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Financial Decoder: Season 4 Episode 2


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Are Financial Plans Just for the Wealthy?

We all have goals. Juggling multiple goals in a world of finite time and money can be tough. Whatever your goals in life are, can you name the steps you need to take in order to actually achieve them?

There’s clear evidence that the best way to achieve your financial goals is by starting with a plan. Unfortunately, the majority of people do not have a written plan. Why is that? In this episode, Mark Riepe and guest Jullie Strippoli discuss strategies to overcome some of the common mental barriers to getting started with a plan.

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MARK RIEPE: In 1911, the race to reach the South Pole came down to two men with radically different approaches to the journey.

Norwegian explorer Roald Amundsen spent years preparing for the extreme temperatures, long-term isolation, and physical demands of Antarctica. Amundsen invested in the best equipment and clothing he could find. And he chose 100 North Greenland sled dogs for the expedition.[1]

British captain Robert Falcon Scott had a hunch that a multi-tiered transport system of horses, dogs, and new-fangled motorized sledges could pull the heavy loads of equipment necessary to reach the pole.

Also, unlike Amundsen, Scott didn’t adopt a fitness regimen for his team—a fact that came back to haunt them when the ponies, dogs, and motorized sledges all failed and the men had to drag the heavy sledges themselves.[2]

This was one of the many mistakes Scott made, and on December 14, 1911, Amundsen and his men reached the pole. Scott and his team made it there five weeks later, but they all died on the return journey.[3]

So two different approaches to planning for the same problems led to remarkably different outcomes. Now, the world of financial planning isn’t nearly as dramatic and dangerous as that of polar exploration, but the way you plan for reaching your goals can have a big impact on your future. And if you don’t plan at all, you’re really putting yourself at a disadvantage.

I’m Mark Riepe, and this is Financial Decoder—an original podcast from Charles Schwab.

It’s a show about financial decision-making and the cognitive and emotional biases that can cloud our judgment.

We’ve discussed the importance of planning on previous episodes, but we wanted to come back to it and focus on one question we get a lot: “Do I really need a financial plan? I thought that was just for the wealthy.”

The short answer is yes, we think everyone should have a plan for how to achieve their goals.

But it’s important that the plan be realistic and you actually implement the plan.

Most people have multiple goals in life. Maybe you’d like to spend your retirement years living abroad. Maybe you intend to pay for your children to attend private school.

Maybe you want to be financially secure enough that by age 55 you can afford to only work when you find projects that are sufficiently meaningful.

A financial plan and conversation uses these types of goals as a starting point. Think of it like a roadmap to your goals.

Unfortunately, planning isn’t popular.

Among respondents to Schwab’s Modern Wealth Survey[4], only 28 percent of Americans have a written financial plan. Among those without one, 46 percent say it’s because they don’t think they have enough money to merit a formal plan, 18 percent say planning is too complicated, and 13 percent say they don’t have enough time to develop one.

This aversion to planning is odd because most of us plan for all sorts of activities.

I live a half-mile from a grocery store. Because it’s so close, I don’t spend a lot of time planning my trips there because the cost of forgetting something and having to go back isn’t a big deal.

I also have a Costco membership.

With zero traffic it takes 30 minutes to get there, and the Bay Area never has zero traffic. When someone in the family is making a Costco run, there’s absolutely some planning involved to make sure we maximize the usefulness of that trip.

That’s a trivial example, but planning for your financial future isn’t trivial.

Here are two reasons why planning makes sense no matter what your level of wealth.

The first is that planning tends to work. Multiple studies provide empirical evidence that the willingness to engage in planning leads to greater wealth accumulation.[5]

One study from the National Bureau of Economic Research[6] showed that differences in the attitudes and skills with which similar households approached financial planning were a significant factor in why those households ended up with very different levels of wealth.

There are a couple of factors driving this result. People who plan tend to do a better job of budgeting, which in turn leads to better control of their spending and saving.

People who plan also notice problems earlier and are able to correct them more effectively, compared to people who don’t have a plan.

The second reason that planning matters is that it helps mitigate the bias of narrow framing.

Think of framing as the way a decision is presented. When using narrow frames, people tend to look at just one piece of the puzzle. Adopting a broader frame makes it easier to see the big picture.

