Three Step Plan to Financial Freedom

Studies have been done trying to determine why more people don’t consult with a financial professional to complete a formal financial/retirement plan. The main reason seems to be the perceived cost of completing one of these plans. Let’s put cost aside for the moment and say there was no cost. I don’t really think the needle would move dramatically either way. Why you ask? I think in part, robo-advisors and large do-it-yourself investment firms have commoditized investing and financial planning.

Here's my line of thinking. As a society, we’ve come to rely on the internet for just about everything. Have a question-Google. Need a widget delivered tomorrow-Amazon. Hungry-DoorDash. Need a ride-Uber. News-Twitter. But what about financial planning and financial services in general?

The emergence of robo-advisors and public television discount advisors have done a great job convincing many that financial advisors are unnecessary and free financial planning and investing can be done by an algorithm, reading a book, or buying an index fund.

Then there’s social media where you can find an “expert” or “influencer” on just about any topic, financial planning included. Although not experts or influencers, you also have the social media advertising cynics that question the credibility and accuse or insult the financial services profession… I assume because they have nothing better to do. Don’t believe me. Go look at a Facebook ad for financial services of any kind and read the comments.

Now I’m not a whiny, frustrated financial advisor feeling disrespected, threatened, or minimized. I’m just calling them as I see them. Financial planning is more than just hoarding cash and buying an index fund. Don’t misunderstand, those won’t hurt, but they certainly won’t solve every financial planning problem or challenge.

If you’ve ever visited my website, www.LakePointeAdvisors.com, or read any of my blog articles, www.lakepointeadvisors.com/blog, you probably know that one of my core services is financial and retirement planning. I’m at a point in my career where friends are asking me to help their kids, who are now out of college and in the real world, get a jump-start to saving and investing. They want me to have a conversation with them that most baby-boomers didn’t have with their kids…the importance of saving, investing, and starting the retirement planning process NOW, at twenty-something years old. I’ve had this conversation with my kids and it’s truly my pleasure to have this conversation with the children of my friends.

At the core of this conversation is that financial success and freedom begins with doing three things consistently.

1. Live within your means
2. Avoid debt
3. Save and invest early and consistently

That’s it. That’s the start of a financial plan or strategy that will serve anyone well.

Now you’re probably saying to yourself that I’m making the case that financial advisors are unnecessary and financial planning is a commodity that any algorithm can solve. If you are…you’d be wrong.

Why? These three steps are the bare minimum one can do to begin the path to financial freedom. It’s like saying that avoiding smoking, drinking, and overeating will ensure a lifetime of good health. A lot happens along the way and every situation is unique. However, if you do nothing else, these three steps will at least give you a chance to survive.

The key is that all three must be done consistently. I challenge anyone to find a flaw in this very basic plan. By flaw, I don’t mean that it’s too simplistic. Of course, it is. It’s simple, but far from easy.

Let’s break each step down.

1. Live within your means: This quite simply is not spending money you haven’t earned yet or haven’t saved. It requires financial maturity and discipline. With television, radio and social media ads tapping into our impulse buying tendencies, the temptation to buy on credit is overwhelming. Not only do many regret these impulse purchases, they also blow up both steps 1 and 2 and make step 3 more difficult. Even if you can implement step 3, if you’re making minimum credit card payments because you violated steps 1 and 2, any earnings from investments most likely won’t consistently cover the double-digit finance charges on most credit cards.
2. Avoid debt: This primarily means credit card and other dream-killing consumer debt. Few can write a check to pay cash for a home, car, or a four-year college education. Unfortunately, some debt is necessary and unavoidable. The key is to avoid maintaining a balance on a credit card and paying harmful interest rates that will prevent you from enjoying financial freedom.
3. Save and invest early and consistently: Part of growing and maturing is the formation of habits; good and bad. Most learn about money from their parents. Some are taught well, others aren’t. We need to understand our money habits to make sure we are doing positive things that will benefit us as we age. By beginning a consistent saving and investing program at a young age, you will leverage what could be an investor’s biggest ally, time.? Don’t try to play catch-up later in life, it’s rarely successful. It also causes many to make decisions that aren’t necessarily aligned with their best interests. Start now and let time work in your favor.

This three-step plan is not and was not designed to replace sensible, comprehensive financial and retirement planning. It isn’t proof that financial planning is a commodity or is a self-service activity.

As a financial planning professional for over 25 years, I’ve learned that there are three kinds of people that I will encounter; people that I can help, people that I can’t help, and people that don’t want my help. Of course,?LakePointe Advisors?is prepared to help and there is never a charge for an initial conversation. We would be privileged to have a no-pressure, no-obligation conversation to see if we fit with what you need.

Live Well-Retire Better?

Live Well-Retire Better??is a non-traditional financial planning process that was developed based on my philosophy that you don’t have to choose between enjoying the pleasures of life while working and saving for a comfortable retirement. Although nothing is guaranteed, with commitment, discipline, and careful planning, you can enjoy the comforts of life now, AND when you retire.

If you’d like to talk about The?Live Well-Retire Better??method of financial planning, or have questions or concerns, please?set up a call. There is never a charge or any obligation for an introductory conversation.

For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.

Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker-dealer and Registered Investment Advisor. Cetera is under separate ownership than any other entity.