How can a financial plan fit on one-page?
In our work we talk to a lot of people. Many are overwhelmed with the idea of creating a financial plan. Maybe its that we are stretched for time, busy in both our personal and professional lives. Or maybe another part of the reason is related to years of financial advisors telling us that we need to create an impossibly thick document full of assumptions and guesswork. Between complexity, and the fact that the plan often misses what you really want, It’s no wonder that not a lot of recommendations get implemented.
So how do we create a simple and actionable document, that happens to fit on one-page?
Most of us are already doing some good things — saving money somewhere, investing that money somewhere, thinking about our families and what the future holds. However, many of us don’t fully understand our current financial reality, and we have even less of an idea of what we are trying to accomplish and if what we are currently doing will get us there.
This is where a one-page plan can inspire action. The goal is to create a snapshot in time of the line between your current reality or where we stand today and your goals for the future.
Here’s how to get started:
1. Define your Why.
Ask yourself the question — Why is money important to you?
The answer to this question lives on the top of your plan, and acts as your compass. It’s the reason you’ll make certain decisions and avoid others. Anytime you are facing a decision big or small, ask yourself if it fits with or gets your closer to your ‘Why’. It might look something like this:
Why is money important to me?
- I want to spend as much time as possible with my family
- I want to promote and protect the environment
- Travel for adventure with my family and friends
2. What are your Goals?
Next, list your goals. Don’t stress about defining your goals, give yourself permission to relax and understand that a lot of this is guesswork that will evolve over time. Think about the next 3 months, 1-year, 3-years, and 5-years+
- Gain clarity and confidence around my financial situation
- Save more money and create freedom and flexibility
- Travel to Norway to hike
- Understand where my money is going
- Save more money, start building wealth and investing toward long-term investments
- Understand insurance
- Buy our next house and determine how much we need to save
- Fund our retirement & kid’s college education
- Buy a farm in Montana
3. Next Steps / Action Items
Lay out the action items required to start meeting your goals. It’s also helpful to set a timeline for each set of next steps.
- Create a balance sheet and income statement
- Track and analyze my spending for the last 6 months
- Set up monthly investment contribution & evaluate options
- Put aside $2,500 for travel
- Review current insurance coverage types, amounts, & cost
By following these steps you’ll have a financial plan. The plan is a living, breathing document that requires on-going attention, and you’ll need to update it often. As you go along make sure to check your completed tasks off on the list but keep them there for reference, it really helps to show the progress we are making over time. The goal with is to get you thinking about your money on a consistent basis and most importantly be intentional with your decisions take action and control.