Well, if ever a year could prove the need for a written financial plan, 2020 was that year. I don’t think anyone could have predicted the things that have happened this year. Besides the medical, work, and social upheaval, there’s been a lot of financial surprises. I can’t find a solid, accurate-looking figure for how many people have lost their jobs, taken pay cuts, or had their hours curtailed. The stock market has grown to new highs and fallen to some surprising lows. Landlords are either suffering with non-paying tenants, looking to buy new properties, or both. The federal government has given taxpayers two unexpected windfalls in the way of economic stimulus checks.
It’s been crazy.
I talk to a ton of people who are beyond the “counting pennies at the grocery store” phase of life, but don’t have a plan for where they are going next. That’s pretty normal – once you meet a goal, it’s easy to flounder a bit until you identify the next goal. And when the world is upended, it is also easy to stray from the plans that you do have.
It’s times like these that a written financial plan can be a big help. 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.
Last year, I got this from my friend Airman at the Military Dollar blog. This year, she’s in a new job and has been sort of busy. I asked if she minded if I copy from it, and she agreed. I hope that you find this as helpful as I have.
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.
What This Mini Financial Plan Covers
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 2020 money philosophy
How Did I Do With My 2020 Plans?
Sometimes, it is helpful to know what other people are planning. 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 🙂
In general, my plan for 2020 is to maintain exactly where we are in terms of savings and investments, while paying for the college expenses of 2-4 girls (definitely two, one may be moving on to grad school, and one may either take a gap year or head straight to college.) On one hand, I feel like that is a pretty ambitious goal. On the other hand, we don’t feel like we’re skimping TOO much, so we could probably do better.
Here are the monthly action plan steps on MY sheet:
January: Reset TSP contributions to for new limits – done in January, thank you Husband!!!
February: Move IRA accounts to new company – completed in April
March: Make 2019 IRA contributions (I’ve been waiting, and I rather regret it) – done in March!
April: Finish my In Case of Emergency Binder – Still not complete, but I’ve made some progress
May: Check credit reports – nope
June: Update wills and other estate plans – well, we talked about it. Does that count?
July: Check tax withholding and see if adjustments need to be made – I eyeballed it, and guessed. Not really good work.
August: Comparison shop for insurances – nope
September: Plan for holiday spending – sort of
October: I’m not really sure yet! – I opened a Solo 401k to use instead of the SEP IRA. It will allow me to save more! I’ve been planning to do this for years.
November: Check credit reports – Sort of. I started to, and then my computer battery died, and then I got logged out. It’s complicated.
December: Stay within our holiday budget – eh. Since I didn’t technically make a budget, I couldn’t stay within it. I don’t think that I overspent, though.
Honestly, I’m hoping I’ll get the first six months done in January, but let us be realistic: I can’t even get a simple post (like this one) out on time. So getting one thing done a month is better than not getting anything done at all.
We don’t have debt except our mortgage, and I’m in no hurry to pay that off, so that part is blank. We plan to max out TSP, our IRAs, and my SEP-IRA again this year. I’m actually not anticipating saving anything outside our usual savings accounts because frankly, college tuition is a lot. – This was pretty easy to stay on track.
I don’t intend to change strategies if the stock and bond market goes up or down, nor do I intend to do anything if the housing market changes. I was not particularly tempted to make any changes while the market went crazy. If I had been tempted, I would have referred to this.
My money philosophy for 2020 is: Cut ruthlessly on the stuff that doesn’t matter so you can enjoy the things that DO matter. Well, 2020 kind of took care of this for us. Though we failed to cut ruthlessly on groceries – we went over the spending plan by $2000 for the entire year. I’m willing to give myself a little grace on that one. Who expected to have six people at home basically 24-7 for so long?
Financial Plans for 2021
2021 is going to be a big year in the Horrell household. My husband is retiring from the Navy in June, and one child is finishing grad school in May. I’m excited and terrified and slightly overwhelmed with all the things that have to be done. I’m having a hard time thinking past that milestone. We will still have three kids in college in the fall, which is a big financial obligation even if they’ve all made financially sensible choices.
Here are the monthly action plan steps on MY sheet:
January: Check credit reports
February: Update wills and set up other estate plans
March: Finish my In Case of Emergency Binder
April: Comparison shop for insurances
May: Have transition fund fully funded
June: decide if we want a Tricare Supplement
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.
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.)
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.
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!
I have no interest in changing strategies based on the stock market, bond market, or housing market.
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.
My money philosophy for 2020 is: 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.
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?