Personal financial playbook: your path to getting ahead

  • Households will face many near- and long-term financial market complexities and economic uncertainties in the years to come. A personal financial playbook can help people get ahead despite these challenges.  

  • We believe that a flexible and adaptable personal financial playbook should include three important elements: 1) a well-defined statement of financial purpose, 2) prioritization of financial outcomes and 3) a financial operating plan.

  • Partnering with a trusted advisor can also potentially multiply your chances of achieving your financial goals and getting ahead in 2020.

Certainly, when it comes to getting ahead financially, households will face many near- and long-term financial market complexities and economic uncertainties in the years to come.  And as we have noted in prior posts, the strategies for financial success that had worked in the past are not as effective as they once were, leaving many households financially insecure and unprepared for economic shocks.  So, how can you prepare for the unexpected and position yourself to get ahead in life financially?

We believe that getting ahead financially means letting go of the notion of a traditional financial playbook, rules-of-thumb and other one-size-fits-all money solutions.  We believe that taking an active role in creating a personal financial playbook tailored to allow for flexibility and adaptability can, over time, help you reduce money-related stresses, provide greater peace of mind and most importantly increase the likelihood of achieving life goals.

We believe that a flexible and adaptable personal financial playbook should include three important elements: 1) a well-defined statement of financial purpose, 2) prioritization of financial outcomes and 3) a financial operating plan.

Figure 1: Components of a flexible and agile personal financial playbook

Source: Franklin Madison Advisors, 12/10/19

A vision and purpose for your money

To the first point, a statement of financial purpose effectively helps to define the role that money will play in your life.  More specifically, it articulates a clear “why” to your money habits and lays the foundation for developing strategies that help you acquire, save and spend financial resources prudently.

Formation of a financial purpose statement begins with a vision for how events would ideally unfold throughout the course of your life, beginning with your final moments and working your way back toward the present.  One way to go about this is to answer questions like, “how do I want to be remembered by those closest to me?” or “what sort of legacy would I like to leave behind.” There are no easy answers to these questions by any means, yet the visualization process used to answer these and other similar questions can help crystalize the role that money will play in helping you navigate important life transitions.

Moreover, the process of vision clarification helps to prioritize financial outcomes and identifies the types of opportunities, strategies and tactics for use in achieving your financial goals.  Taking the time today to develop a well-defined financial purpose statement has other long-term benefits as well, like creating a sense of financial stability by anchoring expectations during times of increasing economic and financial market uncertainty.  Indeed, a quick reference of your financial purpose statement during a time of financial instability or market volatility can help to calm nerves and potentially alleviate a desire to tap long-term savings at inopportunely.

Prioritizing financial outcomes and developing financial strategies

Should you increase savings or reduce spending and if so by how much and when?  Prioritization can help answer questions like these by identifying financial strategies relevant to three key financial outcomes: stability, growth and transition. The first outcome, financial stability, utilizes establishes everyday habits and leverages financial strategies that lay the foundation for financial asset growth by working to secure income, managing cash flows and becoming financially prepared when the unexpected strikes.

Figure 2: Key outcomes of financial prioritization

Source: Franklin Madison Advisors, 12/10/19

The next phase, financial growth, includes developing financial strategies that aligning practical financial outcomes with passions identified in your financial purpose statement.  This can include developing strategies that maximize tax advantaged workplace benefits, increasing your earning potential, and acquiring and growing financial and other non-financial assets.  These strategies can be used to fund goals like buying a house, paying for childhood education expenses or funding retirement goals.

In terms of prioritizing transitions, the third phase, we simply refer to the process of drawing down saved assets in a way that balances achieving your financial goals with capital preservation.  While the definition is simple, the process is not always easy.  Various considerations should be given to the transition outcome, including timing, magnitude and to whom assets are distributed, receiving income during periods of financial market volatility and various tax consequences of early retirement and leaving money behind to family.