A good plan takes a comprehensive view of your entire financial life and by its very nature will look at tradeoffs between multiple goals. For example:

  • Saving for retirement down the road vs. paying for college now
  • Spending on an elaborate vacation vs. short getaways or other entertainment
  • Investing in a home remodel vs. replacing a car still in good condition

Having a plan is great, but a bad plan isn’t super helpful. The downfall of many plans is the optimism bias.

Optimism bias refers to the tendency to have a rosier view than is warranted when it comes to thinking about the future. Think of optimism bias as a general sense that things will turn out just fine even if the facts suggest otherwise.

How many times have you been told by someone “Relax, it’ll all work out in the end”?

Maybe they didn’t really believe that everything would work out, but in most cases I think people really are being sincere with such advice.

Some of that reassurance may be fact-based, but some of it is colored by an innate sense towards the positive when we think about the future.

This tendency towards optimism extends into the realm of personal finance as well.

From 1978 to 2015, a cross section of Americans were surveyed every month about how they expected they would do financially over the next year.

In 435 out of 456, months the majority of respondents believed that their financial fortunes would improve.

In particular, this research found that individuals tend to underestimate the future growth of their expenses.[7]

When planning, this matters because if you pay too much attention to just your personal income statement—and not the expense side of the ledger—then you could run into a problem.

This inherent optimism also can intersect with something called the planning fallacy.

That’s our tendency to underestimate the time it’ll take to complete a task despite knowing that similar tasks have, in the past, taken much longer.[8]

For example, I’m not a golfer, but I know enough about golf to know that each club in the golfer’s bag is optimized to hit the ball in a certain way from a certain distance.

One of the decisions you face when playing golf is picking the correct club for the shot you’re about to take.

It turns out that golfers routinely pick the wrong club. Now, that’s not news. What is news is that they systematically make mistakes when it comes to club selection. In other words, there’s a consistent pattern.

When deciding which club to select, golfers appear to think about the best and longest distance they’ve ever hit with that club and assume they’ll do it for the shot they’re about to take.[9]

But how often do we perform a task perfectly? Maybe you’re different, but for me it’s not that often.

And golfers are no different, and so golfers routinely end up hitting the ball short of where they want it to be. What they should do is pick the club based on the average distance that they usually hit with that club.

The applicability of all this to planning is you need to be realistic when sitting down to chart out your future.

Fantasies are nice, but a plan built on fantasies isn’t so nice when reality starts to intrude.

I’m joined now by Jullie Strippoli. She’s a vice president and assistant branch manager from Austin, Texas. She leads a team of financial consultants who are focused on helping individuals with their wealth management and financial planning needs. Jullie, welcome to Financial Decoder.

JULLIE STRIPPOLI: Thanks for having me.

MARK: Jullie, when you sit down with someone to discuss their goals and plans, it’s such a big topic—where do you even begin?

JULLIE: Well, Mark, the first thing we really want to do is get an understanding of the person’s situation in their life: where have they been, where are they now, and where are they going? And from there, we’ll want to get a picture of how their current assets and liabilities support those goals. What is their current net worth, how are they currently using debt, where are the potential risks, and how are they protected from those risks?

MARK: What’s interesting about your answer is you didn’t mention investments. I think what you’re saying is, the planning process is about a lot more than just the investing side of things. Is that right?

JULLIE: That’s right, Mark. Oftentimes when we ask prospective clients if they have a plan, they’ll interpret that as a question about their overall portfolio allocation, and it’s really not that at all. While, ultimately, we want a portfolio allocation and savings strategy that supports the plan, it’s really more about getting to know our client’s situation better than anyone else so that we can help them through all the phases of their financial life.

MARK: You mentioned identifying goals and the balance between assets and liabilities. What are some other common topics that come up?

JULLIE: There are some core issues that are worth discussing in addition to talking about your portfolio. As I mentioned earlier, many people look at their overall assets and don’t consider how the other side of the balance sheet, debt, either contributes or takes away from those goals. Assessing the value of debt in the plan is an important part of the process.

In addition, I mentioned risk, and while that certainly relates to the investment review, it also ties strongly into insurance review. Retirement planning is also a critical component of the process for many people and often incorporates all the competing goals that come up along the way. Many of our clients find the exercise of confirming their retirement readiness a very worthwhile and comforting endeavor.

