The One-Page Financial Plan

The One-Page Financial Plan Plot Summary

Introduction

Money decisions often feel overwhelming. We're bombarded with countless options, complex investment strategies, and conflicting advice from experts. The financial world can seem like a maze designed to confuse rather than guide us. Many of us respond by either obsessing over every penny or avoiding our finances altogether, neither of which leads to peace of mind. What if financial clarity wasn't about perfection, but rather about aligning your money with what truly matters to you? This journey begins with understanding why money is important to you personally, making your best guesses about the future, and creating a simple, adaptable plan. Whether you're struggling with debt, confused about investing, or simply want to feel more confident about your financial decisions, the path forward starts with straightforward actions that connect your deepest values with your everyday money choices.

Chapter 1: Discover Your Financial Why

At the heart of every financial decision lies a deeper motivation that often remains unexplored. When working with clients, I begin with one simple yet profound question: "Why is money important to you?" This question helps uncover the values that should drive your financial plan, rather than letting external pressures dictate your choices. Sara, a successful emergency room doctor, came to me with her husband Mark for investment advice. Like many clients, they expected me to immediately share hot tips or secret strategies. Instead, I asked them why money mattered to them. After some initial hesitation and vague answers about "freedom" and "flexibility," Sara revealed something surprising: "I really want to have a family, and I haven't even had the time to think about it." This moment of clarity shocked both Sara and her husband. Despite their years together, they hadn't connected her intense work schedule with her deep desire to start a family. This revelation transformed our conversation. Now we could view all their financial decisions through this lens: would a particular choice help or hinder Sara's ability to take time away from her demanding career to start a family? Suddenly, decisions about savings rates, investment strategies, and spending habits had a clear purpose. The process of discovering your financial "why" can be uncomfortable. We're not used to discussing the emotional aspects of money; we prefer focusing on numbers and cents. But without understanding what truly matters to you, you'll struggle to make consistent financial decisions. Your "why" acts as a compass, helping you say no to things that distract from what's most important. To uncover your own financial "why," set aside time in a neutral space away from daily distractions. If you're discussing this with a partner, approach the conversation with a "no shame, no blame" attitude about past decisions. Keep asking deeper questions when you come up with initial answers like "security" or "freedom." Look at how you currently spend your time and money for clues about what you truly value. Remember that financial planning involves more than just money—it's also about how you allocate your time, skills, and energy. When you identify what truly matters, you create what Stephen Covey called "a deeper 'yes!' burning inside" that makes it easier to say no to financial distractions that don't serve your core values.

Chapter 2: Make the Best Guesses You Can

When it comes to financial planning, uncertainty is what scares us most. Many traditional approaches to financial planning make this fear worse by demanding precise predictions about the future. They ask questions like "What will your utility bills be 25 years from now?" or "How much will you spend on auto insurance in 2043?" This obsession with false precision leads many people to avoid financial planning altogether. Here's a liberating truth: nobody knows exactly what the future holds. Your life rarely follows the linear path you expect—and rather than letting this reality paralyze you, you can embrace uncertainty and work with it. Financial planning isn't about clinging to a false sense of security that you'll know where you'll be in thirty years. It's about making your best guess and being willing to adjust as life unfolds. I encourage clients to find balance between two extreme approaches. Some people tape financial goals to their rearview mirrors and obsess over meeting specific targets. Others throw planning out the window and live only for today. The most successful approach lies in the middle: make reasonable guesses about where you'd like to go, but don't become so committed to those guesses that you can't adapt when circumstances change. When Sara and Mark identified starting a family as their core value, we began mapping specific goals related to this priority. Sara needed to work less, which meant ensuring they were on track for retirement even with reduced income. We wrote down concrete financial targets: how much monthly income they'd need in retirement, funding for annual vacations, and creating an emergency fund. By taking their best guess at these numbers, they created a framework for making decisions that aligned with their values. This guessing process can reveal surprising possibilities. My clients Henry and Elizabeth, parents of three young children, initially came to discuss education funds. As we explored why this was important, they shared their discomfort with American work culture that prioritizes career during children's formative years. "What we'd really like," they admitted, "is to take six months off and drive an RV around the country and homeschool our kids." When I asked if this was feasible, they realized this "impossible dream" could actually become reality—and it aligned perfectly with their deepest values. Remember, the point isn't perfect precision. Your guesses will inevitably need adjustment as life unfolds. The key is commitment to the process of guessing and adjusting, rather than demanding certainty. By allowing yourself this flexibility, you'll find financial planning becomes less overwhelming and more empowering.