Bringing the playbook together: a financial operating plan

The final piece necessary in putting together a flexible and adaptable financial playbook is creating a financial operating plan.  Simply put, a financial operating plan outlines the actions necessary to bring together the passions defined in your financial purpose statement with the practical strategies outlined in your financial priorities.  Developing a financial operating plan should begin with a thorough inventory of your financial affairs, including data from legal, tax, insurance and bank statements to measure typical cash flows, exposures to risk and an evaluation of assets and liabilities.

A financial operating plan should also include a projection of future or anticipated expenses associated with the vision, goals and habits defined in your financial purpose statement.  This could begin with a set of ideal monthly cash flow projections and expand out to savings and growth needs to achieve long-term goals like saving for a child’s education, buying a house, starting a business or retiring comfortably.

Some analytical work will be necessary in the next step of your financial operating plan which includes evaluating your financial inventory against your financial projections.  The objective here is to compare activities in your current and ideal financial states in order to select financial and lifestyle strategies that close the current-ideal gap and move you closer toward your desired life and financial goals.

One way a household may choose to close this gap, for example, is in freeing up more money for savings by downsizing lifestyle choices after having adhered to a conservative cash flow strategy.  Others may choose to postpone retirement to increase benefits and look to supplement retirement savings with additional sources of savings or income. Whatever the strategies and actions defined in your personal financial playbook, the success of a personal financial playbook is only as good as its use and the degree to which the strategies outlined in it are followed through to completion.

Multiplying your chances of success with the help of a trusted advisor

Indeed, monitoring progress and making needed adjustments to your financial playbook throughout time is critical to ensuring long-term financial success.  Yet, life often has a way of diverting our attention away from the things that should be done as more pressing needs arise in the present.  Therefore, having the support of a trusted advisor can help keep you on track when the unexpected arises, ensuring that you execute on your financial playbook and increasing your chances of getting ahead in life financially.

Partnering with a trusted advisor has a few additional benefits: first, an advisor can identify financial lifestyle blind spots, like spending above one’s means, that you otherwise may not have been aware of.  This unbiased outside perspective from an advisor can help get you back on track when certain financial habits or unexpected life events upset well laid financial plans.  Next, working with a trusted advisor can bring a level of objectivity that can help during periods of uncertainty.  For example, a trusted advisor can serve as an emotional buffer that keeps your savings plans on track when financial markets are experiencing increased levels of volatility.

Finally, working with a trusted advisor can increase your chances of financial success is by being your accountability partner, ensuring that you are taking the actions necessary today to see your personal financial playbook through to completion.  A trusted advisor does this by lending their expertise in guiding you through the process of drawing out your long-term vision, goals and ideal financial habits as well as helping you establish priorities and strategies to get ahead financially.

Who is a trusted advisor?

A trusted advisor is also someone who meets with you regularly, setting up time to review your personal financial playbook progress, cheering you on, holding you accountable and helping you make necessary adjustments to your financial plans to ensure that you get ahead financially.

It is also important to note that not all trusted advisors are cut from the same cloth.  So, what is a trusted advisor?  Simply put, they have your best interests at heart and more often than not found in a fiduciary relationship.  For example, doctors, lawyers and accountants are held to a fiduciary standard, meaning that they must always act in the best interest of their clients.   To this point, not all financial advisors are held to a fiduciary standard, a fact that is determined by the type of firm that an advisor works for.

Another point to consider is that compensation can be an adverse motivator for financial advice when it leads to the sale of a security or insurance product.  This can create conflicts of interest and potentially bias the advice that an advisor provides to their client.   A bias in advice is not only limited to commissions on product sales but also includes asset under management (AUM) fees when an advisor’s compensation is based on the value of assets that he is overseeing.   Either way care should be taken when selecting an advisor you can trust.

This post is an excerpt from our report, Getting Ahead Financially in 2020.  You can download this report in its entirety by visiting

Important Disclosures

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