When you hear the term money action plan, what does it make you think? Hopefully, it conjures thoughts of executing a plan. In our busy lives, we often have more time to think about a plan, than time to execute a plan.

What’s your money action plan for your financial plan?

Unfortunately, not having a written plan means you don’t get to check your own math to make sure that all adds up. It also means that you and your spouse, partner, and anyone you get advice from, are not fully informed on the assumptions your plan makes.

You’ll probably get advice from many fronts. While these people are well-meaning, are they a Chartered Financial Analyst, Certified Financial Planner, actuary, an official at the Social Security Administration, or any number of people who work in the financial planning industry?

Furthermore, do you have a money action plan for this financial plan? What actions are you going to take with your money in order to achieve your overall financial plan? If you are currently not fully implementing your money action plan, then you may be running up against the cost of waiting. That simply means that the longer you wait to act, you will either have to save more or target a higher rate of return. In the worst-case, this could mean that, in order to implement your money action plan, you would either have to save your entire paycheck or hit the lottery the first time you play!

Stressing out over your money action plan?

One of my favorite retirement researchers is Jim Otar. In his book “Unveiling the Retirement Myth”, he reminds us that we should not plan on averages, but on real-life scenarios. Living in Chicago, aka the Windy City, I’m glad that the skyscrapers are not built for average wind conditions! They must withstand the worst wind conditions or thousands of people would be in peril.

It’s easy to base a plan on averages when we don’t have a lot of time to formulate our plan. For years, people made assumptions on the average return of the S&P 500. That is a bit like saying, I’ll put my hand in hot, then cold water and say the average is room temperature. If you have defaulted into a target-date investment strategy, that makes average expectations even more challenging. It’s important to understand, at minimum, what is the range of returns you may expect for your investment portfolio.

While some portfolios may have the word “smart” or the year you plan to retire in their name, they promise no specific return. Worse yet, they don’t know how much you are saving.

How long with your money action plan last?

Could your plan withstand six months of unemployment, a long-term disability during your working years, a lengthy period of long-term care, or the death of either of the breadwinners? You may be one of the fortunate who is able to balance their budget monthly. However, does that include premium payments to offset the risks of unemployment, disability, long-term care, or death?

While these are logical issues to address, it can be emotionally challenging to plan for, much less pay for, events you don’t want to happen. I don’t want to think about these things occurring either. However, I’ve had friends and family impacted by each one of these issues.

While you may not need to get the most comprehensive of each of these types of policies, having some protection based upon some reasonable assumptions is wise. Few people can self-insure for each one of these risks. Even if you can self-insure, there is wisdom in transferring that risk to an insurance company to conserve the cash should the event happen. While you may hate the payment, you or your family will appreciate the payout in times of stress.

MAPs and road trip apps

Money Action Plan creates a convenient acronym–MAP. For many of us with smartphones, we no longer use paper maps. Instead, we use apps like MapQuestTM, GoogleTM Maps, and WazeTM. Not only do these programs draw a map for us, but they also give us turn-by-turn directions and updates based upon road conditions, traffic, or other obstacles. They may even reroute us based upon current traffic, or the fact that we overshot a turn.

At Envision Wealth Planning, we help you develop your own customized financial plan, with a MAP that works just for you. We’ll help you with a reroute, as life conditions dictate.

Ready to find out more about our Envisioneering™ Financial Life Planning Process? Let’s get the conversation started.


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