“What’s your one page financial plan?” — This is the absolute best question that I’ve heard asked in a long time. Instead of talking about your hot stock pick or your fancy investment that shields you from paying taxes, I think it’s time for all of us to step back and ask ourselves the most intelligent question of all, “Why the heck do I care about money anyway??”
What’s Your One Page Financial Plan?
About 10 months ago, Liz and I bought a fixer-upper to fix and flip for a quick profit. Long story short…
- the process took forever,
- all my late nights away really strained our marriage, and
- in the end it left us questioning what we really want out of this life.
Do we want to keep on living this crazy life, chasing one dollar after the next? All this scrambling around was leaving us drained, irritable, and stressed beyond belief. Sure, we had $27,000 extra dollars in our bank account from our house flip, but our quality of life was actually worse because of it.
During this time of questioning and uncertainty, I found myself at the library seeking out a quality read for our upcoming vacation. One book stood out from the rest – both because of its orange book jacket as well as the simplistic title – “The One Page Financial Plan”.
The One Page Financial Plan…in a Nutshell
After 20 years in the financial advising industry, Carl Richards finally zig-zagged his way to the holy grail of investment advice. And you know what?
- It had nothing to do with secret stock picks,
- killer estate planning, or
- ingenious tax avoidance strategy.
Instead, it had everything to do with:
- Intentionality, and
“Why Is Money Important to You?”
Today, this is the first question Carl Richards asks his clients and it’s exactly what I was left asking myself just a few weeks ago — “Why the heck does money even matter?? What is it really doing for me??”
Sure, money is great for keeping food on the table, clothes on our backs, and a roof over our heads, but what about when we have those staples covered? What else is money really good for? That’s a question that no one can answer for you, and it’s why Carl leads with this line of questioning when he’s in front of his clients for the first time.
Answer the Question, and Then Answer It Again
Within the book, as Mr. Richards presented the question to a middle-aged couple, the woman (after quite a long pause of deep thought) responded:
Carl, sensing they needed to go deeper, prodded and encouraged her to provide a clearer answer.
“Tell me more,” Carl said with a smile.
The woman glanced meekly at her husband…
“I want to start a family”
Mr. Hubby was surprised. She was such a hard-charging woman in the workforce, he didn’t figure she wanted to start a family for at least five more years…if ever. Now they had their main financial goal – to work themselves into a position to start a family – both with their money and their time.
You’ve got to do the same thing. Think of your main goal in life – why money is important to you. Then dig deeper, and perhaps deeper again. Get down to your real reasons and write them down with a sharpie on a full sheet of paper.
Why Simplicity Outweighs Strategy
According to Forbes, the average person has just $10,000 (or less) saved for retirement. Guess what the reason is for these paltry balances!
- Is it due to a lackluster stock market?
- A bad 401(k) plan with no company match?
- Terrible investment picks that all took a plunge?
No, no, and no.
The number one reason for these sad retirement balances is…most people never got started, or they started investing extremely late in life!
People can make investing sound ultra complicated – as if only finance professionals can make sense of investing – but that’s simply not true. All you need is your one page financial plan and a simple financial set-up that will get you there.
Don’t worry about doing everything perfectly. All you have to do is get started!
Our New One Page Financial Plan
Liz and I have been talking about our financial plan a ton lately. Why? Because…
- That flip house landed $122k of cash in our bank account
- We have our second child on the way
- And, my wife desperately wants to live in the country with horses…and goats…and chickens…and probably some other alien creatures that I know nothing about 😉
These are some big ticket items!! So first, we needed to lay out our financial goals on a piece of paper.
Here’s what I came up with that my wife later blessed:
These are our goals – pretty simple…but very real now that they’re down on paper. So now we need to move on to step #2 – how do we plan to accomplish all this stuff?
How We Plan to Accomplish Our One Page Financial Plan
To be honest with you, we don’t have everything 100% figured out yet. I know I know, shocker that we’re not perfect. Newsflash – no one is. But, here’s what we’ve got figured out so far:
Country house on acreage in 2020
We’ve got that $122k chilling in the bank just waiting to make a massive down-payment on the perfect property once it hits the market. The rest of the money will come from the sale of our primary house (which will likely net us another $170k or so). This way, we’ll own our property outright and be able to keep stacking up cash for future investments (ie. 401k contributions and rental properties).
Retirement an option by age 45
So, in 12 years I’d love to have the option to retire. I likely won’t, but life sure would be freeing if I knew that I was owned by no one! How are we doing it? $800 a month into our 401k and $2,000 a month toward rental properties. I haven’t done the exact math on this yet, but it seems doable.
A flexible job/business
This is why I probably wouldn’t retire. My current job is uber flexible. I can work at home, I can work in the office, I can work in a coffee shop. Days, nights – it really doesn’t matter as long as I’m getting my work done and excelling in what I do. And, I absolutely love my employer.
Fund private school for kids
We’ve already gotten a jump on this (we have $3,000 saved for Addi already and she’s only two. We’ll start to fund baby boy’s private education soon as well. Our goal is to always stay two years ahead of the costs (ie. $16,000 stashed in an account at all times for each of them). To do this, we’ll need to start putting $750-$1,000 a month from now until they’re…16 and 18 years old. Sheesh. I didn’t really realize the cost of this private tuition until this moment! (*gulp*) Good thing we don’t have any debt payments!!
Fund college for kids
This one sounds complex, but thankfully my college investment calculator makes it easy. We’re investing $150 a month into a 529 plan to fund half of their college education (that’s right, we’re those evil parents that think their kids should actually work for their education…).
Constant quality time as a family
This is basically our reminder to ourselves not to work so hard while our kids are growing up. We make plenty of money to fund our lives in the present and invest for the future, so what’s the purpose of working more hours? There is none, so stop, spend time as a family, and relish the memories.
Love what I do for work
Check. Already doing it. I’m the finance lead for fantastic new products in an amazing company. And, I change lives with this blog. It’s a beautiful thing. 🙂
Take at least a 2-week vacation each year
Another reminder to have fun and make memories as a family. I get nearly 4 weeks of vacation a year, so why not take a solid 2 weeks during those cold winter months to head south? We did it last year and it was awesome…Our tickets are already booked for next year!
Wife happy in her home/career life
Being a stay-at-home mom isn’t easy, so we put this down as a reminder to touch base each year to see if it’s still the right move for my wife. For now it is, and we couldn’t love it more!
What’s Your One Page Financial Plan? And How Are You Executing It?
Do you have a one page financial plan? If you don’t, I highly recommend that you sit down and sketch something out. It won’t be perfect your first try, but it will definitely get you thinking about what you really want out of this life! Then, once you’ve got it written out, your brain will naturally start to figure out how to make it happen!
Don’t be afraid of your one page financial plan. I can almost guarantee it will be the best thing you’ll ever do for yourself and your family!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.