Question: When you do a financial plan, do you fund your retirement first or get out of debt? Is trying to save on taxes part of it? And my husband says we spend too much money on insurance, but I worry we don’t have enough. We’re all over the map! Where should we start?
Answer: If you want a plan for your money, get a plan for your life.
A life plan is like a flight plan for an airplane – it gives direction. It is also like a nation’s constitution, expressing the values important to that nation and establishing laws to reflect those values.
Once your life plan is in place, your financial plan can then be a natural reflection of your values. Suddenly, it can all “make sense,” since you now can see the bigger picture and the longer term.
Writing a life plan is not a fifteen-minute process. In fact, done properly, it will take you quite a bit of thought and reflection. It may be done over a weekend, or it could take several weeks (a little at a time).
Use the following tips to begin formulating your own life plan:
Step one: define your values. These values are the principles that guide you in your life. If you have never done anything like this, take some time. Don’t rush it.
If you are a spiritual or religious person, those values will obviously come into play in this process. But try not to fall into clichés and catch phrases – use your own words and terminology that is meaningful to you.
If you are not a religious or spiritual person, you still have certain values and principles that guide you. Work at identifying these and reducing them to writing.
You might try these brainstorming activities to help prime the pump: make a top ten list of phrases you want to describe you; imagine a family reunion 25 years from now…what do you want your family to remember about these last 25 years? What would you like said about you at your funeral? What would you like God to say about you?
Step Two: express your values. In a fashion that is meaningful to you, write a first draft of the values you identified in step one. Feel free to write a “yucky” first draft, knowing that you will refine it as time goes on.
Some will write nothing more prosaic than a punch-list of their values. Others may communicate their mission statement in the form of a poem. Still others may do so in paragraph form. Just remember, the only audience is you, so relax. This is a tool to use, not a piece of artwork to display.
Step Three: live your values. This is where the financial plan finally comes in. Assuming you do not have all the money in the world, you are going to have to make choices. You can’t have everything, so what are your priorities? Your life plan can help you see those.
Also, since we do not have all the money in the world, we can’t have it all now – therefore, we must save and invest to have the things we want. That means we have to do without some things today, so we can have the things we want tomorrow.
Your life plan can help you balance today’s pleasures with tomorrow’s priorities.
If you would like an example of a life plan, contact me via email, phone or mail and I’ll get one to you.
When NASA launches a satellite into deep space, it doesn’t aim its rocket at the point in space where the planet is NOW. It aims at the place where that planet is going to be.
A life plan should be like that – aiming you towards that place you want to be.
So get going! Map out your plan and enjoy the journey!
Byron R. Moore, CFP® is managing director / planning group of Argent Advisors, Inc. Email him at firstname.lastname@example.org. Write to him at 500 East Reynolds Drive, Ruston, LA 71270 or call him at (318) 251-5800. The opinions of any single advisor do not necessarily reflect the opinions of Argent Advisors, Inc.No forecasts can be guaranteed. Argent Advisors, Inc. does not offer tax, insurance or legal advice. The information contained in this column should not be construed as a substitute for personalized investment, tax, insurance or legal advice.