Creating a Personal Financial Plan

to Help You Reach Your Money and Life Goals


Let’s do an exercise: Take all the cash out of your wallet (or find the coin jar) and place it on the table in front of you. What do you see?

You may see the takeout you want to order from your favorite Chinese restaurant for dinner. Or maybe you see the cup of coffee you plan to buy on your way to work tomorrow.

Now, let’s take that exercise and reverse it: Instead of thinking about what you can buy with your money now, picture what kind of future you can create with it. Imagine how just the small amount of cash you have on hand now can help you reach your goals for the future.

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Creating a Personal Financial Plan to Help You Reach Your Money and Life Goals

Chapter 1

Focusing on Moments That Matter

When a new client enters the Harvest Wealth Group office for a discovery meeting, the bulk of the time doesn’t center around dollars and investments.

It may seem counterintuitive for money not to be the No. 1 priority of the first meeting with a financial planner, but at Harvest Wealth Group, we believe that the best financial plans start with goals instead.

Garrett German, the founder of Harvest Wealth Group and a certified financial planner, believes that before he can help individuals use or spend their money, he needs to understand where they want to go in life and the values that drive them.

Instead of talking about specific assets and account balances, German spends time learning about his clients’ families and passions. For example, when he learns about his clients’ young children, he is thinking about how a college savings plan can help the family afford college down the road. Similarly, when he hears about his clients’ dream of one day owning an RV and traveling the country, he is thinking about what type of retirement plan would help those dreams become a reality.

A Different Approach

Traditionally, financial planning means putting as much money as possible into an investment account and hoping for the best. However, Harvest Wealth Group uses a people-first style to structure financial planning around a goals-based approach.

Goals-based planning starts with defining personal life goals and sketching out a financial roadmap to help reach them. Success is then defined by progress toward those goals rather than how much money is in the account at any given time.

Chapter 2

The Benefits of Goals-Based Financial Planning

What can a goals-based financial plan mean for you and your family?

1. More Flexibility

Whereas traditional financial and investment planning tools look at an overall portfolio, goals-based planning breaks things down into smaller sub-portfolios. Maybe there is one for retirement, another for a college savings plan, one for emergency expenses, and so on. 

Goals-based plans are dynamic because life is dynamic. When life throws a curveball—maybe you lose your job or your home is lost to a natural disaster—you will still be on track to reach your goals, but you might need to take a different path to get there.


2. A Closer Relationship with a Financial Planner

Financial advising can be a very transactional relationship between client and advisor—but it doesn’t need to be.

Advisors who take a goals-based approach must establish a personal connection with their clients to understand their long-term goals, values, and dreams. The initial discovery process sets the tone for the entire relationship, and it can help to establish a long-lasting partnership, which will help keep both parties engaged and invested. 


3. More Logical Decision-Making

When looking at retirement through the lens of one account balance, it is easy to panic when something does not go according to plan. If the market takes a plunge or a large emergency expense comes up, emotion can take the driver’s seat, causing you to make impulsive decisions instead of following the long-term plan.

However, setting clearly defined goals over a long period of time makes it easier to take comfort in the bigger picture, even if things look uncertain in the moment. 

Having your goals top of mind can help you manage emotions that may otherwise cause you to make a bad financial decision later.


4. Sustainable Motivation

Picture a six-figure account with your name on it. Sounds nice, right? But does that motivate you to follow your financial plan? Probably not.

Now, picture yourself in retirement. You have complete autonomy over your time and no longer answer to the demands of a workplace. Maybe you’re spending time with your grandchildren or enjoying winters in a warm Florida community. 

Research shows that money is not the most powerful motivator. Instead, intrinsic motivations, including personal satisfaction and happiness, are more compelling in the long run. 

A goals-based approach helps you balance your short-term wants with your long-term objectives, keeping you on track.


5. More Success

Research by David Blanchett found that a goals-based framework in financial planning led to a 15 percent increase in overall wealth.

