Why Financial Planning: Step 1, You Need a Plan

BOSTON (CBS) – The financial choices in our lives are overwhelming. Once upon a time, people’s financial lives were simple. There was one kind of mortgage, you had a savings account, no credit cards and if you wanted to buy a stock, you paid an 8% commission thru a broker.

Most households are not adequately prepared for retirement according to a survey by the Federal Reserve Board. Almost half of the adults surveyed were not thinking about retirement. And even less had a financial plan.

Today everyone should consider having a financial plan. The financial planning process can easily be broken down into five simple steps.

  1. What do you want? These are your goals.
  2. What have you got? This is your net worth.
  3. Saving and investing to get what you want
  4. Managing the obstacles you will encounter along the way
  5. Protecting the people you love and the assets you have accumulated


Let’s start with what you want, the first step. The big picture here. What do you want to be doing in 5, 10, 20 years? Where do you want to be living? What kind of job? Retired? And as grown-ups there is a dollar component to all of our goals. Remember, a goal is a dream with a deadline.

Your number one financial goal should be a comfortable retirement. But often times buying your first house, having children and credit card debt put retirement planning on the back burner.

Make out a list of your goals. By writing them down you stimulate a part of the brain called the reticular activating system. This system triggers a filtering process and begins to collect information and routing it to the conscious part of your brain. Next, what’s the time horizon for each of those goals?

Now prioritize the list. What is the most important goal? What you have now is an outline of your financial plan. Now fill it in. How much will you need to save? Where will the money come from? Do this with each item on your list.

One more thing:  To find a financial planner to help you achieve your goals and dreams in your area contact the Financial Planning Association’s (FPA) local Boston chapter.


You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee’s Money Matters newsletter here.

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