Getting Financially Confident

by Jeff C. Johnson

Man's hand holding compass at Yosemite

Behind most of the questions that people ask me is the desire to become confident in their financial situation. I’ve found most people are driven by six basic needs, and the strongest is for “certainty” in some areas of their life. Many, if not most, people desire some degree of certainty—or what I call Financial Confidence—when it comes to the need for income or money.

The following is an overview of a step-by-step guide to seeking Financial Confidence. Ask yourself the following questions and consider them one by one. Try writing down your answers, on paper, as you think about your situation. As you get clarity around the answers that develop, I think it’s likely you will start to feel a sense of optimism about your financial future, based on actions that you can take.

  1. Do you have a written list of specific goals or wishes and exact amounts of money that you think you will need to meet these future goals? Do you know why these goals are important to you? Is there an emotional need you can identify that will instill a strong desire to pursue these goals?
  2. Once you have written goals, do you have a way to monitor your progress? Tracking your results will give you the ability to make changes in your course if you are “drifting” off target and boost your confidence if you are on target.
  3. Are insurable financial risks covered? Do you have too much insurance or the wrong insurance? Do you have too little of the right insurance for you?
  4. Do you have a carefully developed investment plan, based on historical stock market evidence? Are you focused on meeting your goals with long-term investments or are you just “trading paper,” buying and selling because you have no written plan?
  5. The number one goal for most people today is to build a retirement “nest egg” that will permit them to think of work as optional someday in the future. Do you have a retirement account accumulating savings and investment returns that will support you if you want to “pull the plug” on the office?
  6. Do you have a wealth transfer plan in place? This applies to the money in your life that you don’t or won’t spend while you are alive. Do you have gifts that you are planning to church or charity, as well as lifetime transfers to heirs? Do you have an end-of-life plan in place and legal documents that reflect your wishes?
  7. Are you planning to assist with someone’s education, perhaps a child or grandchild? Are you familiar with education expenses today?
  8. Are you tax-wise in your decisions and investing actions? Do you meet with a tax professional during the non-tax-preparation season to plan? What can you do to legally reduce your tax payments?

Want to move closer to the place I call Financial Confidence? Speak with a fiduciary wealth adviser, such as the wealth advisers at my firm, Buckingham Strategic Wealth. You can also get a copy of my book The Eight Points of Financial Confidence, which includes numerous checklists and worksheets to assist you as you make these important decisions. Download this example worksheet for goal identification and ranking from chapter two.

The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Wealth. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. IRN-20-954