Chapter 3

Creating a Financial Plan

Once you make the decision to get started with creating your own goals-based financial plan, where do you start?

1. Write down your goals.

What do you want from life? How do you want to help and support those in your community? What moments do you want to create and share with others?

Take the time you need to fully explore these goals and priorities. It is a good idea to include those close to you, such as your spouse or children, in the process. Think about where you want to be in five, 10, or even 30 years from now. 


2. Know your numbers.

Ignorance is not bliss. Before you can establish a solid plan, it is important to take an in-depth look at your current financial situation. Some numbers to include:


This number most often comprises wages and salaries, but can also include alimony, child support, Social Security payments, and other regular earnings.


Write down any debts you owe, which could include credit cards, car payments, mortgages, and student loans. Tallying these numbers up is not much fun, but it is necessary. It is also a good idea to record your interest rates and understand the impact of the interest over the lifetime of the loan.

Credit Score

Check your score at least once a year. It will give you an idea of your financial health, but it is also important to look for anything that seems out of place. Your credit score will give you an idea of how easy it will be to make future financial commitments, such as buying a home or a new car.

Rate of Savings

To find this number, divide how much you are saving each year by your annual income.


Record everything you own, including cars, houses, savings accounts, retirement accounts, and the value of personal belongings.

Net Worth

Subtract your debt and liabilities from your income and assets to find your net worth. Your net worth will give you a basic idea of how far you are from reaching your goals. Even if this number is negative, you can still correct your path.


3. Build an emergency fund.

Emergencies are unpredictable but inevitable, so it is important to plan for them.

Unfortunately, about 30 percent of Americans wouldn’t be able to cover a $400 emergency with cash, savings, or a credit card charge that could be paid off by the next cycle, according to the Federal Reserve.

Therefore, one of your first goals should be to save at least three months of your salary for an emergency fund, which would provide a financial cushion in the case of job loss, an unplanned trip to the hospital, or costly car repairs.


4. Plan for the future.

Once you know your numbers and have an emergency fund built up, you can start mapping out the path to your future. Start with clear, actionable steps that can be easily assessed and measured. Your financial action plan should be multifaceted; in addition to a personal budget, it should include a plan for debt management, retirement planning, investment strategies, and more, with set amounts of money that will be allocated to each. Depending on your situation, it may make the most sense to start with paying down any non-mortgage debt to save on interest fees.

Also use this time to educate yourself on the other retirement and savings options available to you. For example, you may have pension or employer-sponsored retirement plans available with matching contributions. You may also be entitled to Social Security benefits that could supplement your savings.

Chapter 4

Putting Your Financial Plan Together

Now that you know the steps you should take to create a financial plan for yourself and your family, what exactly should you include in your plan? Well, it depends on your personal situation—but listed below are a few topics that most plans should address.

Personal Budget

A personal budget is a key piece of working toward financial goals, but it can also bring up a lot of emotions for many.

It is easy to look at a budget through a negative lens—one that will deprive you of the fun of making spontaneous purchases and limit what you can do with your money. However, a well-defined budget will actually give you more peace of mind because you will know you are better prepared to pay your bills, reach your savings goals, and be there to help those who are special to you. 

Consider your budget the guardrail on your road to financial freedom. In the most basic sense, a budget is an estimate of your income and expenses over a particular period of time, usually a month or a year.

It may sound simple, but only 41 percent of American households follow a budget, according to a U.S. Bank survey. That could be why the average American has $51,900 worth of debt, or why 69 percent of individuals in America would face significant difficulty meeting their financial obligations if their paycheck were delayed. 

Don’t fall into that trap: Start by writing down your income and expenses on a sheet of paper, in a spreadsheet, or in a mobile app. There is no one right way to make a budget, but there is one very wrong way to go about budgeting: not doing it at all.


Investment Accounts

Everyone should be investing—but not necessarily in the traditional sense.

If you have college debt, you should be investing in paying off those loans. If your savings account is empty, you should be investing in a safety net.

