If you’re in the military community, you’ve probably heard some sayings about planning. For example, “Fail to plan, plan to fail.” Or, “The plan is nothing, the planning is everything.” Or my personal favorite, “It takes as much energy to wish as it does to plan.” That last one is Eleanor Roosevelt.
Regardless of what saying you like, the “common wisdom” is pretty consistent – planning is the best way to accomplish your goals. And writing down your plans is proven to increase the chances you’ll stick with them.
But a big, comprehensive plan can be overwhelming. Not every person needs to have their own financial planner, and even people who do have financial planner still need to be in charge of the planning. And that’s where this super-simple, one-page financial plan comes into play.
Two years ago, I got this from my friend Airman at the Military Dollar blog. She’s now in a crazy-busy job and this isn’t her highest priority right now. I asked if she minded if I copy from it, and she agreed. I hope that you find this as helpful as I have.
What This Mini Financial Plan Covers
Every part of this form may not be appropriate to you, and that’s OK. Either skip it or re-purpose it for something else.
- Monthly action steps – a place to list one manageable thing that you’ll do each month
- Yearly savings, debt repayment, and investment goals
- Your thoughts on market swings – what you’ll do if the market goes up or down, and what you’ll do if real estate goes up or down
- Your 2022 money philosophy
Print it out, fill it in, and then put it somewhere you will see it. It can be as obvious as the fridge or bathroom mirror, or a little more subtle such as inside a kitchen cabinet or inside your planner. Just make sure it doesn’t get buried, because it is a LOT less likely that you’ll do those things. Ask me how I know.
Sometimes, it is helpful to have examples. It can get the brain thinking in different directions. So here’s a recap of what I wrote last year, with notes on how I did :). I’d love it if y’all would share your plans in the comments, either from last year or from next year. They can help someone else.
Everything in italics is what I wrote at the beginning of last year. Everything in normal, bold font is how it really worked out.
How Did I Do With Our Financial Plans In 2021?
We knew that 2021 was going to be a year of change. My husband retired from the Navy, one kid finished graduate school, and frankly, we didn’t know where we were going or what we were doing. What we DID know was that we would still have three kids in college in August, and we didn’t want my husband to need to run from the Navy to a civilian job.
Here are the monthly action plan steps on MY sheet:
January: Check credit reports I don’t remember if I did this or not. Need to do it ASAP this year.
February: Update wills and set up other estate plans Started process of setting up special needs trusts for kiddo. That needs to be done before we can update our other documents.
March: Finish filling out my In Case of Emergency Binder. Decided that I needed to make my own, because that makes perfect sense, right? Launching January 2022!
April: Comparison shop for insurances Did not happen.
May: Have transition fund fully funded Close enough. We had a very unexpected large expense of remodeling a bathroom to make it safer for our older family members.
June: decide if we want a Tricare Supplement Completed! We opted out because our family size makes the premiums very close to the cost of our catastrophic cap. So it became a question of locking in the cost of the premiums vs. taking the chance that we’ll fall into that couple of hundred dollar gap between the premiums and the catastrophic cap. The other factor is that there is no waiting period for coverage if you buy at retirement. Did we make the right hoice? For this year, yes, as we didn’t even near our catastrophic cap. But we will continue to re-evaluate regularly.
July: Let’s be honest – I have no idea what our world is going to look like in the second half of 2021. I can’t even begin to organize plans for that time. Finally decided on vision and dental, right before our 60 days ran out. Was exhausting. I completely underestimated how hard it was going to be to pull the trigger on that one, despite having planned for YEARS.
August: Finished up Special Needs Trusts. Woot!
September: Procrastinated everything.
October: Procrastinated some more. I’m sure I did useful stuff, but I’m not sure what it was.
November: Re-allocated our retirement portfolio.
December: Made the expensive decision to convert all our remaining traditional IRAs to Roth IRAs. A lot of short-term financial pain for what will almost definitely be a long-term net gain. But my bank account says OOF! because we now owe the IRS a whole lot of money.
Savings Goal: Fill up the transition fund, and continue making contributions towards our vehicle replacement fund and health care fund. (Our catastrophic cap will go up with the move to retired status.) Filled it up, and then spent a LOT of it on bathrooms, taxes, and transition expenses.
