Comprehensive Financial Plan

Hey, what's up? This is Tim Pratt Jr. I want to thank you for taking the time to listen to this content today. I hope you hear something that adds value to your life, shaping your perspective, faith, and hope, as well as the application of CMB and its thing in the fall of life. Enjoy. Episode 9: A Comprehensive Financial Plan. So in this episode, I really want to kind of call it wise counsel because it's actually, you know, partnering with the right people. But I feel like kind of if you've been following me, like the coaching and mentor thing and kind of the layout I've been kind of trying to do to show you that all this stuff at the end of the day comes together to finish out this season 1 with the last 3 episodes being about financial literacy. Even though I'm a person of faith, money touches everything. Let's just be real. And so, and the Bible talks about it a lot, which is— I don't know why some people get funny when you talk about money in church. But however, nevertheless, um, this episode is a comprehensive financial plan, and you will also see kind of the importance of why it's important to seek wise counsel even if you are following more of a long-term strategy. Like, for example, many people try to push you to get like with a stock advisor, financial advisor, focusing on stock and securities if you're trading. Now, yes, I totally, totally wholeheartedly believe in self-education and things like that, But it's still good to get with people and plug into people that have actually had success or going somewhere that you want to go because for one, they can basically help expedite and you don't have to make some of those mistakes. And a lot of times even when you're dealing with a long-term strategy especially, just certain things as you've seen me say on this podcast can help you save tens if not hundreds of thousands of dollars when you take into consideration the stuff. Stock market, the Rule of 72, and just knowing what to kind of move and capitalize on. Even just slight adjustments in your long-term strategy can pay big dividends, you know, 30, 40 years' day when you're, you know, hopefully in retirement. So with that being said, let's kind of jump into the content of this episode. But this is why I said I want to call this episode Wise Counsel. And if you haven't, please go back and listen to Financial Literacy and Why It's Important because that kind of lays the groundwork for this, this episode 9 right here. So first, let me just give you a scripture. I kind of pulled this from Emily, which is, uh, she has a book called Faithful Finances. It's basically dealing with like 10 secrets, but really it's not. It's just she does a good job and basically just navigating you and kind of tying it in with more of a biblical perspective, but also giving you that Cornella feel that, hey, you know, this is what it is, you know, this is how both of these actually can go together. Real good book, and I kind of just really gleaned from her and kind of going to hit her points because she actually added to, which made me rethink things, rethink some things, even though I was focusing more on a long-term strategy. But like I say, nevertheless, there's experts out there for that when you get into annuities and all of that type of stuff. But you still need to plug in, but also have a fundamental understanding of your money regardless, even if you do allow someone else to manage it for you. So let's jump in. Proverbs 15:22 says, plans fail for a lack of counsel, but with many advisors they succeed. We will either need a tune-up or a complete overhaul when it comes to our finances. We always have to tune. You're not going to start this one system. If anybody is telling you, just get in this mutual fund right here, put as much as you can in it, it's going to compound over 30, 40 years, you're going to be a millionaire. Look, that could be true. I get that it's better than someone is doing anything, that's not doing nothing. But nevertheless, you have to make tune-ups. Now I'm not saying you have to do it, it's like basically someone is, you know, navigating trading stocks and securities and things like that. But even if you are on a long-term journey, you're going to have to make tune-ups. And sometimes you might have to make a complete overhaul depending on how the market is going. So getting into the comprehensive financial plan, the first one, realistic monthly budget. Now I understand a lot of people hate that word, and one of my favorite, you know, just somebody I actually somewhat know just from growing up in Pine Bluff is Sierra over I Don't Do Budgets. Her podcast is amazing, and it's mostly, you know, geared towards that. I Don't Do Budgets, of course, but For my people that hate that word, I wholeheartedly agree that you can— if you don't want to use the word budget, let's just say a realistic monthly automated plan, automation plan, or whatever you want to call it. They both go hand in hand. At the end of the day, it's about tracking your expenses or controlling your money, because a lot of times people don't do neither or. And so what happens is you can't account for where your money is going. But even in the automated system, Although I feel like the budgeting system is a little bit more detailed, even in the automated system, that you can't spend what you don't have. So I don't think you can go wrong with either one. It's kind of like, do you like grape jelly or strawberry jelly? But both of them are jelly at the end of the day. You might have some people that have a preference on which one's the best, but it doesn't mean that, like, fundamentally according, one is better than the other. And that's just my perspective. I actually have used both when I was getting out of debt. And like really getting into it, I was super detailed on budgeting, giving every dollar a name. After I got better, it came more natural. Certain things I budget on, you know, if I'm kind of just— when I was launching businesses and things like that, I might go back to a budget. But for the most part, I'll say by now like 85-90% is automated finances. So that's the first one. You have to