How To Build A Financial Plan Without A Professional Financial Planner
How To Build A Financial Plan Without A Professional Financial Planner
Jim Wang
Years ago, I dropped my business card into one of those fishbowls near the front door of a restaurant. You've probably seen them too – put your card in to win a free dinner for you and eight of your friends!
I just graduated college, was working for the first time, and I had a box of a thousand business cards. Certainly it was worth it to drop one in the bowl!
It turns out the meal might have been free but it still cost me. It cost me over an hour talking with a “financial planner” who was more sales person than planner.
After realizing I was simply parrying offers of life insurance and overpriced mutual funds (even back then, in my naivete, I knew that paying 1%+ in annual fees plus a sales load/commission was a bad bad bad idea), I thanked the young guy for the food, the pitch, and for remembering that there's no such thing as a free lunch after all.
A financial plan is so important yet so few people have them. You don't have to hire a financial planner to build one of your own, this site will show you step by step how to do it today! He did give me one gift though – I knew I didn't have a financial plan. I wasn't married and I didn't have kids, so not having a plan wasn't a big deal. Fast forward a few years, marriage, and two kids; a financial plan is crucial.
But you don't necessarily need a “financial planner” to help you develop your plan. You have all the tools already, you simply need to learn how to fit it all together. I'll show you today.
I am not a financial planner. What you see below is what I did to develop a plan. Much later on, we began working with a financial planner and now this process has been enriched by my experience working with one. Lastly, a plan only helps if you execute it.
Table of Contents
What is a Financial Plan?
Map Your Current Financial State
Plan Your Future Financial State(s)
Financial Plan for Current to Future
Review Your Plan Annually
What is a Financial Plan?
First things first – a financial plan is a look at your current state, a look at your future state, and building a strategy to get you from where you are today to where you want to be in the future.
When I met the faux financial planner, I was dating my long term girlfriend/future wife, had no kids, and was renting an apartment with a friend. I knew that within five years I would be married, probably with kids or on the way. I would also like to own a house too. The future state was in flux, as it always is, but we had a general idea of where we were going.
You can't predict the future, nor should you try, but you have a better picture of the future if you build a plan. Now, we unpack each of the three steps – map out your current state, plan your future state, and build a plan to get you there.
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