Tags: Richards | uncertainty | financial | planning

Financial Author Carl Richards: Embrace Uncertainty in Your Financial Planning

By    |   Monday, 30 March 2015 10:02 AM

As the poet Robert Burns wrote, "The best-laid schemes of mice and men . . . leave us nothing but grief and pain."

That applies to financial planning, financial author Carl Richards writes in "The One-Page Financial Plan: A Simple Way to Be Smart About Your Money," as excerpted in The New York Times.

There's a search for certainty in our financial planning, he explains. "We want to know exactly how much money we’ll need to achieve [our financial goals] and precisely how we’re going to get it," Richards says.

"But I don’t think that certainty is possible. Not at all. So here’s another idea: we should simply take our best guess — let’s call it what it is — at what we want our financial future to look like. . . . Then we can make decisions that support our goals, with lots of improvisation and further guesswork along the way."

One area where planning is important is retirement savings. USA Today retirement columnist Rodney Brooks offers several tips.

  • Set up a plan and budget. "Planning is the first thing," Nancy Coutu, a financial planner with Money Managers Financial Group, told Brooks. "I tell them in order to see if you've saved enough, we have to first see how much you spend." And be aware, "going through expenses is sometimes painful," she said. Obviously the plan should include steps to increase your savings.
  • Dump your grown children from your payroll. The dicey jobs market has many parents providing financial support for their grown children. "Stop putting the needs of kids ahead of their own needs," Paul Saganey, president of Integrated Financial Partners, told Brooks. "People are still doing things for their children instead of saving for retirement."
  • Don't take huge investment risks to make up for your deficient savings. "The myth is if you have waited too long, you have to take bigger risks to catch up," Rick Foster, president of Guardian Financial Management, told Brooks. The more risk you take, the bigger the chance that you will lose your nest egg.
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We should simply take our best guess — let’s call it what it is — at what we want our financial future to look like.
Richards, uncertainty, financial, planning
Monday, 30 March 2015 10:02 AM
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