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You are not too poor for a Financial Plan.
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Make it work for you.
How much money do you have?
Most potential clients cannot answer this question.
I always ask this particular question after they've said this to me: "I don't have enough money to need a Financial Plan."
Clients think the wallet and the bank account are the only "money" we talk about when we mention planning. The theory is that if it isn't cold, hard cash it doesn't count. Worse, it doesn't need any thought or planning.
But most people are richer than they know. When we get them to look at valuable things that can be sold or converted to money, you can see the Financial Planning light go on. Your car, the grandfather clock in the corner, the books in your library, and even the clothes in your dresser should be thought of as "money", and be considered in your Financial Plan. Think about replacing these items if your house burned down and you did not have the properly designed home owners insurance. You'll need cold, hard cash for that new underwear. Sadly, people fail to see the value in everyday items until they need to replaced.
That is why Financial Planning has two main objectives: Help you build your pile of money and help you hang on to it.
Let's think of a 30 year-old man with a good, steady job. He and his wife make regular deposits into their savings account as they plan for their first child. They live in an apartment and drive a 10-year-old compact car. They have not said it out loud, but it appears they have a plan: save for parenthood. They are both healthy and covered by a health plan at work, and the savings account has grown a little beyond the 6 month cushion financial consultants recommend. They do not own a house, the car works fine, and they enjoy each other. Does this couple need any more planning?
Of course they do. If their health insurance has deductibles and co-pays, one bad illness or accident could wipe out the savings account and their plans for parenthood. If they do not have renter's insurance, an apartment fire could force them to spend their savings on replacement furniture and belongings. Without the proper disability insurance, the husband's work accident might idle him for over a year and eat up that savings account. If the car insurance does not have enough liability coverage, the husband could face substantial out of pocket payments if he causes physical or emotional damage to another driver in a car accident.
And what about when they want to buy a house?
There could be another complete article about the other issues that could derail this couple's plan for their future. Most can be avoided, contained, or transferred with a Financial Plan.
But what young man in this situation would think he needs a Financial Plan?
Another person in need of planning is the poor pensioner nearing retirement. This person needs help understanding when to take retirement benefits, how to take them, and even if they should be delayed until a later date. Most clients I talk to, for example, did not know that they do NOT have to take Social Security Benefits at their retirement ages, and even after they start the benefits, they can be stopped and restarted at a later date. These are planning issues that people do not understand and impact the rest of the retirees life. Yet, these are the exact clients who will tell you they are too poor for planning.
Transfers at death are complicated financial issues, as well. The federal and state governments all have an idea about who should get your money, including the states and federal government. Estate taxes, legal fees, and probate costs can ruin the legacy you planned for your kids or grandkids.
We need to hold on to what we have. And if we're lucky enough to have something, we need to make it do more for us. Design your Financial Plan so that it holds on to what you have, and uses it to make more.
And make sure you know exactly what it is you have.
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