A Psychological Approach to the Financial Plan

Joe Arndt, a financial advisor who lives in Glendale, says identifying feelings about wealth is key before starting a financial plan.

I want to help you begin your own financial plan. I know that many readers will never hire a professional financial planner even though doing so can increase your chances of a successful financial future. Financial planning is not just about accumulating piles of money, but a discovery process of how you feel about money, family, and the meaning of your life.

My typical initial meeting with new clients consists of asking lots of questions, and here are some that can help you discover how you feel about money and wealth. Think about them or talk it over with your partner/spouse.

  • What messages did you receive from your parents about money when you were growing up?
  • What would you do if you had all the money you need?
  • Tell me about the best and worst experience you have had involving money.
  • Describe a painful memory of money, a happy memory.
  • Talk about a good financial decision you made, and one you regret.
  • What do you want your money to do when you are gone?
  • Do money matters cause you anxiety?

Notice the above are not about how much money is in your IRA and bank or investment accounts, or your list of assets and liabilities, and financial statements. When you know how you feel about your money, and you know what you want your money to do, you can design your investment portfolio, plan for retirement, assess your tolerance for risk, and accurately aim for your goals. You do need to be aware of tax laws and the other math parts of planning, and examine financial and account statements preferably with a tax or financial professional.

Also, think about the needs of your family when you are gone. Do you have personally owned life insurance to cover your debts and other needs? Do you have a family member with special needs?  Many couples who leave an inheritance to children feel that everything should be split equally, but this may not be the best thing for your heirs. I know from experience that this can be a very hard thing to do. Any dispositions should be explicit in your will or trust.

After defining your financial and family goals, you are in a position of power to plan to get there, keeping in mind that life is uncertain and plans change.  And don’t forget, even do-it-yourselfers need help occasionally and should check with a financial planner from time to time. There are thousands of sources of financial information, and more than enough talking heads to tell you what to do. The hard thing is to filter out the junk and make wise decisions that are best for you and your family. 

*Securities and investment advisory services offered through Sagepoint Financial, Inc. member FINRA/SIPC, and   a registered investment advisor. Arndt & Associates is not affiliated with Sagepoint Financial or registered as a broker-dealer or investment advisor.

*Written by Joe Arndt III, CLU, Chartered Financial Consultant, President of Arndt & Associates 8124 Big Bend Blvd. St. Louis, MO 63119.


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