Book Summary: The One Page Financial Plan
Carl Richards One Page Financial Plan focuses on budgeting and finding why money and planning should be important to you. Create an income, save for your future, whatever your desired outcome this book can help simplify and clarify your objective.
Related Book Summaries:
Side Hustle – Chris Guillebeau
Happiness By Design – Paul Dolan
Quotes:
People who understand interest earn it. People who don’t, pay it.
If you don’t ever find yourself recalibrating your decisions, you’re likely ignoring some issues that might become problems down the line.
The best financial plan has nothing to do with what the markets are doing, nothing to do with what your real estate agent is telling you, nothing to do with the hot stock your brother-in-law told you about. It has everything to do with what’s most important to you.
The One Page Financial Plan Book Summary Notes:
- Why is money important to you? That’s the first question you need to work on answering.
- Financial plans are only valuable in proportion to how clear and precise your goals are. It can also help you to evaluate how your spending your time each day as well.
- Educated guesses at what your goals are, are fine, to begin with. If you need to save for a house for example maybe saving $20,000 is a fine first step. As you get closer you can begin to hone in on what kind of house you would like and figure out what percentage of a down payment you’d like to make. This will give you a final clear figure, but the initial guess of $20,000 will at least give you a line in the sand to start striving for until you can research, or hone the goal further.
- Before you begin you’ll need to take stock of where you are. Make a simple balance sheet by listing out your bank accounts any other financial assets you may have, as well as their values. Don’t forget to also list out your debts, otherwise known as liabilities, and their values as well.
- Doing this exercise gives you a firm idea of where you are and if there is any small clean up work on your finances you may need to do before tackling your bigger goals. For example, maybe you have a credit card that is carrying a balance month to month, that would be worth getting rid of before switching over to save for a house.
- Another tool to use is to begin tracking your monthly spend. Just like in a diet, the first thing you need to know is what your eating and how much are you eating of it. You need to know how much your spending and where. This exercise alone is incredibly valuable. There are apps now to make it a bit easier to manage but quite a few people also enjoy tracking daily spends manually in something like a small notebook.
- By finding out where your spending your money we can examine if that is really the best use of it. If your goal is a house deposit then maybe $200 a month on cable is not worth it right now. Or how about that $80-$100 a month gym membership you forgot was direct debited from your card each month? Start to cut things where appropriate and evaluate what services you can swap for cheaper options.
- Once you’ve freed up some cash use it to begin making extra repayments on your debt. You’ll know where and how this is from the balance sheet exercise.
- When it comes time to invest, remember that low fees matter and indexing is incredibly hard to beat.
