Today I want to show you that financial planning isn’t complex and it’s actually a simple process.
What makes it simple? Learning the 4 pillars of financial planning.
You see, most of the time we get roped into the idea that there is some “secret formula” out there that is going to save the day:
"Get in the best shape of your life with a 7-minute workout".
"Lose 30 pounds with a diet where you can only eat almonds and cabbage". It seems like we are always being inundated with the latest and greatest research or strategy when it comes to business or life. But when it comes to finance? I say, get back to basics.
Want to Succeed Financially? Get Back to the Basics
John Wooden, the legendary basketball coach used to start each season teaching his players how to tie their shoes. You might laugh, but Coach Wooden led his team to 10 championships in 12-years by starting with his players tying their shoes.
Vince Lombardi, the Super Bowl winning Green Bay Packers coach, used to hold up a football in front of his team and would say “Gentlemen, this is a football”. Really?
So, what did John Wooden and Vince Lombardi know? They knew that no matter how good you were... no matter what level you attained, if you strayed from the core foundational principles, then success will fade.
So, instead of giving you the latest secrets to financial success, I’m taking you back to the basics with the Four Pillars.
It doesn’t matter if you make $30 thousand per year or $3 million, you can find success if you follow these steps.
Ready to dive in? Watch this video.
Make the four pillars your main goals:
- Spend less than you earn
- Avoid the use of debt
- Build liquidity
- Set long-term goals
Now that you know, let’s cover a few quick ideas for each point to give you a few goals to shoot for.
Spending less than you earn
Pick a number that you are going to live off of and save, or give away, the rest. Make a difference with your income, don’t just make it about you, you’ll be better off for it in the end.
Are Your Investments Aligned with Your Risk Tolerance?
Avoiding the use of debt
Decide today that you aren’t going to live with debt any more. Just stop and make the decision...even home debt eventually. Get rid of it all.
The best place to start is to have six months of expenses in cash. This is your emergency fund it should be your first liquidity goal. THEN, you can move on to figuring out how much liquidity you need to achieve your long-term goals.
Lastly, long-term goals: Spend time figuring out what’s important to you and your family. Write them down. Make them measurable. Keep them front of mind and you will get there. There is something about writing them down that crystallizes your thinking and makes them achievable.
So that’s it. Pretty basic stuff.
We’re all professionals and are great at what we do. But when it comes to finances we still need to focus on the fundamentals.
If you want championships… if you want financial freedom… these four principles are there to challenge you, to guide you, to keep you on the right path so you will not only get to where you want to go, but you can stay there until you choose a greater destination.
If you aren’t focusing on the four pillars as well as you want, then maybe it’s time to get some help. If that’s the case, then get a free clarity session with our team. We’ll help you define what that is without all the pressure most advisors bring to the table.
Chip Brackley is the Director of Atlanta for Archetype Wealth Partners. Chip is passionate about helping families experience greater clarity, confidence and contentment by connecting their wealth with their purpose. Archetype exists to help families thrive across generations.
Disclaimer: Our intent in providing this material is purely for informational purposes, as of the date hereof, and may be subject to change without notice. This article does not intend to constitute accounting, legal, tax, or other professional advice. Visitors and readers should not act upon the content or information found here without first seeking appropriate advice from a trusted accountant, financial planner, lawyer or other professional.