Financial Planning

A financial plan is a map from where you are to where you want to be. Without one, you're making decisions in isolation: each paycheck, each purchase, each year disconnected from the bigger picture.

Setting Financial Goals

Vague goals produce vague results. "Save more money" is a wish. "Save $20,000 for a house down payment by December 2027" is a plan.

SMART Goals Framework

Every financial goal should be:

Goal Categories

Organize goals by time horizon:

Goal Priority Matrix

When goals compete for limited dollars, rank them:

If you can't fund everything, work top to bottom. Partially funding a higher priority beats fully funding a lower one.

Example Goal Plan

Household Income:           $7,500/month after tax

Goal 1: Emergency fund      $500/month   (need $15k, have $6k → 18 months)
Goal 2: Credit card payoff  $400/month   ($4,800 balance → 13 months)
Goal 3: House down payment   $800/month   (need $40k → 50 months / ~4 years)
Goal 4: Roth IRA            $583/month   ($7,000/year max)
Goal 5: Vacation fund       $200/month   ($2,400/year)
                            -----------
Total goal funding:         $2,483/month  (33% of take-home)

Net Worth Tracking

Net worth is the single most important number in personal finance. It's the scoreboard.

How to Calculate

Net Worth = Total Assets − Total Liabilities

Asset and Liability Categories

Don't include: Furniture, clothing, electronics, jewelry (unless insured at appraised value). These depreciate fast and are hard to liquidate.

Example Net Worth Statement

ASSETS
  Checking:                    $4,200
  HYSA:                       $12,000
  401k:                       $45,000
  Roth IRA:                   $18,500
  Brokerage:                   $3,200
  Home (Zillow):             $320,000
  Car (KBB):                  $14,000
                             --------
  Total Assets:              $416,900

LIABILITIES
  Mortgage:                  $265,000
  Student Loans:              $22,000
  Auto Loan:                   $8,500
  Credit Cards:                $2,100
                             --------
  Total Liabilities:         $297,600

NET WORTH:                   $119,300

Tracking Frequency

Tools: Spreadsheet (full control), Empower (free, auto-syncs accounts), Monarch Money, or a simple notebook.

What Matters More Than the Number

• Direction: Is it going up? Even $100/month of growth is progress.
• Rate of change: Accelerating growth means your system is working.
• Composition: Shift from "net worth is mostly house equity" to diversified assets over time.

Financial Milestones by Age

These are benchmarks, not rules. Life circumstances vary. Someone starting at 35 can still retire comfortably, they just need a different plan.

Savings Milestones (Retirement Focused)

Based on Fidelity's guidelines. Assumes retirement at 67, 15% savings rate, age 25 start.

Financial Milestones by Decade

Behind schedule? Focus on savings rate over milestones. A 40-year-old saving 30% of income will catch up faster than a 25-year-old saving 5%.

Working with Financial Advisors

Types of Advisors

The rule: Fee-only fiduciary, always. A fiduciary is legally required to act in your best interest. A "suitability" standard only requires recommendations that are "suitable" (a much lower bar).

Questions to Ask Before Hiring

When You Need an Advisor

What to Expect to Pay

Find advisors at: NAPFA.org (fee-only), Garrett Planning Network (hourly), or XY Planning Network (younger clients).

Estate Planning Basics

Estate planning isn't just for the wealthy. Without it, the state decides who gets your assets, who raises your kids, and who makes medical decisions for you.

Essential Documents

Beneficiary Designations Override Your Will

This is the most common estate planning mistake. Beneficiary designations on these accounts take priority over whatever your will says:

• 401k, 403b, IRA accounts
• Life insurance policies
• Bank and brokerage accounts (POD/TOD)
• HSA accounts
• Pension plans

Action: Review and update beneficiary designations annually and after every major life event (marriage, divorce, birth, death).

Wills vs. Trusts

Most families need both. A trust holds assets, a will names guardians for minor children and catches anything not in the trust (called a "pour-over will").

When to Update Estate Documents

Estate Planning Costs

Don't skip this because of cost. Probate without a will costs more, takes 6-18 months, and causes family conflict.

Financial Planning for Couples

Money is the #1 source of conflict in relationships. The solution isn't agreeing on every purchase, it's agreeing on a system.

Account Structures

Hybrid System Example

Partner A Income:    $5,000/month
Partner B Income:    $4,000/month
Total:               $9,000/month

Joint Account (70%): $6,300/month
  Mortgage:          $1,800
  Utilities:           $300
  Groceries:           $600
  Insurance:           $400
  Kids:                $500
  Joint savings:     $1,500
  Shared fun:          $400
  Buffer:              $800

Partner A Personal (15%): $1,350/month
Partner B Personal (15%): $1,350/month
  (Each person spends this however they want, no questions asked)

Key principle: Equal personal spending regardless of income disparity. You're a team. The higher earner doesn't get more "fun money" unless you both agree to it.

Money Conversations to Have

Have these before marriage (or moving in together):

Schedule a monthly money date. 30 minutes, no judgment, review the budget and goals. Treat it like a team meeting, not a performance review.

Common Couple Conflicts and Solutions

Life Event Financial Checklists

Getting Married

Having a Baby

Job Change

Divorce

Death of a Spouse

Key Takeaways

1. Set SMART goals. Specific, measurable, achievable, relevant, time-bound
2. Track net worth monthly. It's the one number that shows if your plan is working
3. Use milestones as benchmarks, not judgments. Adjust your plan, not your self-worth
4. Fee-only fiduciary advisors only. Never pay commissions for financial advice
5. Estate planning is not optional. Will, POA, healthcare directive, beneficiaries at minimum
6. Couples need a system, not just trust. Hybrid accounts with personal allowances solve most conflicts
7. Life events are financial events. Use checklists to avoid expensive oversights
8. Review everything annually. Goals, net worth, beneficiaries, insurance, estate documents