If you are in the fortunate position of having extra money sitting in your checking or savings accounts between paychecks, investing some of it wisely may help you reach your personal and financial goals earlier.

An investment advisor will work with you to structure a portfolio that is customized to your personal risk tolerance, time horizon, and goals.


Tax Planning

Benjamin Franklin once wrote in a letter, “Nothing is certain except death and taxes.”

Taxes may be one of life’s certainties, but they can also be one of life’s biggest surprises. Nearly every financial decision you make has tax consequences—whether good or bad.

There is nothing worse than carefully following a budget throughout the year only to be surprised by a large, unexpected tax bill in April. Well, maybe there is one thing worse: unexpected taxes during retirement.

A strong financial plan takes taxes into consideration at all times—not just in the spring as you begin to think about filing with the IRS. It is important to assess your basic tax liability and then find ways to legally and ethically minimize it. 

Start by determining what tax bracket you are in, and then look at what kinds of accounts or credits you can use to reduce that tax burden, such as flexible spending accounts or child tax credits. Next, think about how your tax liability may change over time—especially in retirement—and plan accordingly.

The U.S. tax system is complex and always changing. Although commercial tax preparation software may make it easier for the average person to prepare their own returns, those programs do not offer the tax planning advice that a financial or tax advisor can.


College Savings

The average student graduates from college with more than $30,000 in student loan debt, according to U.S. News data. You can help significantly reduce the future burden on your children and/or grandchildren by creating a college savings plan.

According to the 2020 College Savings indicator from Fidelity Investments, parents plan to cover an average of 65 percent of the total cost of college for their children—but by the time their child reaches college age, they are only on track to cover a median of 33 percent. 

More families are realizing that working with a financial professional will help them reach their college savings goals. According to the Fidelity report, 40 percent of families consulted a financial professional in 2020 compared to 21 percent in 2007. Those families are more confident in their savings, too:

  • Seventy-nine percent say it helps them with the college planning process.
  • Seventy-one percent say they are closer to their goal because of working with an advisor.

According to the Fidelity Investments 2020 College Savings Indicator Study, families who have consulted a professional have saved $25,000 toward college compared to the $15,000 families have saved without an advisor.


Family Protection

The loss of a family member is always a personal tragedy, but it can also be devastating financially. Only about half of all Americans have a plan to protect their families in the case of their death.

The percentage of Americans who own a life insurance policy has fallen nine points in the past decade to just 54 percent, according to the 2020 Insurance Barometer Study from LIMRA

Take a moment to think about it: If you were to pass away suddenly, what would happen to your family? Could your spouse handle the mortgage and car payments? Would your children be able to continue trying new hobbies or pursuing their education goals? 

It’s not that Americans do not think life insurance is important. In fact, according to that LIMRA report, the “intent to purchase life insurance is at an all-time high with 36% of Americans saying they intend to purchase life coverage in the next 12 months.”

Instead, the research shows that just a fraction of people actually follow through and buy the coverage because they are either deterred by the perceived cost of life insurance plans or overwhelmed by options.

A strong financial plan includes protections for you and your family in the case of a serious illness or death, and a financial advisor can help you find the right policy at the right price.


Retirement Planning

Your retirement should reflect the decades of hard work you’ve completed and allow you to live the life you and your family have dreamed of. 

Retirement is the light at the end of the tunnel—but for many American adults, that light is looking pretty dim.

According to a report from the Federal Reserve on the economic well-being of U.S. households, many adults are struggling to save for retirement. One-quarter of all non-retired adults indicated they had no retirement savings or pension whatsoever, and 13 percent of those older than 60 reported the same.

A financial plan will help you avoid a situation in which you are depending solely or mainly on Social Security, Medicare, Medicaid, or relatives to take care of you when you can no longer work. 

Whether you want to contribute a portion of your paycheck to your employer-sponsored 401(k), start your own IRA, or look at alternative retirement savings plans, a financial advisor can put you on the right track.