Debt Repayment Goal: Our only debt is our mortgage, and I’m in no hurry to pay that off. So I guess we have no debt repayment goal. Well, at least that one was easy.
Investing Goal: Fully fund IRAs, but not until 2022 when we know whether we can or should contribute to Roth IRAs. TSP at the usual level for the first four months of the year. (You can’t contribute in your last month before retirement.) Hopefully, we’ll be able to max out my Solo 401k contributions for 2021! As it turns out, we won’t be funding any IRAs or my solo 401k because we’re giving all that money to Uncle Sam for our IRA conversion. I don’t like it but it is still the better choice.
I have no interest in changing strategies based on the stock market, bond market, or housing market. I did make some changes to our portfolio, but not because of what any of the markets were doing.
If we get a windfall, we will put it straight into the transition fund until it’s topped up. If our windfall exceeds the amount needed to fill up the transition fund, we will take 10% to play with, then out the rest into various larger savings funds: car replacement, travel, etc. If it’s a bigger windfall, then we’ll have to consider our options then, based on the information available at that time. I think 2021 is going to be a little chaotic for the greater world, not just our own little slice of it. Did receive some stimulus funds, used them to help pay for the bathroom remodel. Also received a larger-than-projected tax refund, also went to bathroom remodel.
My money philosophy for 2021: One year of change, and then we’ll see where we are. Basically, this is a year of holding steady and seeing where life takes us. Both physically and metaphorically. Still trying to remain calm about this. Originally predicted 18-36 months before I started panicking about money. I lasted 6 months. Though, to be fair, the unexpected bathroom renovation and the big tax liability from the IRA conversions were not factored into my original forecast.
My Plans For 2022
Once again, I share my plans to help you get thinking. Your goals and actions need to be individual to YOU!
January: Check credit reports. For real this time. You can still get them weekly under the special COVID rules. There is literally no reason to procrastinate.
If you are working at a job with TSP or a 401k, increase your contributions for this year.
February: Get those wills drawn up. For real this time. You can use the legal services office on the nearest installation if you are currently serving or retired. Fill out my new In Case of Emergency binder.
March: Comparison shop our insurance coverages. My friend Joe Saul-Sehy recommends you do it yearly. See whether we can scrounge up any money to go into our IRAs. Do a financial aid appeal with the kids’ colleges, because our current FAFSA reflects active duty income AND does not show our huge tax bill for 2021.
April: File our taxes on time, and pay whatever we still owe.
May: Review our spending plan and annual expenses, see if we need to cut expenses or increase income. See if Navy Federal is doing any promotional CDs (they often do in May.)
June: Review our income tax withholding, and adjust as necessary.
July: Check again to see if it makes sense to refinance our house.
August: Review beneficiaries on insurance policies, bank accounts, and retirement plans.
September: See if there are any credit card offers that really want to be used before the end of the year.
October: Finish up collecting all the basis information for house and retirement accounts.
November: Review our insurance, medical, vision, and dental, and see if we want to make any changes during open season.
December: Consider whether we want to move some money out of TSP so that we can convert traditional funds to Roth funds.
Savings Goal: We’re still in transition, so we need to replenish that transition fund. Or we can start calling it an emergency fund, but that doesn’t seem quite right. Whatever it is called, I am not comfortable with the amount of money we have in reserve. Continue contributing to car replacement fund and house maintenance fund.
Debt Repayment Goal: Our only debt is our mortgage, and I’m in no hurry to pay that off. So I guess we have no debt repayment goal.
I still have no interest in changing strategies based on the stock market, bond market, or housing market. We are considering doing a 1031 exchange on a rental property, but that’s going to depend more on whether our tenants move out, whether I have the mental capacity to find a new property, and whether I can find a property that makes sense, math-wise.
If we get a windfall, it will go into our transition/emergency fund. If we get a big enough windfall that I’m comfortable with that amount, then it goes into the car replacement fund and house maintenance fund. Once they are fully funded, I have a long list of projects: cabinets in the pantry, new living room furniture, and some landscaping.
My money philosophy for 2022: Remember that we are financially fine, even when it feels like we have a cash shortage. It’s OK. It will be OK. It will continue to be OK.
Many thanks to Airman at the Military Dollar for putting together this financial plan template in past years. I’m honored to continue the tradition this year. Will you join me?
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