The Minimalist Guide To Financial Planning (2024)

The Only Two Steps You Need for Financial Success

Believe it or not, financial planning is so simple it's ludicrous.

Step 1 – How to Build Wealth:
Spend less than you earn and invest the savings wisely.

Rinse and repeat until step 2…

Step 2 – How to Have Enough to Retire:
Spend less than your investment income and invest the savings wisely.

That's it. Seriously!

You'll enjoy massive financial success if you run your life from start to finish according to these two sentences.

You don't have to be a financial genius, and you don't have to learn tons of technical mumbo jumbo. Anyone can do it.

It's so simple it's a joke. Except for one minor little detail…

Why So Few Succeed

The obvious question is, “If it's so simple to achieve financial security, then how come almost nobody succeeds?”

I'm glad you asked. 🙂

There are actually many reasons. I'll start the conversation with a few obvious choices, then I'll let you finish it by adding any ideas I overlooked in the comments below.

1. Procrastination: Most people wait until tomorrow to start saving and building wealth. The problem is, eventually there aren't enough tomorrows left to do the job.
2. Lack of Discipline: Thomas Huxley said it best: “Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not; it is the first lesson that ought to be learned; and however early a man's training begins, it is probably the last lesson that he learns thoroughly.”
3. Short-Term Perspective: The essence of spending less than you earn is delayed gratification. You must view your goals from a 20-30 year perspective sosaving isn't a sacrifice. Instead, it's remembering what you truly want (freedom and independence instead of more stuff), and acknowledging it daily with proper action.
4. No Perspective: Some people simply don't connect their daily spending habits to long-term implications. Retirement is so far in the future it equates to Neverland. They live unconsciously and spend, spend, spend until there's more month than money. They're just not paying attention.
5. Ignorance: They don't know any better.
6. Can't Invest Wisely: This is the only part of the equation that requires financial skill. It's not complex. There are simple solutions that work. However, this is the one excuse that legitimately takes fortunes down when everything else is done correctly.

Related: 5 Financial Planning Mistakes That Cost You Big-Time (and what to do instead!) Explained in 5 Free Video Lessons

Two Things To Notice

There are two things you should notice from the above list.

1. All the obstacles except for the the last item on the list (investment skill) are caused by your own mental blocks. More importantly, you have the power to overcome these obstacles since they're inside you. In other words, anyone can build wealth if theyjust develop the essential personal skills. It's not rocket science.
2. Even though building wealth is a financial goal, notice how only 1of the 6 causes listed above is financially related! I'm always amazed how achieving financial goals has very little to do with finance and everything to do with you.

As Steven Pressfield wisely wrote,

“It may be that the human race is not ready for freedom. The air of liberty may be too rarified for us to breathe… The paradox seems to be, as Socrates demonstrated long ago, that the truly free individual is free only to the extent of his own self-mastery. While those who will not govern themselves are condemned to find masters to govern over them.”

In other words, freedom is within you. You have the power to choose it (including financial freedom).

How the Financial Services Industry Has Failed

Most studies show 5% or less of working Americans retire with anything remotely close to financial security.

Applying the previous quote, it means 95% are governed by masters other than themselves.

The solution to the problem is simple. However, implementing the solution has proven elusive to the financial services industry because the cause has nothing to do with “financial”, and everything to do with human nature.

The problem is you've got a financial services industry trained to sell investment products when the only service most people need is accountability, support and coaching to do the right thing.

The technical aspects of implementing a financial plan are beyond simple. Anyone who can fog a mirror can get adequate diversification at low cost using ETF's or mutual funds.

Related: A better investment strategy than buy and hold

You don't need an “expert” to do the job. The prescription for a conventional, diversified portfolio is well-documented and requires no serious expertise. You can learn everything necessary to implement the investment side of the wealth building equation in a few hours or less.

People aren't failing financially because of financial reasons, they're failing for no other reason than they're not doing what they know needs to be done.

The Conundrum

Think about it…

People are turning to financial experts for financial guidance. They want help in resolving their financial challenges.

The experts are selling them investment products as the solution.

Unfortunately, investment products are the easiest part of the equation. Nobody needs an expert for that. What they need is an expert for the more complicated, personal stuff that is truly keeping them from building wealth.

In other words, they need help building wealth in the first place, but what they get is a group of financial experts who are only in the business of managing the wealth they already built.

If you don't believe this is true, just try getting the attention of a high quality financial planner when you have nothing to invest.

The person with nothing to invest needs the most help; yet, the financial planning profession isn't designed to serve that person. They're in the business of selling investment products.

Do you see the confusion?

The primary obstacles to wealth are not financially caused. People seek expert guidance. The experts sell them financial solutions.

It's a mess. It doesn't work.

That's why I got in the money coaching business. People need personal solutions, not investment solutions.

As I said in the opening, the financial planning part is simple – spend less than you earn and invest the savings wisely. The problem isn't in knowing what to do, the problem is getting it done.

It's time people got the help they really need.

What do you think? Do you see the conundrum? What pieces to the equation did I miss? Please add your thoughts in the comments below…