track income and expenses. Take control of your monthly habits, as she says, and ensure you have enough money and a framework to start your savings plan. That's why both of these are important. They like basically either budgeting or automated finances. The next we talk about is a cash reserve plan for unforeseen emergencies. Some people call it emergency fund. Some people hate that word. So who wants to save money for an emergency? So what's another framework you can use? Wordplay. Peace of mind account. This is— now, most people, let me get— before I get into that, most people say 3 to 6 months. I totally agree. For me, I think at one point I had went up out for a year. And the reason I did that some of those years ago is because I wanted to take necessary risks. So for example, how many of us don't really like the job we have or we consistently have to work? I didn't have to worry about bills by the grace of God. I had stored up my money well, you know, before I was married and things like that. And of course I'm still doing it now, but I'm just saying when I was single, I stored up my money well, made like necessary investments. That's how I was able to do a lot of things I'm doing today. And you know, and it's— I, regardless of not being married or not, and this is kind of more so for men and women that's single, you still need to get yourself in order, you know. Yes, it's a lot of things you'll find out and you'll do it. You can grow together in a marriage when you find that person. But I feel like your financial identity, just from my perspective, why not go just as hard before and prepare? And then that way when you come together, man, you all can accomplish so much more, you know. Uh, that's just the way I see it. And so use that time to build those reserves. And then yeah, like I say, once you get married, you know, those things, if you see it that way, they're going to come intact. If you don't, it is what it is. But I say at the most One thing that I'm real big on is that household, you know, checking and savings, marry those two if you do, uh, but keep all investments separate and then deal with that later down the road because that's kind of your financial identity. So I know it's a little tangent, but that's why the cash reserve plan is kind of very important because you want to have that reserve built up. You know, like right now in our home, if the unit goes out and we live paycheck to paycheck, my credit card is not my emergency. So if the unit goes out and let's say if it's like I have a credit card with a $5,000 limit, but I only have $700 in savings and that unit is $2,500, most of us, what's going to happen? Well, we have kids in the house, got a wife, don't want people hot. It's not like we're going to be running fans on here. So to just because I have that credit card, I'm going to use it. And then now I get into say something else happens, yada, yada, yada. You know, you go on and on and on. Now I'm in credit card debt. I'm paying for this unit. Now I'm paying for the unit way more than what it originally cost. So that's why that cash reserve plan, and that's why some people call it emergency funds or just like I said, peace of mind account. But kind of getting back on point, one of the main points I want to say is for me, the why I did a year is that Uh, when I had entrepreneur dreams, I went out more than the 6 months because I wanted to give myself the ability to take certain risks, or if something happened, you know, I still kind of want to see that go through. Uh, because a lot of times, you know, we can't take a break from work or whatever, you know, responsibilities. You might be in school, you might be a single mother, uh, you could be a single father, of course, you know, in today's time. Or whatever it is, you know, that kid might— whatever. And so that reserve, you just kind of pull from it and it just helps get you a break. Like, I know it's a lot of single mothers out there, a lot of single fathers just like working 2, 3 jobs just to make ends meet. And some are not even single mothers, fathers. Some people just doing it because that's the hand that they've been dealt, unfortunately, for whatever reasons they may be. And they can't even just take their foot off the gas and just rest a little. Because there's no cash reserve. So I want to spend a little bit— I know I spent a lot of time on that one, but it's such a strong point because I think people often overlook it, and they do mainly because of access that we have to credit cards. Third one, another one that might be controversial depending on how you see things. I'm a person of faith, so you have to have a plan to tithe and give purposely. You know, 2 Corinthians 9:7, or you can read Deuteronomy 14. 22. And basically it just talks about how we're stewards over that money. And I believe that basically it's a heart issue because sometimes, you know, you have pastors and things like that to make it about the 10% to be net, to be gross, and they turn to legalistic and all of that. And then you can get into like how Christ came, give generously, give from the heart, give abundantly. That's between you and God. That's what I always say. But if you are in debt and you're trying to pay off bills, I kind of agree with the Dave— not kind of, I do agree with the Dave Ramsey philosophy. That you should just pay your tithes and, you know, make whatever kind of sacrifice, because it's always not just about the money, you know, your resources. What did we talk about before? Time, you know, your energy, and your money. Those are 3 things that most people look at. So give me your energy, give me your time, you know, try to make up in those areas. Like I said, that's between you and God, but I would say have a plan to do that. Might say that plan might look like I can get 4 hours out of my week to help serve the ministry of my local church. So next point, a debt management strategy. A lot of us are overwhelmed with debt and we don't even know where to start. You know, you have Dave Ramsey, the snowball method, but then you get into like a lot of people that's mathematical, which I totally understand. They say, well, that's