Chapter 3: Face Your Current Location

Before you can chart a course to where you want to go, you need clarity about where you stand right now. My friend Steve, a corporate CFO, asked me to help organize his finances. Despite his professional expertise in managing company finances, when I asked about his personal financial situation, he wasn't exactly sure where he stood. This situation is surprisingly common. Many people avoid looking clearly at their current financial state. Why? Because facing our assets and liabilities forces us to confront mistakes and missteps we've been trying to forget. Even small debts can trigger avoidance behaviors. One friend told me about a doctor's bill that sat in her drawer for months until she received a collection notice—all because she didn't want to deal with the insurance reimbursement paperwork. Larger debts can push us past our breaking point. I once worked with a woman who had borrowed about $6,000 for a student loan decades earlier. For years, anxiety about this debt kept her awake at night, but she avoided facing it. When she finally contacted the loan company, she discovered her debt had snowballed to $34,000. The monster she'd been hiding from had grown much larger through neglect. Creating a personal balance sheet is actually quite simple. Draw a line down the middle of a page. On the left side, list all your assets: bank accounts, home value, investment portfolios. On the right side, list all liabilities: credit card debt, mortgage, student loans. Be specific about amounts. If you're not sure about the numbers, call your bank or creditors to get accurate figures. Then add up all assets, subtract all liabilities, and you have your net worth. When Steve completed this exercise, he was pleasantly surprised. "You know, we've been really aggressively paying down our mortgage," he said. "I hadn't really thought about it, but that's made a big difference the last couple of years." He also realized they'd been consistently contributing to their 401(k)s and children's savings accounts. Their anxiety had been unfounded. For others, this process provides a different kind of reality check. When I realized I could no longer make my mortgage payments during the financial crisis, facing this truth was physically painful. The anxiety manifested as stomach pain so severe I would vomit. But when I finally sat down and assessed how bad things really were, I felt a sense of control returning. "I can deal with this," I thought. "It just might take some time." Whether your balance sheet brings relief or concern, facing your current location provides clarity that's essential for moving forward. Remember to approach this process with a "no shame, no blame" attitude, especially when working with family members. Make peace with past decisions and focus on the path ahead.

Chapter 4: Track Spending for Awareness

In today's consumer culture, we're constantly bombarded with tools designed to make spending effortless. From Amazon's one-click purchasing to targeted ads that follow us across the internet, we're encouraged to buy without thinking. While marketing departments certainly share blame for our overspending, ultimately we're the ones making purchase decisions. If we want financial control, we must take responsibility for our spending habits. We often justify purchases by telling ourselves stories. "This isn't just any car, it's the safest option for my family." Or "This iPad isn't a purchase, it's an investment." While these narratives might contain partial truths, they often mask the real reason: we simply want the item. These self-justifications can wreak havoc on our savings goals. Budgeting is the antidote to these spending stories, yet many people avoid it. The word "budget" has a marketing problem—it feels like punishment, similar to flossing. We understand its importance but resist implementing it. Jesse Mecham, founder of You Need a Budget, shared an insight that changed my perspective: budgeting equals awareness. Its purpose isn't to restrict spending but to become conscious of where our money goes so we can align expenditures with our values. Dallas Hartwig, co-author of the bestseller It Starts with Food, told me his reluctance to track spending stemmed from fear of what he'd discover. When he and his wife Melissa finally monitored their food expenses, they were "horrified" by the percentage of income devoted to groceries and dining out. However, this awareness led to valuable insights. They realized their hefty food budget perfectly aligned with their values and career centered around nutrition. Simultaneously, they discovered their stated goal of building a house wasn't actually their priority—the flexibility of their current lifestyle was more important. To begin tracking your spending, first list your fixed monthly expenses: mortgage/rent, loans, utilities, insurance, and subscriptions. Automate these payments and any long-term savings goals you've established. Then track every penny of discretionary spending for at least a month. Use whatever tools work for you—apps like Mint.com, budgeting software like YouNeedaBudget.com, or simple index cards. The goal is awareness, not judgment. If tracking reveals entrenched spending habits, consider a more radical approach. My friend Steve Fellows practices what he calls a "spending cleanse"—periodic intervals where he and his wife avoid spending any money. They ride bikes instead of driving, skip eating out, and postpone entertainment expenses. This practice helps break unconscious spending patterns and brings remarkable clarity about true financial priorities. Remember, budgeting isn't about restricting joy but ensuring your money flows toward what truly matters. When viewed this way, tracking becomes empowering rather than punishing—a tool for aligning your financial decisions with your deepest values.

