Beginning Your Financial Plan


Many of us wish that we had more money. We may dream it. We may wish for it. We may work harder and longer for it.

Yet, just about all of us will have over $1 million pass through our hands during our lifetime. In fact, for most of us, we will earn closer to $2 million in our career. What we do with all that money will determine how financially successful we are.

According to study in July of 2012 by the Consumer Federation of America and Certified Financial Planner Board of Standards, Inc., 38% of households live paycheck to paycheck. Only 30% felt financially comfortable while only 34% felt that they could afford to retire at age 65 ( Many other studies reveal very similar results.

The report went on to say that those who have a financial plan had a far better outlook on their financial situation. Fifty per cent of the households with a plan felt they would meet their financial goals compared to 32% who did not have a plan.

Dave Ramsey says our income is our greatest tool to building wealth. Yet, most people never realize where and how they spend their money. They never consider how much money will pass through their hands. Most individuals never sit down and set up a financial plan.

A financial plan is a road map that enables you to reach your destination. A financial plan empowers you to tell your money where to go rather than having your money tell you where it went. A financial plan allows you to see progress, re-evaluate your situation, make changes, and stay on the course to reach both your short-term and long-term goals. Without a plan, you will never know if you are making progress toward your goals or even help you identify what your goals are.

A GPS needs two pieces of information in order to give you directions: 1) where you are currently located, and 2) where you want to go. The same is true for a financial plan. It begins with discovering where you are and identifying the goals you want to reach.

Step 1: Identify Your Goals
Unlike the GPS, a financial plan begins with the destination. You need to identify the goals you want to reach both in the short-term and in the long-term. Your goals need to be agreed upon by each person, and the goals should be re-evaluated periodically to make any changes to them.

Short-term goals can be accomplished within a couple of years. These goals can be getting out of debt, saving for an emergency fund, saving for a major purchase, saving for a vacation, increasing your tithe, lifetime gifting strategies, or purchasing the right amount of insurance. Your short-term goals need to be specific and measurable. Your particular situation and desires will determine your goals.

Long-term goals will take over 5 years to accomplish. Examples of these goals are retirement savings, college savings, estate plans, lifetime gifting strategies, or financial independence and security. Just like short-term goals, long-term goals are specific to your particular situation and need to be measurable.

You need to spend some time reflecting on your long-term goals. For example, when identifying retirement savings, you must reflect on your expectations in retirement. For clergy, retirement savings need to include money for purchasing a house or renting. Others may want to have money set aside for traveling. Of course, these dreams and thoughts can change over time so you may need to adjust your retirement savings as your expectations in retirement change.

Step 2: Discover Where You Are
Once your goals are identified, you are ready to discover your current situation. You will need to gather together all of your assets and liabilities. Assets include all your bank accounts, savings accounts, life insurance policies, investment accounts, and a list of your personal property such as real estate and vehicles. Liabilities will include all your debts – credit card debt, mortgages, auto loans, personal loans, and student loans. You will also want to include your insurance premiums under the liabilities.

A planner can use all this information along with your goals to develop your financial plan. The plan should include “check-up” times when you will review your plan, goals, and your current situation. A financial plan is not a once and done item but is a fluid, ongoing process between you and your planner.

The earlier one starts on a plan, the easier it is to reach your goals. For example, if your goal is to pay for your child’s college education, you must save less money per year if you begin when the child is born versus beginning to save when the child reaches high school.

But the important thing is to start! No matter where you are in your life – just starting out, in the middle, or ready to retire – it is important to have a plan. Your confidence level will be greater when you have a plan. And your odds to reach your goals are much greater if you have a road map to get you there.

Rev. Keith Anderson is the Executive Director of Preachers’ Aid Society and Benefit Fund and a CERTIFIED FINANCIAL PLANNER™. He can be reached at or 217-529-3221.