Where do I start?
It’s the most common question I get as a financial planner.
And usually, after the “where do I start” question come the follow up questions, each one pushing to the front, only to be bumped aside by the urgency of the inquiry to follow, each begging for attention and resolution.
Should I fund my retirement first or get out of debt? Max out my 401K or pay extra against my mortgage? How can I save on taxes? Do we have enough insurance? Too much? How do I know? Am I saving enough? Should I just pay cash for everything? What about the cost of college coming up for my high school senior? Do I really need a will? Will Social Security be there for me? How can I make sure my kids don’t fight over my money after I’m gone?
By anyone’s estimate, that’s a tiring (and perhaps intimidating) list of questions!
It’s no wonder so many decide at this point that their best course of action is…procrastination.
Some have said that trying to run your financial life without a plan is like trying to piece together a jigsaw puzzle…without the box top. You don’t realize how important a vision of the completed project is until you try building without it. Or even worse, what if someone mistakenly (or maliciously!) switches box tops on the puzzle. Talk about confusion!
But I’ve come to believe the jigsaw puzzle analogy is actually misleading. The idea of a puzzle illustrates the need for a vision to drive you forward. But in real life, there are no carefully cut puzzle pieces requiring only that you put them together. There is no pre-determined plan. The design is up to you.
Planning your financial life is actually more like working with a box of building blocks. Remember Legos? Those are the colorful, plastic building blocks that come in a nearly infinite variety of shapes and sizes.
With Legos, you apply your vision and creativity to a set of blocks. You are the designer.
There is no pre-set number of blocks. During your life, you will exchange your time, effort and skill for more “Legos.” And no one gives you any guarantees how long you’ll have to build.
Given all this ambiguity, it’s up to you to create your own masterpiece. And since the individual pieces will yield precious few clues about how to successfully build your magnum opus, we realize that a vision of the finished product is even more important than it is with a jigsaw puzzle.
With the jigsaw puzzle, there is only one right answer. With a box full of Legos, your imagination, ingenuity and industry are the only limitations to what you can build. Those, and your inventory of Legos!
Isn’t that a lot closer to real life?
With so many unknowns, how and where do you begin?
It’s my hope in this paper to give you some tools to assist you in your thinking about what I call a Real Life Financial Plan®.
A Real Life Financial Plan® is a plan that combines both the human and the financial elements we all deal with when it comes to money.
I will argue that a Real Life Financial Plan® must first be discovered. Then it must be designed. And finally, it must be deployed.