Chapter 5: Build a Strategy for the Long Run

We've all heard the golden rule advising us to save 15 percent of each paycheck for retirement. While this guideline has helped many begin saving, it presents two problems: you may not be able to put away 15 percent, or you may not need to. These one-size-fits-all rules can create unnecessary stress for those doing their best but falling short of arbitrary targets. My friend Brad Petersen offered a refreshing perspective when I asked if he was saving enough for his child's college education. "Carl," he answered, "how about this: I'm saving as much as I reasonably can." This simple response has guided my approach to savings advice ever since. The question becomes: what does "reasonable" mean for your specific situation? One major obstacle to saving is our difficulty connecting with our future selves. Stanford health psychologist Kelly McGonigal explains that brain scans show we process information about our future selves using the same brain regions activated when thinking about strangers. This disconnection makes it challenging to prioritize future needs over immediate desires. That Friday dinner splurge might seem harmless, but multiply it over decades and you've sacrificed thousands toward retirement. Rather than starting with traditional advice like skipping coffee or packing lunch, begin by examining what you learned from tracking your spending. Focus specifically on surprise expenses—those unplanned purchases that weren't part of your regular routine. Perhaps it was an impulse book purchase or an unplanned shopping trip. These "surprise choices" often represent significant leakage in your financial plan. I implemented what I call the "72-Hour Test" to combat my Amazon impulse buying. Instead of immediately purchasing items, I keep them in my cart for at least three days before deciding. This simple buffer dramatically changed my behavior—most items stay in my cart until I forget about them entirely. Very few purchases are truly urgent, and this waiting period helps separate genuine needs from momentary desires. If you're feeling behind on savings goals, focus on starting now rather than lamenting past decisions. Nearly half of Americans couldn't come up with $2,000 in thirty days if needed, which highlights how common savings struggles are. Avoid the temptation to seek get-rich-quick investment schemes to compensate for lost time. Instead, return to fundamental principles: save as much as reasonably possible, spend less than you earn, and protect what you've already saved. Whatever savings approach you choose, bring mindfulness to both saving and spending. Automate regular savings to remove decision fatigue. Save one-time windfalls like tax refunds or bonuses. Set short-term goals to increase savings during specific periods. Most importantly, continually revisit your definition of "need" versus "want" in a culture that constantly blurs this distinction.

Chapter 6: Invest According to Your Values

After decades helping people create unique financial plans, I've discovered one common thread among clients: widespread disillusionment with the stock market. Many view investing as a "giant scam" or recall losing money in previous attempts. Yet paradoxically, the stock market has performed quite well over the past decades. What explains this disconnect? The problem lies in confusing investing with speculation. A massive entertainment industry has grown around financial "experts" shouting frantic advice, leading many to believe that successful investing requires constant buying and selling based on market predictions. This confusion between trading and investing leads to what I call the "Big Mistake": buying high and selling low. Even sophisticated professionals fall into this trap. Many doctors, real estate agents, and media professionals believe their industry expertise qualifies them to pick winning stocks. When friends tell me they want to buy Apple or Samsung stock because they love their phones, I ask if they've read the company's annual report. No one ever has—not because they're negligent, but because they're busy. Acting on gut instinct without proper research almost inevitably leads to poor investment outcomes. Real investing has nothing to do with this speculation carnival. Instead, it follows scientific principles based on decades of academic research. When I first learned about evidence-based investing during a professional course at the University of Pennsylvania, it felt like discovering a parallel universe. Just as medical researchers test hypotheses through rigorous studies and peer review, financial researchers have extensively studied market performance patterns. This scientific approach to investing reveals three fundamental principles. First, diversify your portfolio. The financial press rarely celebrates investors who made sound, diversified investments over decades, instead highlighting unicorn stories of concentrated bets that paid off spectacularly. But for every Mark Zuckerberg, countless others lost everything on single-stock gambles. Diversification means spreading risk across thousands of companies through low-cost mutual funds, ensuring no single failure significantly impacts your portfolio. Second, keep costs low. After examining countless variables to predict investment performance, researchers found only one reliable factor: cost. The more you pay for investments, the less you keep. This simple mathematical reality makes low-cost index funds particularly attractive for most investors. Third, understand the correlation between risk and reward. In finance, taking appropriate risks generally leads to higher returns over time. Stocks typically outperform bonds, small companies outperform large ones, and financially weak companies often outperform financially strong ones. The key is taking "compensated risks" backed by research, not speculative gambles. Rather than providing a one-size-fits-all portfolio recommendation, I suggest beginning with the institutional default of 60% stocks and 40% bonds. For money you won't need within ten years, consider placing 42% in U.S. stocks, 18% in international stocks, and 40% in bonds. This allocation provides a starting point you can customize based on your specific goals, risk tolerance, and time horizon. Remember to rebalance your portfolio annually, forcing yourself to sell high and buy low in a completely unemotional way. Finally, create an investment policy statement documenting your rationale for your investment decisions. This serves as a contract with yourself to maintain discipline when market turbulence tempts you to abandon your plan.

