For Those With A New Year’s Resolution About Financial Planning

“In preparing for battle I have always found that plans are useless, but planning is indispensable.” Dwight D. Eisenhower

The takeaway.

The plan is not the purpose. The process of planning is where the reward lies.


Where to start

Many people begin with techniques, concepts and products. That is always wrong. You must start by deciding what you want from the plan. Security in retirement, predictable lifestyle, money to grow with.

Once you have the general idea under control, move to more specific ideas. These are answers to “W” questions. What, what with, when, who with, where, and what if, usually cover the ground. The whats come in several forms.

Only after you have specific ideas, should you move to how. How is complex and should involve specialists. Despite how easy it looks, doing your own will is foolish. Same thing with investing, insurance, and tax management. Tactical fields change when laws change, opportunities arise, and factors become obsolete. You don’t have the time or knowledge to keep up. Hiring help is a sound move.

Those same tactical people often approach you with how. Be cautious. Without a strategic view, any tactic might work. You are the planner. Never forget.

You might notice “why” is missing from the strategic list of “W” questions. Done right, why falls out of the others. With a sound purpose and clear strategic methods, tactical fit is obvious. Why becomes motivating. As a bonus it always gives you why not. Why not allows you to dismiss things that don’t fit your vision. They might be good for someone else, but not for you.

The strategic overview

All the assets you have now, and will ever get, end up on one of three piles.

  1. Spend. Spending defines lifestyle. An important choice
  2. Lose. Taxes, fees, mistakes, misfortune, carelessness, obsolescence.
  3. Leave or give. Charity and heirs

To avoid all losses is a mistake. Avoidance has a cost. Nonetheless, most people have a “lost” pile that is bigger than it must be. Planning helps them do something about it.

Financial planning is about money and time

Financial planning involves three time zones.

  1. The past = spending financed by debt,
  2. The present = lifestyle,
  3. The future = lifestyle, investing, and distribution.

You can do things that influence how much money you can receive in the future, like education, but you must wait to get it. Debt payments are a charge on future income even though the spending happened long before. Be sure the trade off is a wise one.

Lifestyle spending and the earnings that support it are in the present. You can move income between zones to allow spending, but earning must eventually match spending. Balancing lifestyle in time is a key element of financial planning. If you overspend at one point, you must underspend at another.

Debt lets you spend before you earn. Saving and investing let you spend after you earn. Lifestyle is consumption that you earn and spend in the present.

Financial planning is the plumbing.

You take the assets you receive and control the distribution. Planning prevents plugs and cures bottlenecks. Planning finds ways to do what you want with the least commitment of resources – Efficiency. Planning helps prevent failures – Risk. Planning permits repair and modification. It expects both.

Orderly, capable of communication. Inspectable. Modifiable in parts.


Things to notice

  1. There are narrower plans to consider. Estate distribution plans. Business succession plans. Education plans. Retirement plans. Eventually all planning fits into the life plan category. Be sure financial considerations are not the sole driving force in your life.
  2. Income is temporary, expenses are forever. Understand the idea of consumption before the others. If you get spending wrong, not much else will work.
  3. Debt is impatience measured in money. Debt, especially credit cards, can hide overconsumption. Debt is an “anti-investment.” You pay rather than earn.
  4. Investments are a time machine. You send the money to the future for lifestyle or other purposes. It earns on the trip.
  5. Planning is about balance. Spending now versus spending in the future and the past. Assessing and addressing risks like premature death or disability. Paying taxes at the lowest legal level, and then as late as possible. Learning cost minimizing techniques. Synergies.
  6. Planning affects all time zones. Over-saving or overspending are both wrong. Always think balance.
  7. Today may not be a good representation of future spending or investment possibilities, so don’t rely on it lasting
  8. The right investment yield is the one that offers you what you want and need. Enough is the key. Risking what you want or need for something that is just a higher number, seems wrong. If you could get what you want earning 6%, why would you take risk to earn 9%? Notice risk means you might earn 3%. Yield is contextual. If it gets you what you want, it is the right yield. Think Goldilocks. Just right.
  9. Predictability is a high planning value. Stress always attaches to unpredictable situations. If it doesn’t feel right it is not right for you. Whether up or down, the stock market is difficult. Fear and greed are both harmful. Sell ‘til you sleep.
  10. No plan is ever finished. Record results, review them, and revise the plan as necessary. It goes on forever.

Do-it-yourself is an unreliable way to reduce costs.

There is nothing I can add to that image.

May 2019 be a joy filled and prosperous year for you.


I intend to take on six planning engagements in 2019. If you think I can help you, please be in touch.

don@moneyfyi.com or 705-927-4770

2 Comments on “For Those With A New Year’s Resolution About Financial Planning

  1. First, let me wish all the best possible 2019 and mostly to you Don for your contribution over the years I truly appreciate your commitment and dedication to the cause. May the Good Lord grant you long life with the necessary energy and zeal to continue being the servant of the industry we appreciate it whilst we grow and develop as advisors. We are ready and willing to be your audience and provide support where possible go for it we love you. Thank you

  2. Pingback: The Week Ended 5 January 2018 – moneyFYI

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