Why Everyone Needs a Plan

Financial Planning

Whether it is buying groceries, determining your next vacation destination, or even what time you’re going to wake up tomorrow, we plan for just about everything in life. Except when it comes to money. According to a Gallup poll, only 30% of Americans have a long-term financial plan that includes savings and investment goals. Failing to have a plan can make it much more difficult to achieve your financial objectives, regardless of size or time horizon. With this in mind, and in honor of October 6th being World Financial Planning Day, we have listed a few key areas to consider when creating a plan.

Understand Your Financial Position

Your future often stems from your present, so to have a clear understanding of your current financial position is paramount to understanding where you want to be in the future. Technology has made it easier than ever to do the occasional “pulse check” on your day-to-day activity. However, we recommend that you take the extra time to get a more in-depth picture of your current financial situation to align yourself with your future financial goals.

First, work on clearly defining your net worth including assets and liabilities. You should also be able to break down your discretionary spending into recognizable categories, such as utilities, home and auto, health and wellness, entertainment, etc. Next, have a clear strategy for cash reserves. The rule of thumb is to have an emergency fund equal to a minimum of six months’ worth of your average monthly spending. Lastly, have a strategy for managing debt. A good example is the snowball effect. Allocate any additional funds possible to the monthly payment of your smallest overall debt. Then, once it’s paid off, roll the monthly amount into the monthly dues of the next smallest debt, and so on and so forth. It is likely that you may already be leveraging some of these suggestions, but putting them on paper (or better, in Excel) will help you to develop a more comprehensive plan.


Investing is a critical part of any financial plan. Whether you choose to handle your own investments or have your money managed by a professional, we believe that developing healthy behaviors is the foundation of success. We often see individuals who fall into a trap of chasing returns or trying to time the market. While the thought of achieving a return that exceeds major benchmarks sounds attractive, it’s been proven time and time again that this strategy often fails. It’s as fool proof as trying to predict the future. Alternatively, individuals who take the time to develop attainable financial goals often have an easier time handling market volatility, primarily because their goals also encompass their tolerance for risk.

Retirement Planning

In retirement, without planning, we often say that people are more likely to run out of money rather than run out of lifestyle, though, the latter can be equally worrisome as the former. To mitigate these concerns, you should have a firm grasp on important items such as fixed and variable expenses, housing, health care, and inflationary pressures. The sooner you grasp these concepts the better, as you have more control over the success of your retirement earlier in life.

Risk Management

If you own a home or a car, chances are you already have insurance on these possessions. In most cases, coverage is either required by a lender or required by law. The reasoning is pretty straightforward, it helps protect you or another party in the event there is some type of loss. It’s important to have the right type of coverage. Settling for a less comprehensive policy because of price can leave you vulnerable in the event there was a loss associated with your property. It is financially prudent to shop your insurance regularly to help save money where you can, but in doing so, don’t save money at the expense of the quality of your plan.

Estate Planning

Estate Planning is often associated with the ultra-wealthy. This is one of the biggest misconceptions in financial planning. Simply put, estate planning helps establish who will receive your assets when you pass. It also helps chronicle how you would like your affairs to be handled in the event you are ever incapacitated and unable to carry them out yourself. Failing to address your estate before passing or incapacitation can lead to negative tax consequences, unwanted stress on your family, and improper divestment of your assets. While there are several online options available for those who want to tackle their estate plan by themselves, the reality is that circumstances change quickly and often. Developing a relationship with a local estate planner can help provide peace of mind for you and your loved ones.

Wrapping Up

Keep in mind that these topics only scratch the surface when it comes to a comprehensive financial plan. Some of the notable omissions include tax planning, planning for higher education expenses, life insurance, and many other situational specific areas. We left these topics out not because they lack importance, but simply because we believe the topics above are a great starting point for anyone who is taking on the new task of creating a financial plan.

Written by Nelson Greene, Wealth Manager