My wife and daughter own Fitbits. I didn’t want to be left out, so I bought one too. The main reason for getting our Fitbits is our healthcare plan will give us points we can use to purchase gift cards. Of course, we want to get fit, but our real motivation is to rack up the points.
My Fitbit tracks my sleep, steps, heart rate, weight, water intake, calories, and so on. My goals are to walk 10,000 steps per day and exercise at least five days per week. So far, it’s going well. My Fitbit buzzes when I reach my goal, and if I have been sitting for extended periods, it will remind me to get up and walk around. My daily record, so far, has been 26,000 steps, which included walking, mowing my lawn, and cycling around my neighborhood. For my efforts, I earned the following badges: skydiver, skyscraper, penguin march, and classics. I guess these are good badges.
My Fitbit is like an electronic coach I wear on my wrist, a constant reminder to keep moving, keep pursuing my goals despite the obstacles.
A financial plan is like a Fitbit. A plan records and tracks your essential financial data to make sure you're on pace to achieve your goals. Unlike your Fitbit, your plan comes with a financial planner. Your planner will be your coach and confidant, encouraging you to keep moving despite the headwinds.
As the stock market falls and the economy crumbles, a financial plan may bring you peace. Despite the destruction in the market this year, our client’s financial plans and goals remain intact. We monitor our client’s data regularly and adjust as needed. When a client inquires about their investments, I can review their financial plan to let them know they’re still on pace to achieve their goals.
A financial plan is mostly data-driven, a combination of assets, ages, goals, time-horizons, risk tolerance levels, etc. It’s a numbers game, and the data gives clients the confidence they need to keep moving forward.
Here are five reasons why it’s essential to complete a financial plan.
- Individuals who complete a financial plan have three times the assets of those individuals who do little or no planning.
- A plan will quantify and visualize your goals. Do you want to retire early? Buy a second home? Travel the world? Your plan can answer these questions and several more.
- A plan can improve your budgeting and spending goals. A spending plan can give you control over your cash flow, allowing you to buy what you want – if it’s in the budget!
- Your plan will be your financial guide, whether your saving money for college or retirement. It will be your GPS. It will keep you on the right path.
- It will keep your emotions in check, especially when global markets are falling apart.
For our part, as a planner, we will do the following:
- Understand your personal and financial circumstances.
- Help you identify and select goals.
- Analyze your current and potential course of action.
- Develop financial planning recommendations.
- Present your recommendations.
- Implement your recommendations.
- Monitor your progress.
Once your plan is in place, I recommend meeting with your planner quarterly. After you’re satisfied with the results, an annual review is all that is needed.
A Fitbit can’t make me work out, nor can a plan make me develop healthy financial habits. I must do the work and put in the time, but if I do, I know good things will happen.
Success is walking from failure to failure with no loss of enthusiasm.” ~ Sir Winston Churchill
May 13, 2020
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and are not suitable for every investor.