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Don't Rush Your Financial Plan

When building a financial foundation, do things in the right order.

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When it comes to saving and investing, it’s always a good idea to start young and be consistent. Early and often, right? While this is solid advice, I also advise my clients not to rush the process when it comes to building a solid financial foundation.

Let me give an example. A prospective client recently told me that he wants to start saving and investing for retirement, as he’s now age 30 and hasn’t put much away. I asked him how he wanted to fund a retirement account, for example lump sum vs monthly contributions. He informed that he didn’t have the lump sum, and so wanted to save monthly.

At this point, I knew we needed to take a step back and make sure a few other things were in order. I asked him about his budget and cash flow. Come to find out, he didn’t have a budget in place, didn’t have an emergency fund, and due to the nature of his job, some months were leaner than others. He planned to save during the good months, and “figure it out” during the lean months.

While it’s great that he’s creating a plan to save for retirement, I’ve seen this approach before, and it usually goes like this: put money away during the good months, only to take it back out a couple months later (and face possible penalties) to cover expenses during the lean times.

I sat down with him, and we took a look at his financial year as a whole, created a budget and a plan for each month that he could commit to while building up an emergency fund as well.

It’s important to not rush the process when creating a financial plan that will work now and into the future, and to do things in the right order. Aggressively saving for retirement now without having other financial plans and safety nets in place could backfire. Our team is happy to help you create a customized financial plan that fits your needs. Give us a call – first meetings are always complimentary.

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