Did you know that 58% of Americans think their financial life planning efforts need improvement, and 38% have done nothing at all to get ready for their financial future (Source: Northwestern Mutual Planning and Progress Study, 2015)?
And these numbers are probably a bit low, given that most people aren’t really sure what a comprehensive financial plan is or what it includes.
Today I want to walk you through the first two pillars of a comprehensive financial life plan and some key questions they answer.
1. Financial Independence/Retirement refers to that point in time when you don’t have to work to earn money to support yourself. You can live comfortably off the wealth you have accumulated and decide what you want to do with your time. Key questions:
- Will I run out of money when I’m old and can’t do anything about it?
- When can I retire, or pull back/change jobs and do something I want to do at a reduced salary?
2. Investments are the assets you have accumulated, such as cash, stocks, bonds, mutual funds, real estate, and so forth. The proper selection and management of your investments is key to your Financial Independence, and this should also line up with your values. Key questions:
- How can I keep up with taxes and inflation over time?
- Which types of accounts can help me meet my goals for financial independence?
- Which types of investments can help me meet those goals?
- Are there certain companies or industries I do or don’t want to invest in?
And of course there are plenty of other questions to be covered by a truly comprehensive financial life plan. This is just a primer on two key areas, but your plan should be tailored to you and address every area which applies to you.