Everyone's Money Needs a Plan

It doesn’t matter where your money comes from: hourly wages, salary, commission, pension, Social Security or a trust fund. If you don’t have a plan for your money, you won’t get the maximum benefit and you’ll spend too much time and energy worrying about it.

A good financial plan puts structure and intention into your financial life. It helps you pace your spending, saving and borrowing through the tight years as well as the prosperous ones to avoid the chaos of a feast-or-famine existence. Financial plans include insurance to protect you and your assets and careful investments to grow your nest egg.

The more you have, the more complex your financial plan becomes. Here's how to change your approach as you become more affluent. 

Financial planning is not just for the affluent. It’s for everybody. First, enlist a trusted professional with experience who can help you map out the plan and adjust it periodically to suit your changing circumstances and goals. Choose someone you feel comfortable talking with openly about your dreams for the future as well as the details of your financial situation.

Retirement isn’t your only goal. People typically think of financial planning with that one milestone in mind. It’s an important one, but there are many more in between. It helps to break your plan into smaller steps and timeframes:

  • Short-term (what you can achieve within a year)
  • Mid-term (take up to five years to accomplish)
  • Long-term (take more than five years to complete)

Each season of life brings different goals and financial priorities. Your financial plan should be comprehensive, covering all decades, and subject to adjustments along the way. Absent any major setbacks, a good financial plan includes steady incremental increases in savings rates as earnings grow, as well as steady decreases in debt and living expenses as retirement nears. And the goals within it should be SMART (Specific, Measurable, Achievable, Relevant, and Time-bound).

For people in their 20s: Short- or mid-term objectives may include finishing a college degree, moving out on their own or saving for a car. Long-term goals could be saving for a down payment on a home or borrowing for graduate school to increase earning potential. Financial planning is especially important if you’re anticipating a move from “me” to “we.” Let your advisor know if you anticipate a marriage or children and what your timeframe may be. This is the decade to set up life insurance and start a retirement savings habit – ideally with the first paycheck – and repeat it like clockwork. Take advantage of employer-sponsored benefits. Your future self will thank you.

For people in their 30s: The long-term objective for this decade may be paying down debt and hitting the gas pedal on savings as earning power increases. On the short-term front, each annual raise or paid-off debt is a dollar amount that you can deploy in service of your goals. Using your financial plan to inform these decisions, you could speed up the pay-off on another debt or increase your habitual deposits to savings. Or you can direct it at a longer-term goal by starting a fund for a child’s education or a small business or rental property you’ve dreamed of owning one day.

People in their 40s should continue a thoughtful, modulated pattern of spending and borrowing responsibly and saving and paying methodically as their earning power peaks. People in this age group own more assets than at any other time in their lives. Some are raising growing families, and many are gaining clarity on what they want to accomplish in life. Paying down all remaining non-mortgage debt and maxing out retirement contributions are the important pursuits of this decade.

For people in their 50s and 60s: The road to retirement comes into sharper focus, making it a time to tie up loose ends, become entirely debt-free, plan for long-term care and downsize living expenses. In these two decades you should examine and adjust your risk exposure with your planned retirement date in view. You may sell the two-story home where you raised a family in exchange for a smaller one-level property, perhaps re-locating to the place where you hope to retire.

Once retired, activities may include re-evaluating your estate and making specific arrangements for the disbursement of your assets to loved ones. (And of course, enjoying your retirement!)


Courtney Chavez is an office leader based in Pinnacle's office at 2209 Medical Center Parkway in Murfreesboro, TN. She can be reached by phone at 615-904-3409 or by email at Courtney.Chavez@pnfp.com.

The information provided herein does not, and is not intended to, constitute tax, legal or accounting advice. Instead, this material has been prepared for informational purposes only. Information contained herein is subject to change and may not constitute the most up-to-date information. It is recommended that you contact your own tax, legal and accounting advisors before engaging in any transaction. All liability with respect to actions taken or not taken based on the contents hereof are hereby expressly disclaimed. The content herein is provided “as is;” no representations are made that the content is error-free.

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