Your financial plan as it relates to retirement should take a number of factors into account, including how much you’re willing to put aside for retirement now, what kind of lifestyle you are hoping for during retirement, and at what age you would like to retire.

According to the Center for Retirement Research at Boston College, the average retirement age for both men and women has been creeping upward over the past few years. As of 2016, the most recent year for which data is available, the average age of retirement was 65 for men and 63 for women.

"Intent to purchase life insurance is at an all-time high with 36% of Americans saying they intend to purchase life coverage in the next 12 months."

- LIMRA report

How to Maximize Your Social Security Benefits

Estate Planning

According to frequently cited research conducted by AARP in the ‘90s, Americans lose $2 billion dollars a year on probate, the legal process that wraps up an individual’s legal and financial affairs after their death. You can save your family headache (and financial burden) by creating an estate strategy. 

An estate plan is a collection of legal documents that outlines how decisions about your health and finances should be made if you are incapacitated, as well as how your assets should be distributed when you pass away.

Estate planning is about more than creating a will—although that is a crucial step in the process. It is also about:

  • Collecting healthcare and financial documents in a safe location
  • Designating beneficiaries on bank accounts and retirement plans 
  • Taking the steps to manage your tax liabilities
  • Protecting your business or investment interests

It may seem like a lot of work to create an estate plan, but think about how much harder it would be for your loved ones to try to do it for you after your death. An organized estate plan is a gift from the grave to your loved ones, and there are professionals who can help.


Monitor Your Progress

Financial planning is not a “set it and forget it” process. Reaching your financial goals requires you to regularly monitor your progress and fine-tune your plan. When reviewing your financial plan, examine how well your behavior aligns with the plan and consider whether your goals have changed at all.

A few questions can help you assess your progress:

What is in your accounts?

If the amount of money in your savings, retirement, and investment accounts is growing, then you are likely headed in the right direction. Calculate your rate of savings every few months and ask yourself if it is sustainable or if you can even afford to bump it up a bit.

How much debt do you have?

Have you been able to consistently pay down any outstanding debt? What is left on your mortgage or car payment?

If your credit card statement is growing as much as your retirement account, you will likely need to adjust your rate of savings—at least temporarily.

It is important to constantly monitor debt and have an aggressive plan for paying it down. Once free from liabilities, you will have more freedom and flexibility to build up your assets.

Are you closer to reaching your goals?

This is the most important question to ask: Are you on track to reach your goals? Is the timeline still realistic? It’s OK to have minor setbacks. 

Chapter 5

Review Your Plan with a Financial Advisor

You’ve taken the first step on your own, but you may benefit from the experience of a professional who can make sure your plan is as comprehensive as it can be.

An advisor can offer an advanced understanding of personal finance topics, including IRS rules, and the impact that different investment decisions can have on your savings goals. A financial advisor can also help you evaluate the underlying assumptions you used when developing your plan to make sure they are realistic.

When researching a financial advisor to partner with, you should consider looking for one who will act as a fiduciary. A fiduciary financial advisor works under strict federal and state regulatory rules that ensure they always put your interests ahead of their own or those of their firm. Although a fiduciary financial advisor typically uses a fee-based compensation model that may seem to cost more up front, other financial advisors have other financial incentives to guide you toward products or investments that may not be as good for you as other options.


Take the Next Step

This guide has provided you with some of the tools you need to take ownership of your financial health, get started with the financial planning process, and get set on a path toward creating moments that matter for those you love for decades to come.

It is possible to go it alone, but setting yourself on the right path—and sticking with it—is hard work that requires an investment of time and knowledge as well as support from those around you. Without it, it is easy to feel uncertain about whether your financial plan will deliver the results you desire.

Fortunately, at Harvest Wealth Group, we bring our experience, professionalism, values, and resources to help you define your goals and develop a plan that not only sets you on the right path but also keeps you motivated and progressing toward it. 

To learn more about Harvest Wealth Group and how we approach financial planning, we welcome you to contact us here.

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Creating a Personal Financial Plan to Help You Reach Your Money and Life Goals