The One-Page Financial Plan

The One-Page Financial Plan is a book by Carl Richards who is a financial planner, author, and speaker on all things behavioral finance. When it comes to personal finance, the most important aspect is managing our behaviors, not creating the greatest investment portfolio. Creating a financial plan that allows you to behave properly, and not make quick, emotional decisions, will be the driver of your long-term financial success.

I read Carl’s book The One-Page Financial Plan in 2016 but thought I would do a quick overview, as it is one of the most clear and concise books on creating a successful financial life around.

Part One: Discovery

In order to put together a one-page financial plan, you must figure out where you are and where you’d like to go. This step will be pretty quick for some, but may take awhile longer for others. As Carl mentions:


“this discussion brings us face-to-face with our fears about money, and makes it shockingly clear whether or not our behavior lines up with our goals.”


The most important money question: “Why?”

Why do you want to have money? Why is money important to you? These are tough questions. Questions you most likely have never thought about deeply. Most will say they want money to pay the bills, to have financial freedom, or to show they are successful.

It is important to really dig deep into these questions to find the true answer. Why do you want to have financial freedom, why do you want money to be a barometer for your success? The true answer will most likely be more personal. You really want to start a family, or start a business on your own.

A process I like to walk my clients through is taking a close look at their spending over the past few months. Does each transaction reflect back to your “why”? Most likely, not every transaction will but that’s okay. What’s important is recognizing where you may be spending money that doesn’t truly bring happiness to your life. By taking the time to recognize these aimless transactions, you will be more prepared to stop yourself the next time around.

Part Two: Spending and Saving

Having gone through the process of finding your money “why”, you are now ready to start making progress on your spending and saving plan. As I mentioned just above, being aware of your spending is a crucial part of your financial life. All too often, I see individuals going through life without truly understanding how much they spend each month, or where that money is even going. By taking the time to understand your current position, you will be able to then create a plan to move forward. Again as Carl mentions:


“Budgeting is important not only because it reminds us not to spend so much on gasoline or takeout, but also because it helps us cultivate the awareness we need to save and spend in accordance with our values.”


Do you have to budget forever? Not necessarily. I recommend you do a thorough review of your spending on a monthly basis until you really get familiar with your spending and start to see your patterns and behaviors. This process won’t take long either. Sit down with your significant other for 30 minutes once per month to go through your spending for the month prior. You can also take this time to discuss any major changes you see coming on the horizon. Does the car need maintenance? Do you want to redo the deck on the back porch? Keeping an open and honest discussion of these events will help to reduce any surprises or conflicts in the future.

How much do you need to save? This really depends on what your goals are and where you currently stand financially. One of the best philosophies I like to go by is this - spend what you have left after saving, not save what you have left after spending. Everybody will have a different rate that they should save, so a general rule of thumb like “save 15 percent” is not a prudent way to determine your savings rate. Save what you reasonably can today and continue to improve upon that rate going forward until you reach your needed personal savings rate.

Here’s Carl’s thoughts on getting started saving:

  1. Be more mindful of the money flowing in and out of your hands.
  2. Save one-time windfalls.
  3. Automate savings.
  4. Set short-term goals.

Part Three: Investing

I get asked more often than I’d like “so what’s your hot stock tip right now?” If you know me or my philosophy on investing, you won’t be surprised to hear that I usually respond that I don’t have one. I believe in long-term, passive index investing. I don’t want my investing to be exciting, I want it to help me accomplish long-term goals. I will leave the excitement for the roller-coaster rides at the theme park.

How do you find the money to invest? Earn more and spend less. The gap between your earnings and spending rate is what you are able to invest. The more you are able to invest, the sooner you will be able to retire and/or achieve your other financial goals.

My general advice on investing is to invest what you can on a regular basis. Do not try and time the market, just set your investments and savings on autopilot, and let time take care of the rest. Compound interest is your best friend. Here’s Carl’s take on how to manage your investments:

  1. Diversify your portfolio.
  2. Keep your costs low.
  3. There is a correlation between risk and reward.

Part Four: Strategies for Avoiding the Big Mistake

Making a financial plan you can stick to will serve you well in the long run. It is the friend you can always turn to to help you from making rash decisions that don’t align with your best interests. The toughest part about a financial plan is sticking to it. You will be pulled in every direction at different points in your life and be tempted to stray from your original plan. However, you know that sticking to the plan you made while in a calm state is what you need to listen to. Once again as Carl said:


“Behave. For a really long time.”


It sounds much easier than it is. Every day you are faced with difficult decisions and are being asked to stray from your goals. You must not listen to the outside world and know that you have made a plan and are going to stick to it.

One way to help you through this long process is to hire a real financial advisor. Not an insurance salesman or stock broker, but a real financial advisor. This advisor will charge you a fee for the service provided, will be a fiduciary that acts in your best interest, and won’t accept commissions from outside companies. Here is what Carl has to say about “The Secret Society of Real Financial Advisors”:

  1. Real financial advisors diagnose before prescribing.
  2. Real financial advisors are open about conflicts of interest.
  3. Real financial advisors are transparent about fees and compensation.
  4. Real financial advisors stand between you and the big mistake.

Sticking to your financial plan will not be easy. However, by going through the process and reevaluating your priorities on a regular basis, you will be well on your way to a successful financial life.

Be sure to make a plan, find someone who can help you stick to it, and get on with living your life. Life is short, get out and live a little.


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