Worry 6: I Need to Develop a Financial Plan
A financial plan will help you achieve the things that are most important to you, whether that means paying for your child's college education or creating a fund for a vacation home. It's broader than a budget, encompassing savings, investments, and even insurance. Who needs a plan? Anyone who feels anxious or confused about her financial situation.
Do Right Now:
Write down the names of three people you know and admire who are diligent about money―say, your father-in-law, your next-door neighbor, and a former boss. Call each of them and ask a simple question: How do you plan your finances? You'll come away with a wealth of practical recommendations, as well as the realization that none of this is rocket science.
Do some reading. Try browsing around the site getrichslowly.org, a great all-around personal-finance website by blogger J.D. Roth, who writes entertainingly and knowledgeably about digging out of debt and investing for the future. A good basic book is Get a Financial Life, by Beth Kobliner (Fireside Press, $15, amazon.com). Although it's aimed at people in their 20s and 30s, it's a fine introduction to financial planning for people of any age.
Find a planner. If you want some hand-holding (and who doesn't?), hire help. Look for a fee-only financial planner―the kind who charges a set price, averaging $200 to $250 an hour. Because she's not making money from commissions on investments she sells you, you know her advice will be objective. To find an adviser, start by asking friends for recommendations. You can also go to the site run by the National Association of Personal Financial Advisors (napfa.org) and click on "Find an Advisor." Also try the Garrett Planning Network (garrettplanningnetwork.com), another network of fee-only planners, and click on "Locate an Advisor." Look for the letters CFP (certified financial planner) after the adviser's name. That designation means the adviser had appropriate training and passed a rigorous test.
Before you make an appointment, ask the planner if she is willing to have a short initial meeting with you at no charge, so you can make sure you feel comfortable with her before moving forward. (The Garrett Planning Network's site has a comprehensive list of questions to ask at the first meeting.) A planner will help you create a solid game plan that takes into account your financial needs and priorities. And because you've paid for the advice, you'll be more likely to follow it. "Once you pay for something, to not follow through feels like a waste, like throwing food away," says author Jason Zweig. That's just one more way to trick your brain into doing the right thing.