Another incredibly important element is understanding how the titling of your accounts and beneficiary designation actually supports your long-term objectives, and ensuring, of course, that those remain up to date.

These are just a handful of topics, most of which are relevant to any person that we’re having a planning conversation with. There are others that may come up along the way, depending on the circumstances.

MARK: I think that last point you made is really important, because the decision that this episode is based on is whether it makes sense for people to go ahead and take the plunge and get a financial plan. And I think pretty much everything you just mentioned is pretty universal. It applies to everyone in some form or fashion. Is that kind of what you’re experiencing on a day-to-day basis?

JULLIE: Absolutely. Regardless of what stage you’re at in life, having a foundational plan is going to be very helpful. Over time, your situation is going to change, and some complexities might be added along the way. A basic plan can help you address those complexities over time more easily because you had a well-established foundation to start with.

And it’s true if you’re in your 20s or even your 30s, thinking about what’s going to happen 30 to 40 years from now can seem really abstract, but taking the long view early on is going to help you maintain a positive outlook throughout your financial life.

MARK: Let’s go into more detail on retirement planning. A lot of the data I’ve seen, whether you’re older or younger, that’s one of the top priorities for people. Why is retirement planning so important?

JULLIE: Well, Mark, you know that we’re moving steadily toward a society where we’re becoming more and more responsible for ensuring that we have a sustainable retirement. This really is the backbone of the planning process for many clients. The beauty of a retirement plan is that it can open up the conversation about the future in a fantastic way and can also allow us to think through the what-ifs and address them prior to their occurrence.

MARK: Complexity kind of gets in the way of a lot of these conversations, so let’s just try to simplify things. What are the basic components of a retirement plan?

JULLIE: Well, a basic plan would outline how the projected growth of your savings and assets will support a stated lifestyle in retirement. Through the process, we can also assess whether debt, like your mortgage, for instance, will last beyond your working years and devise a plan to address that. We can also imagine some scenarios that might cause someone to spend down their assets quicker than they expected, like long-term care needs, for instance, and talk about how to mitigate that risk. It truly is one of the ways that we can help clients to sleep better at night and be more confident about their future. I’ve literally watched clients visibly exhale after going through this conversation.

MARK: It’s almost as if they’ve had this burden, and now that they’ve got a plan to take care of it, a lot of that stress is released.

JULLIE: That’s right.

MARK: With retirement accounts and pretty much all portfolios, a major consideration is taxes. As someone ages they accumulate wealth. What are some of the common mistakes you see with respect to tax planning?

JULLIE: Tax planning is a very interesting topic right now, particularly as it relates to retirement accounts. We envision that many of our clients are going to want to revisit their beneficiary designations at this point in time due to the passing of the SECURE Act. Previously, with the stretch IRA, inherited IRAs were able to stretch out over the lifetime of non-spousal beneficiaries. Those inherited IRAs now would need to be distributed within 10 years in many cases, potentially amplifying the tax burden on your heirs.

MARK: Yeah, the SECURE Act, a lot of changes with that. For those who want to hear more about that, there’s an episode of WashingtonWise Investor that gets into a lot more details.

Jullie, what are some of the other decisions that matter when thinking about retirement accounts and how they’re taxed?

JULLIE: Well, another thing to seriously consider as you’re setting up your retirement savings strategy is how a Roth IRA or Roth 401(k) fits into the equation. A traditional 401(k) is very tempting because, one, we generally default into our plans, and a traditional 401(k) is the default option. And two, when you make that contribution, you make it with pretax dollars, which saves you from having to pay taxes on those contributions or those earnings in real time. The thing to remember, though, is that while contributions to a Roth are made with after-tax money—and you don’t get that immediate tax savings—those assets then grow tax-free for life and are also tax free once distributed after your death. 

MARK: Many people, they’ve got, in addition to their retirement accounts, they’ve got, you know, so-called taxable accounts. What are some tax strategies to consider with those accounts?

JULLIE: One notable one is making sure to take advantage of your losses. It sounds counterintuitive, but you can use losses when it makes sense to offset gains and pay less in taxes within the same tax year. You can even carry forward losses not used for future years and use $3,000 worth of capital losses against ordinary income in a given tax year. While it never feels great to have a losing position in your portfolio, with the well-allocated portfolio it’s expected, and it can be a really powerful way for you to implement tax savings in your investment strategy.