Chapter 7: Behave for a Really Long Time

The final and perhaps most crucial step in creating a successful financial plan is surprisingly simple yet incredibly challenging: behave consistently over time. You can discover your deepest values, create the perfect budget, buy appropriate insurance, and design an ideal investment portfolio—but if you don't stick with it, all that effort becomes wasted. Financial success depends more on behavior than skill or knowledge. Nobel Prize-winning psychologist Daniel Kahneman explains that we all suffer from cognitive biases that make sound financial decisions nearly impossible. These biases appear to be hardwired into our brains, causing us to take mental shortcuts that compromise our judgment. Unless you got exceptionally lucky in the DNA lottery, your biases will inevitably threaten your financial wellbeing. The good news is that while we can't eliminate these biases, we can create systems to work around them. Think of these as guardrails that keep you on the right path even when emotions tempt you to stray. My daughter leaves her shoes directly in front of the door so she literally can't leave without noticing them—similarly, you can establish financial guardrails that prevent poor decisions. First, having a clear, written plan serves as your touchstone during turbulent times. When market volatility triggers fear or greed, your investment policy statement reminds you of the rational decisions you made when emotions weren't clouding your judgment. It reconnects you with your deeper values and long-term goals. Second, automate good behavior wherever possible. Set up automatic transfers for savings, investment contributions, and bill payments. By removing the need for repeated decisions, you eliminate opportunities for your biases to derail your plan. Automation transforms good intentions into consistent actions. Third, remember your past financial mistakes. We all leave a trail of decisions we regret—chasing hot stocks during the internet bubble, panic-selling during market crashes, or jumping into real estate at market peaks. While you can't change past behavior, you can identify patterns and use them as cautionary tales when similar situations arise again. Finally, leave your investments alone. Warren Buffett compared investing to growing an oak tree—no sensible person would dig it up monthly to check on the roots. Similarly, your investment plan needs time and neglect to flourish. As Buffett noted, "The hallmark of our investment process is benign neglect, bordering on sloth." This might be the only area in life where laziness becomes a virtue! This approach creates what I find most exciting about financial planning—not maximizing returns or finding perfect investments, but reclaiming time for what truly matters. When you align your financial decisions with your deepest values and establish systems that protect you from your worst impulses, you gain both peace of mind and freedom to focus on life's meaningful aspects.

Summary

The journey to financial freedom isn't about complex strategies or magical formulas—it's about aligning your money decisions with what truly matters to you. Throughout this book, we've explored how discovering your financial "why," making your best guesses about the future, facing your current reality, tracking spending for awareness, building a sustainable strategy, and investing according to evidence-based principles all contribute to a path that's uniquely yours. As I've learned through both professional experience and personal mistakes, the real secret to financial success lies in behavior—making sound decisions consistently over time. As Warren Buffett wisely observed, "Someone is sitting in the shade of an oak tree today because someone did the boring work of planting and taking care of it decades ago." Your financial future grows from the simple, sometimes boring actions you take today. Begin by identifying what truly matters to you, then set up systems that make it easier to behave in alignment with those values. The reward isn't just future financial security but immediate peace of mind knowing your money decisions support what you care about most.

About Author

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Carl Richards

Carl Richards is a CERTIFIED FINANCIAL PLANNER™ and the director of investor education for the BAM ALLIANCE, a community of over 130 independent wealth management firms throughout the United States. He is the creator of the weekly Sketch Guy column in the The New York Times, and is a columnist for Morningstar Advisor. Carl has also been featured on Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. In addition, Carl has become a frequent keynote speaker at financial planning conferences and visual learning events around the world.Through his simple sketches, Carl makes complex financial concepts easy to understand. His sketches also serve as the foundation for his first book, The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money (Portfolio/Penguin). Carl's art appeared in a solo show at the Kimball Art Center, in Park City, Utah. Other showings include The Parson's Gallery in New York, The Shultz Museum, and an exhibit at the Mansion House in London. His commissioned work is on display in businesses and educational institutions across the country. He lives with his family in Park City, Utah.

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