What’s Your Financial Game Plan?
“checklists seem able to defend anyone, even the experienced, against failure in many more tasks than we realized.”
― Atul Gawande, The Checklist Manifesto: How to Get Things Right
Financial planning is a very broad topic. It involves an understanding of your financial position, insurance and risk management, taxes, retirement planning, estate planning and investing. Most of us are aware of each element but lack the time or depth of knowledge necessary to bring the pieces together into an actionable, personal financial plan.
Consider approaching financial planning from two different fronts; offensive and defensive. Each front plays a critical role in ensuring the proper resources will be available for you to achieve your desired goals. Here’s a simple list of relevant topics and some popular questions I see related to each:
Cash Flow Analysis – How much money is coming in and how much is going out? What can I afford to spend? Am I spending too much?
Debt Management – Should I pay off debt XYZ before debt ABC? Does it make sense to pay off debt now or should I do it over time? What are my alternatives for paying down debt?
Tax Planning – Am I paying too much in taxes? Did I get get a proper refund? What can I do to avoid, reduce or defer my taxes?
Emergency Funding – How much should I save in an emergency fund? How should I save it? Should my emergency fund be invested?
Adequate Protection – What types of insurance do I need? Do I have the right amount of coverage? Am I exposing myself to too much risk?
Estate Planning – Isn’t estate planning just for old people? Do I need a will or a trust? What is durable power of attorney and who needs it? Who should be my beneficiaries? Can I leave money to a charity?
Retirement Planning – How much should I be saving? Should I have an IRA What is a Roth 401(k)? How does my pension work? When can I take out a loan against my retirement plan? When do I have to take distributions? Should I count on social security? Am I paying too much for this annuity?
Education Saving – What are my options for saving for college? Is college really going to cost $90k per year in 2032? How can I afford that?
Asset Allocation – How should I invest my savings? Should I take more risk? Am I taking too much risk? Should I hold a lot of cash?
Compensation Planning – What do I do with my stock options? Should I own a lot of company stock? How can I reduce my taxes?
Benefit Planning – What is an HSA? Should I participate in a flexible spending account? Are group insurance policies a good deal? Do I have disability protection? What are fringe benefits?
Home Purchases – Can I afford a new home? Does it make sense to refinance? Can I buy a vacation house? Can I rent it?
Goal Specific Planning – Can I retire early? Can I travel the world? Can I send my kids to Europe for the summer?
This list is by no means exhaustive, and as you can see, there’s certainly a lot to consider. Don’t let the number of topics overwhelm you though. Use the list as a foundation for addressing important issues and aligning finances with your life goals. And hey, if you want some help, that’s why I founded Ariadne. Always feel free to reach out!