And now we will go through the last two steps to taking control over your money and telling it whose boss. These two steps are last, but they are probably the most important ones so listen up! These steps are important to do by yourself, with your partner, and with your advisor because you want to make sure everyone knows everything and is on the same page.
Month 3: Your Financial Plan
- Week 1: Go through your goals. Make a list of your goals and then prioritize them so you know which one you are working towards first. Remember I said this is important for your partner and advisor to know so you are all working towards the same thing. Be realistic and understand if some of your less important goals might not become a reality or might take a while longer. If your circumstances change, make sure you inform your advisor. If you lose your job, you might not be willing to take on as much risk as before with your investments, but your advisor won’t automatically know this. Your goals might change with your circumstances as well. You get a promotion and have more money to stock away for your next big goal: a vacation condo. Remember your goals list and start saving that extra money before you get used to spending it! One family got a nice promotion, and they were all set to save an extra $2,000 each month towards their kid’s college. This was important since their kid was in high school already. However, they started using the extra money to live on and before you know it, they haven’t saved a dime of it. So start saving before you start spending that extra money! Maybe a goal was to pay off your student loan debt, and you finally paid it all off. Do you treat yourself each month and spend that new found money? Not if you want to tackle the next goal on your list. Put that extra money towards something more rewarding than “stupid stuff!”
- Week 2: Get your strategies in order to get to your goals. This is where your financial plan comes into place. It’s time to sit down and get a plan in order so you can stop say dreaming about your goals and actually live them. One couple recently came in to see me, and they were working with another advisor. No offense to the advisor, but the couple had no plan in place, and they were in retirement. They had no idea where their money was coming from, if they were withdrawing from the right accounts in a tax efficient way, or if they were taking out too much or too little (if they were so lucky!). Since they had no idea what they were doing and being in retirement when they were withdrawing from their accounts, it added a lot of stress to their lives. They had NO idea if they were on track or going down a bad path, and it was so overwhelming to them. By creating a plan, they were able to see exactly what they were doing and what changes they can make to insure they are financially fit for their entire retirement. So what is your plan, does it need to be adjusted, and what part of the plan can you implement today???
- Week 3: If you haven’t already, meet with your advisor. If your advisor hasn’t brought up some of the things we talked about the last few weeks, it might be time for a change. Schedule a quick 10 minute call to make sure you are doing everything you can to get to your goals instead of waiting around for your advisor to call you once or twice a year.
- Week 4: Grab a martini or piece of cake. And then schedule on your phone or calendar set aside a time each year (at least) to review your goals, plan, and strategies. And then have another drink, it’s on me!
essica Weaver, CFP®, CDFA™, CFS®