That's actually stupid because you're paying more interest on— because you're just following small to largest, you know. But Dave Ramsey is coming at it from more of a behavior standpoint and motivation, you know. But if you do get into, like, from a sound financial advisor, kind of without that, if I may say, empathy or just concern that Dave Ramsey have, you know, they might say start here. A lot of times that could even be the bigger loan. But each is one own. Like I say, you know, I play with it, I wrestle with it. I do feel like I lean more towards the mathematical, but I'm a self-starter, motivating person. Like, I'm gonna see the goal through. Then that's just me. So like I said, each is one own, but you have to come up with a strategy. You have to basically say, I gotta tackle this debt to increase my future. My future earning, my future potential. You know, no one really, really wants to be grinding and still living paycheck to paycheck. If you're 25 to 30 or even older, just think about going all the way to 70 still living with that same debt, or just still kind of that rat race like a hamster on the wheel. So it's very important to kind of get and plug into Wise Counsel, lay all the debt out there, get a tracking system, and just start tackling it and going through it. The next one is specific personal savings goals. This is separate than your standard emergency fund. This is more so like, hey, I want to go to Disney World. That's not— you shouldn't be going into your emergency fund for that, or your peace of mind account, I guess we say. This is like something separate. So you set up another savings account and call it that, like specific savings goals, or call it Trip This, Trip XYZ, or 123. Or it could be for a car, it could be for a nice purchase. I mean, it could be a nice sew-ins, weave, or whatever. I mean, I don't know, like whatever you want to do. I mean, it could be for the new PS4, I mean a PS5 when they come out, one, and the 2K. I mean, these games, what, now going for $800, $900 now. So it doesn't matter. I mean, it could be $100, $500, $1,000 or more, but it's specific and you set goals around that and figure out According if you want to do budget or automated finances, and you start moving towards it. And so that's another part, key component of this, you know, financial plan. This is one that kind of everyone hates and they overlook and feel like because there's a lot of scams out there, but nevertheless, it should be a part of your comprehensive financial plan, and that's affordable insurance to protect you and your loved ones. So I hate paying this insurance bill every 6 months for our vehicles, as well as the one once a year for our house and other ones that we have. But it's necessary because lo and behold, I get out here and something happens because I'm trying to say, well, I can save that money. Now, possibility they come after me, they take our house and just come after our assets and stuff like that. Whether you own a small business and so on. So if you're married and you're the primary breadwinner, do you have that stuff set up where term life insurance or whole life, whatever you want to get into, which one, do your research. Hit me up, we can talk it through if you don't understand it. But it's very important to have those things in place because like, If something happened to me, like, I want my wife, I want my kids straight. Like, just straight up, because they need time to grieve, you know. They need to be protected. So you really have to think about that. The next one I would say— matter of fact, let me go to my notes real quick, sorry. Oh, about advice about purchasing a home you can afford. Some of us are house poor. Not some of us, a lot of us are house poor. We don't understand the percentages, and that's kind of what we get into in the next episode. But, or you can even, if you're not, if you don't own a home, you can think about renting. Some of us rent too much than we can afford. So you want to basically get with someone and figure out what you really can maintain, what you really can sustain. True home ownership. We talked about that like, I I believe in one of the previous episodes with the car, you know, when people go, they go look at just the note, but they don't take into consideration the maintenance, the insurance payment, whether they're paying every 6 months or monthly and all of that. It's the total cost of car ownership. So it's just the same, the total cost of home ownership. You have to seek proper advice because it's one of the largest investments many of us will ever make in our lifetime. So don't overlook that one. The next one is an investment overview, such as your stocks, bonds, you know, are you in well-diversified mutual funds. That's good for beginning investors, and you might have to get a CFP or a good money manager or money coach later on down the road as things get a little bit more complicated and you start to see success, because you might not want to manage that money all the time. I'm not the biggest financial investor, but I have gotten to a point where I do have to talk to advisors from time to time, you know, especially when it gets around taxes and things like that, because I'm learning how to take less tax hits and put money here and put money there and just on and on and on. So you have to do those things. Uh, it is a— for lack of better terms, it is like a game sometimes. And if you don't know the rules, man, it can get real scary. And especially when you start making money and just, you know, the, the mistakes, I mean, of just getting in trouble with IRS and all that type of stuff can happen if you're not careful. So make sure you're getting the proper education, even advice on that. Another point, strategic retirement plan. You know, we talked about this in previous episodes due to, you know, compound interest and all of that. You want to be able to put back a nice percentage. Now, Dave Ramsey recommends 15%. I'll say start with whatever you can, work your way up to that. Um, for me, I always came out the gate doing nothing but 10%, and I went up to like, you know, you get into the game, which is going— if