If you are like many other Americans, you have promised yourself that you will save more money this year, especially to cover emergencies. Perhaps you even set a goal. But inevitably something unexpected, an emergency, comes up, your financial resolution is derailed, and you are back to where you started. Except that now you feel like a failure.
The best way to stick to and achieve your goal is to develop a plan. At Life and Career Planning, we recognize that having a complete financial plan is critical. A life without a financial plan is like a boat adrift in the sea. You just won’t know if you can weather a storm, where your boat will land, or if it will land at all unless you have a plan. Financial Planning is a critically important chapter in the book Time To Get Real! The contents of this chapter are one of the greatest gifts that we can give to a reader because all of your life plans should be based on a realistic view of your financial life. Your financial position will either support your plans or cause them to crumble.
A life without a financial plan is like a boat adrift in the sea. You just won’t know if you can weather a storm, where your boat will land, or if it will land at all unless you have a plan.
Too many people shy away from thinking about their current and future financial status. Our day-to-day worries and financial concerns eat up our time and prevent most of us from thinking ahead more than the next several months or a year. In our practice and in our teaching, we have met too many people who are financially ill-prepared no matter what their career. In addition, financial planning is important at every stage of life.
Financial Planning is Important at Every Age
We find that our message about financial planning is not taken as seriously as it should be by younger individuals in the 20 to 35-year range. These young people, with exceptions, see the need for financial planning as something way off in the distance. After all, “Why talk about retirement when I’m 27 years old?” The reason that this attitude concerns us is that the possibility of achieving one’s long-term financial goals is greatly increased the earlier an individual thinks about it, acts on it, and makes decisions about savings and investments. Career decisions can be informed by an early financial plan. Decisions about marriage, having children, where to live and so on, can all be informed by having a financial plan. Having a financial plan at a young age can demonstrate the choices and options faced by the young person and how one choice or one option might be better than another for their long-term financial health.
One example of how a goal and a financial plan could be implemented focuses on the establishment of an emergency fund. According to an article by Michelle Singletary in The Washington Post, “When trying to build an emergency fund, it’s best to set it and forget it. Set it up so that there’s a direct deposit from your paycheck to a bank account for your emergency funds. I suggest it be a different financial institution from the one where you keep the account to pay your bills. The separation usually results in less temptation to transfer funds into the household account to make up for overspending.
If your employer doesn’t allow split deposits or you’re self-employed, you’ll have to set up a system to make the automatic deposits yourself. You could schedule regular transfers from your checking account into a savings account at the same institution. The point is to make paying yourself feel like a bill that needs to be paid every time you get a paycheck.”
On the other end of the financial planning spectrum, individuals on the glide path to retirement have different expectations for their time in retirement. Some want to spend more time traveling; others merely want to spend more time with family. Others prefer to move to a warmer climate, perhaps purchase a home. Still others want to take up long-desired hobbies like cycling, painting, or volunteering. You need to envision just what you would like your retirement to be and attach to it the lifestyle costs that will support your vision. The amount of money you need is a function of your needs and your desires. The ability to be able to produce that money now and into the future, so that you’re ready for retirement, starts with a good financial plan and the actions required to build that supporting base.
Involve loved ones in your planning
Financial planning helps you to discuss with those you love important issues about retirement, savings, where to live, planning for children, the details of your respective wills or estate plans, and so on. If you have someone significant in your life, engage him or her in the planning at the outset. It works even better if that significant individual is one of your key relationships and has provided input to your overall life and career plan.
If you have both a life and career plan and your financial plan, you now have a motor on your boat and you can take that boat, which is your life, where you want, bringing your significant others along with you. If you don’t have a financial plan, don’t procrastinate in getting one.
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If you would like more information about financial planning, we recommend reading chapter nine in our book Time To Get Real!. Having a comprehensive financial plan is one component of the Life and Career Planning Model© featured in the book. This model is the framework for developing your own life and career plan. Should you choose to create your own plan, we suggest that you consider some amount of personal coaching that can help you to discern and activate your life’s mission and move you toward the best life and career that you deserve. Our coaching fees and services are flexible and meet a broad array of client financial and coaching needs. All Life and Career Planning LLC coaches are experienced and certified in the Life and Career Planning Model© and serve as your accountability partner. To inquire about working with a coach, click here.
