When Will You Begin Your Financial Plan?

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Do you feel left out or behind in “the game of life”?

Unless you start your family, career, saving, earning, investing, planning for retirement, estate planning and financial planning in your second decade, then you’re already behind.

That’s why the media rages about stories of those who succeeded with their game plan after 40, 50, 60, or older. The stories are noteworthy because we’re led to believe this is an impossible accomplishment—later in life.

Crazy!

Take a look at your adult children. Do they have it all together now?

Probably not. (Mine aren’t! One is struggling with unemployment. The other is battling debt).

Did YOU have it together in your twenties? (I certainly didn’t!)

The common denominator is we’re all struggling in some manner; we’re constantly pivoting, adapting, and improvising. AND – this pattern is NOT age discriminating!

Good news: money discussions are no longer taboo.

So let’s talk money!

Life Events across the Decades

It takes a major life event to get us thinking about the future. These life events can take any form: graduation, marriage, the birth of a child—the standard twenty-something life event. Most of these life events directly or indirectly involve money.

At 50 or older, a major life event looks like: the birth of a grandchild, an adult child moving back home, caregiving, divorce, death of a parent, or a significant health event. Sometimes several of these occur at once. As you know, the longer we live, the more life events we encounter, which directly or indirectly impact our finances.

These constant, unpredictable fluctuations makes it necessary to think about, pivot, and adapt with our personal finance.

So why don’t we?

It is time? Improving finances does take time but we really do have the time available. With life expectancy stretching beyond the 80s and 90s, most of us have 3 decades to prepare, learn, and utilize.

More good news: there are tools to help you start, get on track, and stay on top of life events and their potential financial disruption.

Savology is your launching pad. My history with Savology began during the 2019 FinCon conference. It was during this conference that a major life event occurred: my mother’s death. The 8 months following that event sent me on an eye-opening journey of what to do and not to do. Most of these realizations were financially- and risk-management based. During the process of finalizing her affairs, I became overwhelmed and sought solutions to simplify my own affairs. Luckily, I had just visited the Savology booth and had a glimmer of possibility. Clarity. Hope.

Make Finances a Top Priority

Inspired by their blog, 30 Important (and Easy) Personal Finance Tips to Improve Your Financial Literacy, I had a helpful outline to initiate the process.

The Savology Financial Planning Tool is step one. You’ll need to create an account to enter the system. Naturally, this requires an email address and password. First hurdle done!

Start with the fundamentals

The fundamentals does not require a degree in finance or business administration, though it may feel like it. The fundamentals start where you are right now. Without a clear picture of your situation, it’s difficult to know where to begin. The Savology survey has taken the complex and made it simple. You’ll need to set aside roughly 10 minutes to fill out the survey (it took me 8 minutes), which is divided into 5 sections with an average of 5 questions each:

• Personal
• Savings
• Spending and Debt
• Risk Management
• Outlook

Are you already feeling anxiety just thinking about this? If so, keep in mind you are not alone. Trepidation is normal. We’re taught to be afraid and wary of money. This is a first step to coming out of the financial-ghost closet (with ourselves) to take a bold look at our financial awareness and literacy. We’re breaking the silence to improve our circumstances and honesty (with ourselves) is a key hurdle to overcome. The more realistic you are with the survey, the more accurate your results and outcomes are going to be.

Take a breath. Take another. Complete the judgement-free survey. Then 10 minutes later, you are greeted with this window:

Once the Savology tool completes its calculations, you’ll get your report card. Here’s mine.

Build Your Financial Plan

What I like about the report card and action items is that it “read my mind”.  I am thrilled to score 94/100 yet it identified the 2 areas I need to improve. Deep down, I knew I needed improvements, but I wasn’t sure where they were. Honesty identified what was needed. Clarity is the result.

Not surprisingly, one of my areas of improvement is income (I scored C-). As a freelancer, my income has been nowhere near the dreamy 6-figure claims filling the internet. Maybe it’s because of my conflicting caregiving responsibilities over the last decade. It could be related to my clientele; solopreneurs vs big brands. While my income is lower, my lifestyle isn’t extravagant. This isn’t out of necessity, but rather a choice. Even with a frugal and minimalist lifestyle, I can comfortably make purchases and have a few vacations planned to visit grandchildren and a few national parks.

Would I have a more extravagant lifestyle if I had more money?

No.

However, lifestyle is one of the Savology survey questions and your answer will help determine your financial action plan.

The other money weakness I have is I worry more about my future than my present. Is it a bad habit to save too much? Maybe. The problem I encounter is I save before I spend for necessities then find myself awaiting the next client payment – the equivalent of living paycheck to paycheck. According to a 2019 report from CNBC, 78% of American workers report living paycheck to paycheck.

The second area of improvement (I scored B-) is risk management. I’m covered with a will and POA (power of attorney), but other necessary documents are missing from my portfolio. Some of these I wouldn’t have known about without the Action Plan report.

A Word of Wisdom about Risk Management

This covers all the legal documents you’ll need to protect yourself and loved ones: wills, POA, insurance, guardianship, and disposition instructions. These are critical aspects of a financial plan, yet are most neglected or postponed for “I’ll get around to it.” Much of the delay is due to fear and superstition. Or, fear when observing a family member’s life event and the financial or emotional impact it creates.

A lot of risk management is associated with “ifs”. There are plenty of insurances and programs available to cover the “what ifs”, but where do we start? Where do we stop? All those insurance premiums can be compared to a “death from a hundred cuts”. How much do we pay out now for protection we may or may not need in the future?

These are very big considerations and emotions to roll the dice with. Each is an individual decision and worth discussing with trusted friends, family, and especially a financial advisor or estate attorney. Following my parents’ deaths and the wisdom of my financial advisor, I’m choosing more protection now, regardless of the “what ifs”. The proper risk management plan and documents will save potentially thousands for the future what ifs.

Kristian Borghesan, Director of Marketing at Savology, has this to share, “Which do you anticipate will be most needed to protect you and your family 5, 10, 15 years from now? Get things in place sooner rather than later so 5 years from now, you are very well protected.” He adds, “If you think the worst will happen, then yes, you will need extra protection.”

Set Financial Goals

At this stage of the Savology Action Plan, your next steps are outlined in your dashboard. No need to wander aimlessly, questioning if anything is missing. Your Action Plan is a simple way to check for gaps. Savology provides additional tools, articles, and examples to help you analyze and understand your financial goals. It will save you time seeking the information yourself.

Follow Up and Checking In

You may already hear it from your banking institution or financial advisor (if you have one), but it is recommended to visit your finances no less than twice yearly.

With your Savology account, check in each time you complete an Action Item. Secondly, return to update your financial information anytime you experience a significant change, life event, or when the economy is fluctuating.

An extra bonus: Savology will send email reminders to keep you on track. They’re your financial plan accountability partner—without nagging or intimidating.

What does your financial plan look like?

Improving your finances takes time. The more time and effort that you commit to improving now or at any age, the better off you will be. While a financial plan isn’t something that you need to review every day, or even every week, you will want to revisit it often enough to stay involved, informed, and educated.

Get past the hump of thinking, worrying, and avoiding money and get in action!

p.s. more to come on building a financial plan.

Kristen