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5 Ways to Take Control of Your Financial Plan Thumbnail

5 Ways to Take Control of Your Financial Plan

October is a great month. Earlier this year on a hike with some friends we had a discussion on the best month of the year and October came out with the majority of the vote. After all, it carries the prospect of great weather, fall foliage, a busy sporting schedule, and Halloween.  

October also marks the start of the last quarter of the year and a great opportunity to finish strong both personally and professionally. While the headline of this post plays on the fun of Halloween’s spookiness, it’s no secret that a lot of people are scared to look at their financial situation. The reasons vary, but some of the most common excuses we hear are: ‘Once things settle down I’ll have more time for this’ or ‘I don’t have enough money to get started’ and ‘My situation is changing and I can’t possibly commit to a budget right now’. The good news is that now is a great time to revisit and take control of your financial plan. Here are some things to know & that you can do right now to take control of your family’s financial plan.  

Small Amounts Add Up

Don’t think you have enough money to invest? It's true that small amounts matter and can they can add up. 

Let’s say you make $150,000 as a family and are currently saving 5% of your income. This means you are investing $7,500 a year or $625 per month, if you earn 8% for 20 years you would have $368,137.76. Not bad right? However, If we increase our savings rate to 6% of income (an increase of $125 per month) this number shoots up to $441,765 at the end of the 20 year period. Now let’s assume you buckle down and get to your savings goal of 10% a year. Earning 8% for the same 20 years you would now have $736,275. That's a significant difference.  

How to pursue: Automate. Simply adjust your contribution percentage (%) on your retirement plan or the amount of the automatic deduction you have set up on your investment accounts. Once you live without it, you’ll never miss it.  

Don’t Wait Until Things ‘Settle Down’ to Get Started

This is the most common excuse we hear for not tackling your financial goals, and it usually goes something like this, “With the kids’ activities and our work schedules we just don’t have any time right now. We should be able to sit down in 2 months when ‘(you name it)’ ends and take a look at it then".  

The thing is; it doesn’t really take up that much time to just do something. Pick one priority and work on it for a 30 minutes. Financial planning doesn’t have to be a marathon planning session with your advisor. It can be as simple as logging into your 401(k) account and moving the contribution from 5% to 6%. Once you have that first item done, I know you’ll feel empowered to move on to the next one.  

Here is a simple way to get started: On a piece of blank paper or napkin.  

  • Answer the question ‘Why is money important to me?’ 
  • Directly underneath list your top 3 goals at this moment. 
  • Then, list the specific next step you’ll take to work toward each of those goals.  

Take Control of Your Budget

If you are always in the pattern of thinking you don’t have any extra money to save, you are probably right. On the other hand if you are a person who thinks you can find a little extra each month to sock away, you are also probably right. The point is, it’s all about mindset and the power of intention. It’s also important to have a budget and system of accountability. According to a 2013 Gallup poll only 32% of American use a budget. A recent study by US Bank has that number increasing to around 40%, but this is still a large percentage of the population without a good budgeting process. 

How to get started: List your last 3-6 months of spending from bank and credit card statements and spend an hour analyzing exactly where your money goes. There will be a few outlying items but this period of time will give you an indication of your spending habits and what you are doing well and not so well. Plan to save a minimum of 10-15% of your income toward long-term wealth building investments, and try to keep your fixed expenses to no more than 50% of your income and discretionary spending to no more than 25% of your income.  

Look at Your Investments

It’s true that investing is a long-term process, and one that is better left to a consistent and disciplined approach with less movement. However that doesn’t mean that you shouldn’t know exactly what investments you own and be able to answer why they are in your portfolio. The majority of folks that come to us have said ‘I don’t understand what I own, so I just don’t look at it’ or ‘I picked a few funds based on the ones with the best performance when I set up the account and haven’t looked at it since’. I know this can be confusing, so it’s best to ask for help. Your retirement plan at work should have an advisor you can ask or call your financial advisor (I’m always happy to give input). 

If you want to try and tackle it alone, here are a few things to consider and look for:

  • Find an online tool to help you track and analyze the asset allocation of your holdings and risk level.  
  • Determine current asset allocation. This is the percentage of stocks, bonds, and cash that your portfolio holds. 
  • Know what types of each of these assets (classes) you own. i.e. domestic vs. international, large cap vs small cap, etc. Every asset class carries different characteristics of risk and return. 
  • Review Expense Ratios. These are internal costs that can bring down investment performance.  
  • Look at Past Performance. Make note of the 5 & 10 year numbers. 

Make a Balance Sheet

The balance sheet is the keystone of the financial planning process. If you've just realized that you don’t have a balance sheet, take a minute and get started. On a napkin or piece of paper, simply list all your assets and all of your liabilities, you don’t even need worry about the value at the moment, just list what you have in approximate terms.  

The goal here is to create awareness and momentum. With your balance sheet you’ll be able to calculate your net worth (assets-liabilities) and see your progress over time. You’ll want to create a system that you can track consistently, many people use a spreadsheet or an online program that aggregates all your accounts for you in real-time by connecting to your various financial institutions. I use both and recommend taking 15 minutes once a month to sit down and update your balance sheet and track your net worth.  

There you have it, 5 things to get back in control of your financial situation. Don’t let those scary thoughts hold you back! As always I would love your thoughts, questions and tips that have helped you along the way.  




The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.  

All investing involves risk including loss of principal. No strategy assures success or protects against loss.  

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.