It’s also a good part of a rebalancing discipline that can help you keep from incurring opportunity costs associated with holding onto a position for too long.

MARK: Yeah, don’t let a good loss go to waste, right?

JULLIE: Right, exactly.

MARK: I want to switch gears here a little bit and talk about wills. Pretty much everyone knows they need a will if they don’t already have one, but for someone who hasn’t been through the process, one of the key decisions is deciding on who the executor or trustee is going to be. What’s the best way to make that decision?

JULLIE: Well, it’s definitely a conversation that has to happen in order to arrive at that conclusion, and not an easy one at that. We’re talking about potentially who will be taking care of your children, who it is that’s going to be benefiting from your assets, what it is you’d like them to do with that. I always say that oftentimes people think that an inheritance is the last gift that they leave to their heirs, and they fail to consider the power of a poorly planned estate to take that away. I’ve been on the administrative end of some poorly planned estates, and I have to say it makes the distribution process time-consuming and costly, and it’s no secret that it can tear families apart.

This brings up an important point. An estate plan has got to be revisited as your life changes—marriages, children, divorce, your children’s marriages, moving to a new state, tax law changes are all among many triggers for review. Beyond the financial cost of not having an estate plan, it’s important to know that upon your passing, if you don’t have a will, the state gets to decide who is entitled to your assets. If you have minor children, they’ll also decide who the guardians of those children will be.

MARK: As a follow-up to that, I want to ask about some of the real-world problems that titling and beneficiary designations can cause. Do you have any examples of how this can really affect people in real life?

JULLIE: Titling and beneficiary issues come up often because these are decisions that often get made without consulting a professional, and they often get neglected after life changes. Consider my 401(k) plan. When I first started saving for retirement, I put my mother down as my beneficiary for my retirement plan. It made sense because she’d likely incur the costs associated with my passing, and other than charities, I really had nobody else to leave the assets to. Then I got married. I promptly updated my beneficiary to my husband based on our financial conversations and priorities that we established prior to marriage. Now I have children designated as secondary beneficiaries under a trust. If I had never made those updates and, heaven forbid, something were to happen to me in the near future, it would be a tax nightmare to get those assets in the hands of who I truly wanted to receive them after they were passed on to my mother.

Another pitfall worth mentioning has to do with trusts. There are so many instances where clients make the decision to go through the estate planning process, and for good reasons the decision is made that they need to set up a trust for their assets. Then they walk away with an envelope full of documents outlining the new trust stipulations, and they never update their accounts to actually activate the trust and re-register the assets. When that happens, it’s as if the trust planning never even existed.

MARK: You know, I saw an interesting article this past weekend that while divorce rates are steadily coming down in the U.S., they’re actually rising for people in the 50-plus age group.[10] How does divorce influence everything you’ve just been talking about?

JULLIE: Well, actually that’s really interesting topic right now. And when married couples get divorced, it’s really important that each person review their will and beneficiary designation. If they don’t, they risk unintentionally leaving assets to their ex-spouse after they’ve remarried. It happens more often than you might think, and much like in the example with my mother from earlier, the assets will distribute to the persons who are named in the document, regardless of the true intent of the person who passed.

MARK: Some of the items that we’ve just been talking about here, they might be more important than others depending on the situation, but for other people everything might apply and be very important. When you’re having these conversations with people, are you trying to tackle everything all at once or are you trying to kind of rank order things and check off the things at the top of the list first?

JULLIE: It’s really important to note, Mark, that covering all these topics generally takes more than one conversation. The retirement plan is often a helpful first step in identifying how to prioritize those important topics. Once those priorities have been established, it’s a worthwhile exercise to then take some time to consider the alternatives and find the best solution, whether that’s insurance, debt management, charitable planning, or any of the other wealth management issues that we cover. Let’s think practically. If you talk about anything for more than 45 minutes to an hour, it starts to get challenging to focus and make decisions, but the most important part in the first meeting is to walk away with clear, actionable objectives and a timeline to completion.

