When was the last time you assembled a puzzle? I recently spent a Saturday afternoon with family, and someone had an idea that we should spend it working on a puzzle. So we turned on some tunes, made a few drinks, ordered some grub, and got to it.
This experience got me thinking about how putting together a puzzle is very similar to financial planning. This puzzle (a 3000-piece one) had a beautiful image on the box, which we were all excited about replicating by connecting each of the 3000 pieces.
Financial planning is kind of like a puzzle. For example, we can all “see” or visualize what financial success or achieving financial goals looks like (the image on the puzzle box). But then, we need to consider all these different products and services (the puzzle pieces) to put our financial plan together. That’s where things get tricky, and at that point, we’ve got to develop a strategy.
Many would agree that the most basic, fundamental way to start a puzzle is to separate the edge pieces. This way, you have secured the perimeter and can now begin the next phase of filling in the puzzle. The most fundamental step someone should take with financial planning is completing a balance sheet (this captures your assets and liabilities). The balance sheet helps you take inventory of where you currently stand financially. It’s like seeing your financial situation from a 5,000ft view. This is an important step because many people prefer to start purchasing financial products and services but aren’t sure how they “fit” into their overall financial strategy.
The next phase of the puzzle typically involves segmenting out specific colors. During my puzzle experience (a nature-themed puzzle), there was a substantial portion of the sky, water, and trees. So, the best strategy was to separate all the light blue pieces (the sky), darker shades of blue pieces (the water), and the various shades of green, which would cover the trees. Eventually, we knew this was an efficient way to build our nature scene puzzle.
A similar approach can be utilized to craft a financial plan. For example, we could break it down into three primary sections; money management (cash flow/budgeting), offense (investments, retirement, real estate, running a business), and defense (life, disability, health, or any other type of insurance). By breaking down your planning efforts into those three categories, it’s easier to see where the opportunities might lie. This is a simplified way that more people should think about financial planning, but it’s hard. Why? Because the world (your family and friends, the news, social media influencers) is telling you what you should do with your money instead of being in control of your money and directing it accordingly.
The one thing I want to highlight is that my puzzle experience included multiple people. It’s not that I’m not capable of strategizing on my own and completing a 3000-piece puzzle, but the overall experience was much more enjoyable. See, I had people assisting me with completing the puzzle, which helped save a ton of time.
Many feel compelled to go at it alone with financial planning, which wastes time because they’re trying to become the expert in everything. Plus, it’s impossible to be an expert in everything, so why not work with a professional or team of professionals (check out my article called Your Money Team) to assist you with crafting a solid financial game plan. And, because you’re not an expert, you might not be making the financial decisions that are in your best interest, or there could be blind spots within your plan that you’ve overlooked that could be detrimental to your long-term future financial success.
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