what you’re saving for. Think short-term, mid-term and long-term. Do you plan on buying a home in the next three years? Write it down. Do you want to have your business running without you in the next nine years? Write it down. Do you have visions of the Bahamas after you retire? Write. It. Down.

Whatever your goals are, write them down so you can better plan for your actions leading up to those achievements. You can’t build the roadmap to financial security without knowing the destination.

Create a Budget

Run through your statements and receipts to figure out where you are now. This is an opportunity to find places where you can tighten your belt, but be realistic in your discretionary spending and allow room to breathe.

Fixed Expenses

  • Housing | mortgage/rent, insurance, property taxes, dues, maintenance/repairs, utilities, phone, internet
  • Healthcare | health premiums, copayments, deductibles, medication/supplies, dental, vision
  • Transportation | vehicle payments, insurance, gas & oil, maintenance/repairs, parking, public transportation
  • Debt | loan payments, payments on credit cards, other debts

Discretionary Expenses

  • Food | groceries, dining out, ordering in
  • Personal | clothing, gifts, personal care, charitable contributions
  • Entertainment and Recreation | sports, hobbies, gym/club dues, cable/streaming, subscriptions, travel, movies, music, pet expenses
  • Dependents | extracurricular activities and lessons, childcare, K-12 education
  • Savings Toward Goals & Insurance | 401(k) contribution (pre-tax), IRA contribution, mutual funds, stocks, bonds, college savings, emergency savings, life insurance, disability insurance, other insurance, additional payments on credit cards/loans

Build an Emergency Fund

An emergency fund can be useful in situations ranging from minor home-appliance repair to longer-term unemployment. How much should you save in your emergency fund? Most financial experts recommend that you have somewhere between three months and six months of basic living expenses in your emergency fund. The three-month guideline is generally recommended for those who are in salaried positions and have more secure employment.

Address Your Debts

Fully understanding your debts is a key piece of planning for a financially sound future. Take a minute to write down the balance, interest rate and minimum payment for each debt you have. Now that you have all of the numbers down in front of you, decide the best method to manage your debts:

Snowball Method | The debt snowball method is a debt reduction strategy where you pay off debt in order of smallest to largest, gaining momentum as you knock out each balance. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance.

Avalanche Method | The debt avalanche targets debts with the highest interest rates first. This route may help you save time and interest over your debt payoff journey.

Protect Yourself with Insurance

Purchasing insurance is about protecting yourself against risk.

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How Can Insurance Protect Your Financial Future?

Insurance is an essential part of any sound financial plan. Being prepared for the unexpected will ensure that you can still reach your goals after facing a financial crisis. Certain situations can be expensive for those without coverage, or with insufficient coverage.

One of our own Stromsoe Insurance Protection Coaches knows the importance of insurance from personal experience. Our teammate’s mother was hit by a drunk driver and because of that crash, she lost her leg. The drunk driver wasn’t insured, so the buck stopped with her. Months of recovery had wracked up medical bills. Her own insurance was able to provide her with some support through her Uninsured/Underinsured Motorist coverage, taking a great deal of the burden off of her own family.

For a number of people, this is the sad truth they find themselves facing. Insurance is meant to protect you in the event that one of those risks becomes reality. All too many out there are either uninsured or severely underinsured. It’s important to work with your local, experienced, independent insurance coach to find the coverage that works for you.

Why is Insurance Considered a Financial Product?

To answer this questions, let’s take a look at Life Insurance. The purpose of life insurance is to provide a replacement of your income in the event of your passing. Life insurance policies can be one of the most important financial products you can purchase, and they are often more affordable than you might think. But how much life insurance do you need?

The amount of life insurance is going to depend on you and your situation. How much annual income would you need to replace if something were to happen to you? Do you have any debts? How much do you have in savings and investment accounts? Do you already have life insurance policies?

There are two general rules of thumb when it comes to deciding how much to purchase:

  1. Multiply your annual income by 10
  2. Multiply your income by 10 and add $100,000 per child for college expenses


Questions? Want to learn more? Here’s 4 easy ways to reach us:

Phone: 877-994-6787
Text: 951-482-8144

PS Here’s a few words from one client that trusts Stromsoe Insurance Agency:

“After a little accident with a parked car, we called [Stromsoe Insurance] for advice, [they] took time to answer all my questions, and gave me some practical advice in handling the situation.”

Louisa Hsieh – Temecula, CA – Clients Since 1993

PPS Every policy is backed by our iron clad, 100% complete satisfaction guarantee. Ask for your copy today!