From there, I like to say that our job is 90% accountability, which is great for our clients. There is someone else working with you to identify solutions, and then ensuring that the process keeps moving along. It’s especially helpful for people who may not feel as comfortable with these topics. If I think about my own life, I’m a financial planning practitioner, and feel real comfortable with the steps and topics and how to activate my plan. For months, though, I’ve been wanting to get a nutrition plan together for me and my family. I try to do it myself and get lost in the wormhole of research, and until I hired a nutritionist, nothing ever got activated. There were just too many parts to the equation and too many priorities that I was trying to sort through. That professional partner, once I did hire them, helped me by providing guidance and accountability, and it’s made the process 10 times easier.

MARK: So that’s fascinating. I mean, in essence, you kind of work as an advisor, and then here in this other aspect of your life, going out and finding advice was something that helped, you know, trigger some positive changes. What’s going on there? Why does that happen?

JULLIE: Well, I think that part of it is just overcoming the hump of not knowing what to do. And being able to partner with somebody who can establish what it is that those priorities are and then also take care of you through the process is pretty valuable. I consider myself a reasonably smart person, Mark, but being able to have somebody there to hold me accountable really allows me to keep things at the top of my list that I want to stay there.

MARK: So it’s a combination of, you know, the professional expertise and plus that coaching advocacy aspect of it all.

JULLIE: Right, yeah.

MARK: Another thing I’ve heard is that, you know, some people … frankly the process is a little intimidating, there’s sort of a fear factor. Does that ever really go away in your experience?

JULLIE: Once you start to get through the process, it certainly does. I think the most fearful part is not having the answers. And so what I will say is that it doesn’t get any less intimidating if you put it off with the passage of time. The earlier that you’re able to identify the specific things that will make you successful in achieving your retirement goals, the easier that ask is going to be. There are only three things that you can do to change your retirement outcome: save more for retirement, spend less in retirement, and delay retirement.

The most favorable of these, in my opinion, is to save more, and my logic here is that you don’t have to give up on your retirement goals overall in order to do that. The earlier that you’re able to start planning and identifying those steps to success, the greater the likelihood is that save more is your answer, and you don’t have to make any of those harder choices.

MARK: I think we’ve all been in situations where, like you were just talking about, we’ve worked with a professional, whether it’s an attorney or a nutritionist or a doctor, we get that to-do list, we go home, and we implement a tiny fraction of what we agreed upon. How do you prevent that? How do you work through that? Because as you were talking about with your trust example, it’s one thing to set up, get it all set up, but if you don’t implement some of these things, you don’t really get the benefit of it.

JULLIE: It’s all about accountability. I talked about this earlier, but I’ll give you a non-financial example. I have a plumber. He’s a really nice man. He does incredible work. I trust him implicitly, and he’s really gotten us out of some sketchy renovation situations that could have been pretty catastrophic. I call him whenever I need something. So a few months ago, we decided to install our own dishwasher, and I’ll be the first to admit that we had no idea what we were doing. We just wanted to get it in quickly, and of course, our terrible job caused us to have a leak somewhere under the sink. I called the plumber and let him know what was happening and that my husband would follow up with him to schedule some times so he can come and fix our mess. Then we got busy. This was still a priority for us, but in the meantime, we had two jobs to go to, three kids to raise, a plethora of other commitments, all of which kept us from putting time on the calendar.

In the meantime, we felt like it was all right because there was a bucket under the sink buying us a little time, basically our watery ticking time bomb. The plumber didn’t just go away, though. He called several times, and he sent text messages to make sure that we got that appointment on the calendar. He truly took it to heart that our kitchen one day didn’t flood while he was sitting idly by waiting for us to call him. Without that partner who knew that there was work to be done and was making sure that we had time designated to do it, who knows? I might still have that bucket under my sink. That’s really all that’s needed, a future date when you know you can address the next issue and maybe a few to-do’s to help keep you on the path to making progress.

MARK: So I think one thing I’m taking away from that story is don’t get overwhelmed with the length of the list. Focus is important. You know, pick one or two items, focus on those, get them done, and then move on to the next thing. Is that right?

JULLIE: Yeah, what is the next thing that you can do to move you forward? It’s really just about answering that question.

MARK: Oh, we’ve got thousands of planning conversations going on across Schwab right now. Inevitably, there’s gonna be tradeoffs that need to be made. What are the most common tradeoffs that real people are struggling with?

