10 Questions to determine your Financial Health

WRITTEN BY: Gideon Drucker, CFP® AIF® ECA

You have been receiving our emails for a long while...

Twice weekly emails about every financial planning concept under the sun.

As most of you know, I try to be as direct & transparent in these emails as possible.

I’m well aware that might turn a few of you (that aren’t ready to hear it) away from us....that’s ok. It’s the only way I know how to write & more importantly I believe that it leads to far more people waking up & thinking about their finances in a more intentional way.

So as we begin the new year (which historically has been when the most amount of people reach out truly committed to making a change) I wanted to issue a clarion call.

Read the following list of questions...if you don’t have definitive answers to at least 8 of them, I can tell you this: the cost of NOT hiring a fiduciary financial planner immediately is SIGNIFICANTLY higher than the investment you will make when hiring one.

I’ll say that again because nothing could be more clear to me: For the majority of people I speak with, the value a competent & fiduciary planner will provide to you and your family are dramatically in excess of the cost.

That’s just the reality. There are so many different areas of financial planning & it only takes us improving your situation in ONE of them for our value to leapfrog our fee (because mistakes...just like solutions compound every year that you don’t address them).

I have worked with hundreds of clients on their financial plans...but I’ve also seen that "other" group of people that reach out every 6 months to schedule a call, mention the fee, never do anything, and then wonder why they feel stuck in the same financial situation for 3 years running. They talk themselves out of an upfront cost and then go spend money on something frivolous (rather than life changing) the very next week. A CFP's fee is not the problem here...it is the solution to the problem they already have.

Don’t let that be you.

All of that said, here are my list of questions...

I would truly suggest truly taking the time to figure out your “score” here. (Btw: a few notes follow some of the questions to provide you enough context to truthfully answer the question.)

Do you have a system for allocating cash flow between day-to-day spending, one-off goals, investments, and retirement?
Do you have an intentional emergency reserve? (Note: A reserve that’s too small means we need to spend more time on question #1 and a reserve that’s too large we need to spend more time on #4.)
What’s your current saving/investing rate & is it enough for you to reach all of your financial goals?
Are your investments aligned with your goals? ie: are you investing based on YOUR time horizon, liquidity needs, tax situation, & future funding needs?
Do you have a tax strategy to help you minimize your lifetime tax bill & do you review your tax return each year to seek out opportunities for improvements?
Do you have an up-to-date estate plan & the basic estate planning documents that EVERYONE should have? (These include a living will or revocable trust, health care proxy, financial power of attorney etc)
In the last 3 years, have you analyzed the current amount of life insurance, disability insurance, and long-term care coverage that you have? Do you have enough coverage that would protect your family members adequately?
Does your investment allocation make sense as one cohesive strategy or is it more of a hodge podge of “stuff”? (A good marker of this is to look at what funds you’re using in your 401k as compared to your non-retirement investments)
Based on all of these various decisions & data points, are you currently “on track” to hitting your long-term financial goals? Put another way, if you kept doing what you are currently doing would you be in for a nasty surprise?
Are your spending goals, lifestyle goals, & housing goals appropriate given your income trajectory & asset base?

Take a deep breath....are you ready to take that first step?

Schedule your 15 minute "Right Fit" call here to discuss...