Carl Richards offers readers some simple and basic tips to improve their finances and reduce stress through the use of a very simple financial plan.
He starts with the important question of ‘WHY’ – Why your money should be important to you. Carl challenges the reader to think for themselves, and gets you to actually write down your responses as the start of developing your individually tailored, self made one page financial plan.
The second important step is setting your goals. These need to come from within you and Carl suggests just taking a guess at what they are; you can always revise and fine tune them later!
The third step is writing out a simple balance sheet of incoming and outgoing to asses your current financial situation. List all of your bills; expenses, needs and wants, and all your forms of income. List all of your assets (things that make money) and all of your liabilities (things that cost money).
The fourth step is to simply track what you spend. Budgeting is discussed as a useful tool to help keep within spending limits, but Carl re-frames it to think of it as a bit of a game or a challenging to make budgeting fun! Let your competitive side come out. Removing sources of temptation like online shopping is a great way to get better at this.
The fifth step is to use this budget to save as much of your income as possible and pay off your debts, and then begin to make smart, diversified investments by using scientific methods. Carl recommends consulting peer reviewed and academic journals, which all point to a diversified index tracking strategy. Certainly don’t listen to mainstream media or the morning news for your investment advice!
My Big five take aways for the one page financial plan
- Start with Why you are doing this
- Set goals with your partner
- How you can make budgeting fun
- Why you need to pull the plug on online shopping
- Why you should ignore the mainstream media’s investing advice
Check out my book summary The One-Page Financial Plan: A Simple Way to Be Smart About Your Money by Carl Richards