JULLIE: One of the most obvious and frequent tradeoff decisions is between saving for college and saving for retirement. Oftentimes, parents take extreme ownership over making sure that they’re adequately prepared for their children to go to the college of their choice, or any college, for that matter. And sometimes that’s to the detriment of their retirement plan. Some clients even come in with a plan to make distributions out of their retirement account to pay for college. One thing we always want to emphasize is you cannot get a loan for retirement. It’s often a good idea to back into what you’re capable of putting away after confirming that you’re saving enough to meet your retirement goals. As with any tradeoff decision, this can lead to some interesting discussions about current and future lifestyle choices.

Tradeoffs are often discussed as a move one side of the balance sheet to the other, Mark, but I can’t emphasize enough that these are life, family, and legacy decisions that are deeply meaningful to our clients. It’s why planning is a fantastic way to engage every stakeholder in the household, not just the person who is interested in talking about the markets.

MARK: I think that’s exactly right. One element, though, of the planning process is we have to deal with the fact that people tend to be optimistic, which is, you know, oftentimes a very good thing, but blind spots can develop, where they’re not really thinking about some things that might go wrong down the road. What are some of the more common blind spots that you see people really not thinking about?

JULLIE: Planning for a job loss is a good example. A very basic way to address this blind spot is by ensuring that you have enough savings to sustain your family during a job search.

Optimism about stock market returns is definitely another one. One of the things we can’t control is market volatility. We can, however, manage that risk by defining how our investment portfolio will respond to a significant drop when it does happen, and how it will participate in the recovery. And that comes back to what I mentioned earlier about identifying what risk you’re willing to take and sticking with an investment strategy that’s appropriate based on that answer. Oftentimes the planning process is helpful in uncovering that clients don’t actually need to take on as much market risk as they thought, and we can have a meaningful follow-up discussion around dialing it back in order to sleep better at night.

Another blind spot that I love to talk about is the risk of being involved in litigation. Titling your assets appropriately can be one way to protect yourself from a lawsuit, but so can having something as simple and cost-effective as an umbrella insurance policy. One doesn’t have to be a high-profile doctor or politician to assume this kind of risk. Just imagine a lawsuit over a traffic accident, a slip and fall on your property. Any number of ordinary events could lead to an injury that would have the potential to deplete your savings beyond your general liability insurance. If you’re at the point where you’ve accumulated a fair amount of assets, it’s definitely worth evaluating.

MARK: You talked about earlier that it’s not really possible to get through everything in one 45-minute conversation. So how frequently are you getting back to clients? Is this an annual thing? Is this biannual? As needed? What’s the best approach?

JULLIE: Your financial plan is a living document. It changes with your life, and as goals are achieved and moved to the category of accomplishments, it evolves along with those achievements. So earlier on, maybe you’re having a few frequent conversations to get that foundation established. And then from there, at a very minimum, you want to revisit the plan annually if nothing has changed. That could be a quick exercise and could even provide an opportunity to identify things that you hadn’t thought about when you originally put the plan together. Also, there are legislative changes that could impact the success of your plan as we discussed earlier. And without coming back to it regularly, you may not have an opportunity to discuss how those will impact your outcomes.

It’s really a best practice to plan for an annual review, but keep in mind that in between that, when life events happen or when you’re considering a life event, it’s a good idea to update your plan as part of that process.

One great example is marriage. Not enough couples discuss finances prior to getting married, and encountering financial uncertainty early on can be an incredible drain on the success of a marriage. Buying a new house is another great reason to update a plan. And one thing that we talk about often with clients is leaving your job to start a business, that’s another great example. These are all conversations that we’ve had in the past and are a good, important part of the planning process.

MARK: So Jullie, one thing we hear many times—people have told me this, I’ve seen it in some of the data—people say, “Yeah, you know, financial planning, it’s not really for me. I just don’t have enough money.” What would you say to that?

JULLIE: I hear that a lot, too, Mark. And the primary answer to that, in my opinion, is do you want to leave your future to chance? If you don’t have a financial plan, that’s effectively what you’re doing. You might be doing all of the right things as it pertains to stashing money aside, buying the home, making all of the financial moves that will put you in a position, hopefully, of financial strength down the line, but wouldn’t it be a valuable consideration for you to put it all together and make sure that there’s nothing else that you’re missing? Just like we talked about earlier with the estate plan, having a financial plan early on in life, even when you don’t have assets, will allow you to make sure that you’re getting the outcome that you want down the line.

