Financial Planning

10 Core Beliefs About Financial Planning

Let me start by saying, there is not one perfect way to approach financial planning. Each plan is different, as they should be. Over the past few years, I have developed a core belief system which acts as the foundation of each unique financial plan. The ten beliefs below are principles I share with my clients, so they can understand if working together would be a good fit.

1. Together we must understand what truly matters to you 

Real financial planning boils down to helping people discover what is most important to them. The goal is to align your resources with the things you value most.

2. You can either control your finances or let them control you 

Let’s face it, very few people in this world have enough money to do anything and everything they want. The earlier you accept that, the easier life will be. Instead of running from your problems, face them head on. 

3. Spend your money on experiences with the people you care about 

Reward yourself for all the hard work you do. There is no ROI on experiences with your loved ones, but it does create memories that you will cherish forever. At the end of the day, the goal is not to die with the most money you can possibly have, it’s to live a fulfilling life.  

4. Cash flow management is the core of financial planning 

You need to spend less than you make, it’s that simple. To accomplish this, you either need to increase your income or decrease your spending. It is easy to say, “Once I make more, I will start saving.” However, this rarely ends up being the case. Lifestyle creep happens, and as we make more we spend more. Create good habits at a young age. 

5. You will not find your self-worth from your net worth 

Money itself will never make you happy or feel valuable in the long run. Sure, it may make you feel less stressed but it is not going to fulfill you.

6. Accept the fact that most of the future is uncertain and scary 

There is no way to know what will happen in the future, and that is okay. That’s life. Most of the time when you feel uncertain, the best thing to do is nothing. Don’t let the emotions you feel today drive your behavior. 

7. Having an emergency fund is key 

If the coronavirus pandemic has taught us anything, it’s that you never know what can happen. Income is not always a guarantee. Build up an emergency fund with at least three months of expenses to protect against the unknown.  

8. Find a balance between the “now” and the “later” 

If you focus too much on the now, you will not be able to have the future you want. If you focus too much on the future, you may not get to enjoy life today. Find the sweet spot between “What if I die tomorrow” and “I want to retire on my own terms.”

9. Avoid high interest debt whenever you can

There are obvious times in life when taking on debt is not a bad thing: a mortgage, business loan, car loan, etc. However, continuing to finance your life through debt can feel like a nightmare that never ends. Try to avoid using credit cards if you cannot pay them off at the end of the month. And if you have debt, start by paying the highest interest debt first. 

10. Have healthy and regular conversations about money 

Most of the time couples have completely different viewpoints on money and risk. Opposites attract right? Talk through this and work to understand the other person. If the conversation isn’t going anywhere, consider bringing a third party into the equation. A financial advisor can help balance the conversation.

Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimer page.