Do I need a Financial Plan?


I’m sure you have heard the term “financial plan” before and may have a general idea of what it means to create one on your own or with a financial professional. However, you may not be aware of the details, the long-term benefits, or the various areas of your finances that a financial plan covers. You probably think that it seems like a lot of effort, with many numbers, and a bit time-consuming. Well, you are right. A financial plan is all about getting laser-focused and "taking time to work on it, not just in it." And if you are genuinely interested in maximizing your full wealth potential and giving your best effort toward your finances, then a financial plan may be the difference-maker. Remember that if success came easy and didn’t require much effort, we’d all be wealthy! As I tell my teenage kids, there are no shortcuts in life. If you want something bad enough, you will have to work hard at getting it and even harder at keeping it.

Think of financial planning in terms of fitness. Let’s say your goal was to “get healthier.” You know that eating better, going to the gym, or taking regular walks outside are positive actions you can take. Do all three of these activities, and you will improve your overall health. Will you reach your goals and stay there? Maybe. You will be better off for sure. But, how healthy do you specifically want to be?

Let’s say you took some time to figure out what specific and measurable health goals you want to achieve and by when. “I want to lose 15 lbs. and lower my LDL cholesterol level by 30 mg over 12 months so that I can have more energy and feel great.” Now we are talking about real numbers and specifics. So, you sit down with a nutritionist who reviews your current eating habits and then lays out a specific meal plan for you with a recommended caloric intake and the ideal balance of fats, carbs, protein, and fiber. You then meet with a personal fitness trainer who creates a detailed fitness routine, schedules specific times and days to meet with you to train with you one-on-one and recommends a particular exercise routine when you work out on your own. You also meet with your doctor, who reviews your blood work, hormone levels, and body fat percentages taking note of where your numbers are today and the difference between where you would like them to be. The doctor recommends certain supplements and specific lifestyle changes that can help improve your levels and get you closer to your targets.

You now have your specific health goals set, your numbers to track, and an outline of actions to take. You have a team of professionals helping you along the way and keeping you accountable. Because you invested your time, energy, and even your own money into creating your health plan, you are now fully vested, motivated, and clear on what you need to do. Congratulations, you have just significantly improved your chances of success.

Creating a financial plan is very similar. “I want to retire” or “I’m already retired and don’t want to outlive my money” is replaced by “I would like $100k of income in today’s dollars at age 65, be debt-free, and budget $15k a year for travel expenses.” Specific, measurable financial goals with a time horizon. A review of your income, expenses, taxes, monthly savings, wasteful spending, etc. is performed. A specific cash flow plan and allocation of excess savings are recommended. Your assets, debt, investment strategy, and performance are analyzed and discussed. The amount of capital needed to provide you with $100k a year after considering any pensions, social security, or other income is determined. A plan of action, tailored especially for you, is produced and then implemented. Your progress is tracked, and your performance is calculated. You have a team of professionals keeping you accountable, providing guidance, and helping with the critical financial decisions you will face along the way. Congratulations, you have just significantly improved your chances of success.

Taking the time to create a financial plan is worth the effort. If you would like to examine how a plan can impact your financial picture, please reach out to our team. We will be happy to set aside some time to speak with you.