you work for a company, you go up to your match, then max out your 401k, max out, I mean, like your, yeah, your Roth for, uh, I mean, your Roth IRA, and you come back and put extra in your 401k. It's just however it takes some planning. Like, once again, it's a lot of people out there to say I do 1% every year, or I do 6%, or I do this. And I hear no one talk about IRAs, you know. So you have to be intentional about that and strategic. And so you have to have a plan for your retirement, college savings, you know, and, um, an analysis for children, again, grandchildren. If you don't have these, I'm not gonna say thank God, but no, in all truthfulness though, Many people do. And so that's another thing you have to take into consideration if you do have kids or grandkids. I'm not gonna say if you have grandkids, but you might want to do that just to help take that burden off and make sure they get a winning start. But if you have kids, it is your responsibility. But however, I would say this: if you don't have your house in order, meaning that you can take care of yourself and you have a good retirement, the best thing for you to do is put this one last on your plate because you can go so hard for your kids' college fund and then you just never know the future. I pray that everybody's kids turns out great, but you have to take care of you first, um, when you're dealing with that. Because although I do not recommend student loans, but you can give your child information, information, you know, try to maybe get them good tutoring sessions, make them challenged where they can get scholarships and things like that. To take that burden off you. This is a luxury. I mean, you know, depending on who you listen to, I'm not saying I do not, because I don't want to be taken out of context. I mean, if you can, by all means do it. But at the same time, I don't feel like you should go so hard because it's like I have sat down with people and their plans when they're planning out their kids' college and it's like, why I can't let this $350 a month go. But I'm like, this $350, compound this and you can become debt-free or straighten up your financial situation in the next 2.5 years. And now you can like really put back almost $500, $600 and be way more comfortable. If you like, no, no, no, I can't let this go. And then, you know, time go on and on and on. It's like they pulling from that fund or they're deep down, deeper, deeper in the hole. And I'm like, man, like that sucks, you know, and because they're just straddling the fence. And so that's why I say yes, by all means, if you can do it, put something back for them, but make sure you're good because they have a wealth of resources they can pull from where you won't when it comes to retirement. You have to think about that. And then also you have to take consideration, do you even want to put that responsibility on them where you done all of this work? But is it necessary? Like, do you— help me, Lord. Do you feel like that it's their responsibility to basically now put that finance, shift that financial burden on them because you didn't take care of yourself? So those are things that you really have to think about when you're taking into consideration college savings plans, things like that. And the last one, estate planning. This gets into your wills, trusts, your medical directives, and what's the word I'm looking for? I'm sorry, power of attorney. When you think about all that type of stuff, A lot of people stay away from these. Look, one day we all gonna die. This just, it's just the truth. And so the best thing you can do is to basically make sure your family have peace of mind. Um, for me, I have done one because I don't want no one coming for my wife, my sons, uh, my parents. I just want everything to be taken care of, you know. My brothers, it's people that For the most part, yes, family first, intermediate family well taken care of, and then it just trickles down from there. And so, uh, and just empowering people to be able to make those decisions that I wholeheartedly trust, uh, that I'm, you know, going to be okay. And if like if something happens, you know, or something significant changes, then I go update that, make small updates, make sure everything stays intact and just go from there. And so that's kind of the last one. So Overall, we hit, you know, the key things that make up a comprehensive financial plan. And to kind of reiterate them: realistic monthly budget or automated finances, a cash reserve plan for unforeseen emergencies, or what some people call a peace of mind account, a plan to tithe or give purposely, debt management strategy, specific personal savings goals, affordable insurance to protect your loved ones, advice about purchasing a home you can afford, an investment overview, strategic retirement plan, college savings analysis for children or grandchildren, and estate plan. So if you have any questions on this one, I know this is kind of getting more to like the technical— could be, it could have been a boring episode, but when it comes to personal finance and really getting to the nuts and bolts, it's not the sexiest topic if you don't have an interest for it. But I really hope I kind of just put something on your mind and it's 20, 24, 25 minutes, and just share with anybody. And if they have any questions, just, hey, hit me up. Or if I can't help, I promise you I will try my best to point them in the right direction with somebody that I have worked with, or I would— I could— I feel like I could stand by 100% of the time. So with that being said, enjoy. And to close out, you're gonna hear me say it again, but please share this episode if you haven't shared it. No other. Thanks. Hey, thank you so much for listening to this content today. I want to encourage you, if you haven't already, to subscribe to it and share with family and friends on your social media feeds. And you can also go to www.timothyprattjr.org in order to find out more about the blog as well as other things that I offer on how to connect with me. So with that being said, I hope you have a blessed day and continue to see this thing through that we call life.