What The Hell Is Financial Planning?

I have recently been asked: “Josh, What exactly is this financial planning thing you keep talking about?” Is it something you do one time? Is it creating a budget? Is it just getting assets into a brokerage account and then figuring out how to invest those assets?

Financial planning isn’t a budget or getting life insurance or something you do once, set it and forget it. Financial planning is an ongoing process to help you make sensible decisions that can help you achieve your goals in life.

Financial planning: An ongoing process:

1. Developing a set of family goals and objectives

2. Creating a strategy for reaching those goals

3. Implementing the tactics that will enable the strategy

4. Monitoring the plan to ensure goals are being reached

5. Adjusting the plan as new variables become known

An Example (aka Free Financial Advice)

Here’s an example of how financial planning works. I’ll use a family goal that we can all relate to. Consider this free financial advice. The specifics below might be slightly different for your situation but you will be able to see yourself in this scenario. Feel free to bookmark this page ;)

Family Goal: Safeguarding you and your family from the unexpected

If things go sideways (e.g. the roof blows off the house, you unexpectedly need a new car or there is no salary for several months) you and your family can continue to maintain your current lifestyle without worrying about your day-to-day expenses.

2. Strategy to reach this goal:

• Disability insurance

• Monthly budget for “things that come up”

• Rainy day fund

3. Implement the following Tactics:

• Sign up for your company’s disability insurance covering x% of salary.

• Factor in an additional $500 into the monthly budget for “things that come up”

• Build a rainy day fund equivalent to 3 months of expenses

4. Monitoring:

• Is the paycheck reflecting disability insurance getting paid?

• Is the monthly budget getting funded an additional $500 each month?

• How is the rainy day fund progressing towards 3 month’s of expenses?

5. Adjust:

Once the rainy day fund is fully funded, its time to start diverting money to another longer term goal.

ThIS planning thing seems like a major undertaking!

It is a serious undertaking. Understanding your goals, from securing your future, to living life to it’s fullest today and tomorrow, takes a lot of planning and commitment. My passion is helping families dream big, make a plan to get there and then monitor them and their assets to ensure they succeed. We each get one life to live and we need a plan to make sure we make the most of it: Work hard, have fun, and love our friends and family.

A Chamberlain Financial Advisors Financial plan will cover:

• Understanding your long term goals.

• Looking at insurance and risk mitigation.

• Understanding streams of income.

• Understanding streams of expenditures.

• How to fund various investment vehicles that will be used to your fund goals.

• Selecting low-cost ETFs that match your risk profile.

• Retirement planning - how will you live when working less.

• Estate planning - what will happen after you turn into a rainbow in the sky.

Are you ready to start the process that will ensure you live your life to the fullest and help you reach your long term success? Let me help!

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The Problem with the Majority of Parenting and Investment Advice.

I read an article on the Farnam Street blog, 5 Mental Models to Remove (Some of) the Confusion from Parenting and was struck by the similarity between the common pitfalls with parenting and personal finance advice and the approaches we often take: 

 "Few topics provoke more unsolicited advice than parenting. The problem is, no matter how good the advice, it might not work for your child. Parenting is the ultimate “the map is not the territory“ situation. There are so many maps out there, and often when we try to use them to navigate the territory that is each individual child, we end up lost and confused. As in other situations, when the map doesn’t match the territory, better to get rid of the map and pay attention to what you are experiencing on the ground...

...As in any other area of your life, developing some principles or models that help you see how the world works will give you options for relevant and useful solutions. Mental models are amazing tools that can be applied across our lives."

 

Are you caught up in tactics without a clear mental model or strategy?

Many of us save a few bucks every month, stash money yearly in our kids 529s, and invest in our company's 401k plans.  All super good things to do, but will it get you to where you want to be?  Do you have a set of family goals that inform all areas of your strategy?  Here are a few of mine: 

I want my kids to be self-reliant adults who will make a difference to society.  That means I am comfortable if they fail often, as long as they win in the long run.  They play a variety of sports, play violin or the sax and arent bashful about speaking Spanish to a stranger.  If you have heard a 10 year old practicing violin, you know the sound of failure. And we save each year so they can go to sleep away camp for part of the summer, where they learn how to make friends and learn on the fly.

I want the freedom in my own life to make choices not based entirely on finances.  That means I invest part of every paycheck, whether the market is up or down, so that I can create long term wealth.  And we prioritize traveling for new and unexpected experiences.  That means Jenn and I have a weekly family budget and stick to it, even if we have to forgo some fun now.

Are you living by tactics as you go? Have you developed a set of guiding principles? If you haven't, you are not alone. Want to live free of financial burdens and have peace of mind? You'll need a strategy and a plan. I can help.  

Let's talk about your personal financial goals. Contact me to set up your free consultation.