MARK: Yeah, I think another thing I would add onto that is it’s not just about yourself, right? It’s about the people who are depending on you, as well.

JULLIE: Yeah, absolutely. When you’re making financial decisions, there are a ton of other stakeholders in your household, or in your family, or whatever your situation is, who might be dependent or reliant on those good decisions that you’re making early on.

MARK: Jullie, this has been fantastic. It’s great to be able to talk to someone who is actually out there in the trenches working with, you know, real clients on a regular basis. Thanks for coming by.

JULLIE: Thanks for having me. I’ve really enjoyed the discussion.

MARK: In the race to the South Pole, the competing teams of Amundsen and Scott both had plans, but with the benefit of hindsight it’s clear that Scott’s plans were flawed.

Here are four tips to make sure your financial plans are more effective.

  1. Write down your specific goals,
  2. Identify the concrete steps that you need to take in order to actually achieve that goal,
  3. Pinpoint roadblocks that could get in the way, and
  4. Tell someone about your goal.

Writing down your goals helps because it makes you more accountable and creates a sense of ownership.

Making your goals specific helps because the more specific the goal the easier it is to create the steps to get there, which is tip #2.

Also, it makes it easier to monitor your progress.

People tell me all the time that their goal is to live comfortably in retirement. What does that really mean? It’s a nice vision, but it’s hard to build a roadmap to achieve a goal if the goal is so fuzzy.

Once you have a vivid goal, it’s time to create a list of tasks to get there. Break each task into clear, discrete pieces that aren’t too complicated and because we’re all forgetful, find a way to create specific reminders to complete each of these tasks.[11]

For example, instead of the task being Create a Financial Plan, instead, break it into pieces like List and Rank My Goals, Attach a Price Tag to Each Goal, Determine Where My Money Goes Each Month, Find an Online Resource That Can Suggest the Savings Rate I Should Have.

As Jullie mentioned, you don’t need to do it all at once. In fact, it’s probably better if you don’t do it all at once because it will seem overwhelming and you’ll lose your motivation.

Instead, set aside a small amount of time each week and work on one part. Use a reminder tool, and don’t forget to reward yourself a bit as you complete each task.

The third tip is to think about what can go wrong and make sure you have a contingency plan to deal with it. That’ll help to combat our bias towards optimism.

The last step is to tell someone about your goal. As Jullie mentioned, accountability is important. Talking to others about what you plan to achieve helps to create that sense of accountability.

Finally, planning is fundamentally about the future.

Let’s face it, most plans are going to require time and effort to make achieving the goals possible. 

Similarly, the more effort you put into visualizing your financial future and your specific financial goals, the more connected you’ll feel to your future. That degree of connectedness will drive you to develop a workable plan and commit to your plan in order for a payoff down the road.

Thanks for listening.

We have more information about getting started planning at

If you want to learn more about the details of planning and how you can achieve your goals, there are retirement calculators and other helpful tools available at

If you’ve enjoyed this episode, consider leaving us a rating or review on Apple Podcasts or your favorite listening app.

For important disclosures, see the show notes and


[5] [5] John Ameriks, Andrew Caplin, and John Leahy, “Wealth Accumulation and the Propensity to Plan,” Quarterly Journal of Economics, August 2003

[7] Jonathan Z. Berman, An TK Tran, John G. Lynch, Jr. and Gal Zauberman, “Expense Neglect in Personal Finance,” Journal of Marketing Research, August 2016.

[8] Roger Buehler, Dale Griffin, and Johanna Peetz, “The Planning Fallacy: Cognitive, Motivational, and Social Origins,” Advances in Experimental Social Psychology, 2010.

[9] Brian Costa, “The Golfer’s Delusion,” Wall Street Journal, May 13-14, 2017, p. A9.

[11] Todd Rogers, Katherine L. Milkman, Leslie K. John, and Michael I. Norton, “Beyond Good Intentions: Prompting People to Make Plans Improves Follow-Through on Important Tasks,” Behavioral Science & Policy, December 2015.

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