Overview of the Financial Template, Part 2
This post is being published a day early due to logistical issues. Even though it is a busy Monday morning, I hope you will make time to read it, as it is full of useful and factual information that can help you. Thank you for your support!
The key to your financial future is the financial template, the Afterburner Success Partners differentiator, Part 2.
Completing our financial template is hard. And important…That’s why we don’t rush it
Two weeks ago, we began a preliminary overview of the financial template. Last week, we took a pause for review, and this week, we will continue to work on the initial overview of the financial template. As I mentioned, completing the financial template is difficult and takes a lot of time. Depending upon where you are in your financial journey, you may need outside professional assistance. Completing our (read: YOUR) financial template requires us to intentionally focus on our financial future. You now have that opportunity as we begin to overview what our (your) financial template might look like before we go into detail down the road. In Part 1 of the overview of the financial template, I mentioned that properly completing this exercise is likely one of the most difficult things you will have to do in your life. Why is that?
Could determining our financial future be like going to the doctor? Sometimes, we don’t…
You’ve heard me mention the term “The world according to Dave,” which means I have an opinion on something; it’s generally based upon fact, but not everyone will agree with me. Here is my answer to why not everyone has spent the time to determine their financial future in well laid out plans:
Many people don’t take the time to develop their financial plans because they are afraid of what they will learn and must now do
Well, now, you see, like, ahem, you know Dave, well, uh, I, yeah, maybe, you know, maybe Dave, maybe you are right.
Americans are not concerned about their health…
Readers may or may not believe me with that statement I just made. OK, fine, read on. Let me tell you for a fact what I do know. 60% of men will not go to the doctor (Note 1). Why is that? Let’s see:
72% of men would rather do household chores than go to the doctor.
It’s not convenient (61%)
Men were taught not to complain (41%)
Lack of health insurance (25%)
They don’t want to know (37%)
Only 8% of adults over 35 have received all the recommended health care for their age. This includes women, which says many of them won’t go to the doctor either. Ugh…
Let me close the loop on this discussion of healthcare. Here are a couple more statistics for you (Note 2):
Americans rank 34th in life expectancy at birth
The US spends more on health care but performs poorly on most measures of health
There are large disparities in health by race, ethnic group, and county by county
In general, our poorer outcomes fall into the following categories:
Shorter lives
Bad birth outcomes
More injuries and homicides
More heart disease
Chronic lung disease
Disability
Adolescent pregnancy and sexually transmitted disease
HIV and AIDS
Drug-related deaths
…nor are we concerned about our education…
To think we are the wealthiest nation on earth but have such poor outcomes is just horrible. Don’t EVEN get me started on education. OK, maybe I will talk about education for a little bit. Like health, it’s not something to write home and brag about. Consider (Note 3):
The US placed 16th of 81 countries in science when last tested in 2022
The US placed 34th of 81 in math. The top five math-scoring countries were in Asia
US math scores have remained steady since 2003. That means they have not increased in 22 years.
US science scores have remained static since 2006. That means they have not increased in 19 years.
In 2024, the IMD World Competitive Center reported that the US ranked 12th in its competitive report compared to ranking first in 2018. That’s a significant drop in six years…
…or our financial well-being…
These are shocking statistics. Given Americans’ low appetite for their own health and education, is it any wonder that their concern for their financial well-being would be any different?
So, in my opinion (that’s “The world according to Dave”), the reasons people do not determine their own personal financial plan are the following, in order:
They don’t want to know
If they know, then they will have to do something about it
Doing something about it means they must change how they do things now. They may have to sacrifice today to secure tomorrow
They would rather just wait, and maybe things will work out
They will deal with it when it happens if they have to
Lesser reasons include:
They don’t know how or what to do
They don’t know who to ask
They are too embarrassed to ask
They don’t want to take the time or have other things they would rather do
So, maybe it’s best just to ignore our financial future. Until we are forced to…
…and here are the numbers
All of this aligns with what I knew when I developed this course in 2019, established Afterburner Success Partners in 2024, wrote a book on the subject (due to be published in mid-2025), and posted these weekly blogs (starting in July 2024). And that is, those who take the time and effort to do the things I recommend are in the 3% minority. Not surprisingly, these 3% group are typically financially secure or have an excess financial abundance. Sadly, most people, who, like going to the doctor or realize the importance of a good education, will not want to be bothered by doing it. But just for the sake of full disclosure, transparency, and our own information, let’s look at a few financial statistics:
In 2023, 72% of Americans report they are “living comfortably” or “doing OK.” This is the lowest since April 2020. (Question: Is 72% a good number or a bad number?)
19% reported they were “just getting by”
9% reported they were “finding it difficult to get by” (Note 4)
77% of Americans are anxious about their financial situation
58% feel that finances control their lives
52% have difficulty controlling their money-related worries (Note 5)
As of the 4th quarter 2024, Americans’ credit debt is now at an all-time high (Note 6)
Nearly 50% of adults 60 and older have household incomes below the desired Elder Index Value (a formula that includes cost of housing, health care, transportation, food, and miscellaneous essentials) for where they live
80%, or 47 million households of older adults, are financially struggling today or at risk of falling into economic insecurity as they age (Note 7)
Are you as alarmed by these statistics as I am? And…these statistics are about 2 years old, and everything I read says we are worse off today (Note: Conversely, everything I read says the rich are getting wealthier, that is, these statistics do not apply to the very wealthy). Because you are still reading this post, I will assume you have more than a passing interest in developing your own financial goals and want to learn more. Excellent! Let’s pick up where we left off two weeks ago..
For now…
Let me mention something, and it’s important. What we are doing now is very high level, and I don’t expect you to be able to complete the financial template at this time or any time soon. What I do want you to do is start thinking about it. Getting it all down on paper is something you can hold in your hand, look at, and ponder. I will provide you more information later, so our discussion of completing the financial template at this point is just preliminary. You must stick with me to learn so much more before you can finish it. OK, do we agree? Then let’s move on.
Overview of the financial template, Part 2
Last time, we began developing our financial template by completing the two left-hand columns. These two columns were to list major milestone dates from today until 30 years past our (your) projected retirement date. I know, that’s amazing to think about, isn’t it? In the second column, we applied dates to each of those milestones. Now, if laying all those milestones out to 30 years after our projected retirement was amazing, adding actual dates to them is mind-blowing! It’s hard to comprehend. But we understand why, don’t we?
This week, we will complete the top horizontal column titles, add one more very important item, and pause until the next time. If you are getting impatient about finishing this exercise, just know that when you take the course, either virtually or in person, this exercise will span at least a week and maybe more. It takes a lot of time to develop this information, let it sink in, and consider if this is accurate and if any changes are needed.
OK, so across the top and to the left, we already have two columns. The first is labeled “Time Period”, and a key entry down a way is not a number but a phrase entitled “Retirement” or “Retirement Date.” This is something you should have been thinking about since the last time we discussed the financial template. The second column is labeled “Date,” and each column should be fully completed all the way to retirement plus 30 years. Just putting these two columns to paper is a bit difficult, no doubt. If you have done that, then you are ready to proceed. Oh, I may have forgotten to mention, the sheet of paper should be labeled “My Financial Goals” across the center top (use your name if you wish), and you should have a date you started it. Put a date on everything you do regarding goals. Over time, you will see how fast time passes, which is a good way to gauge your progress.
The remainder of the columns will be labeled across the top as such, in order:
Goal (what I want)
Position
Annual Income
Target Income
Annual Savings
Target Savings
Action Steps
Adjustments needed
As you complete developing this financial template, you may want to express things a little differently; this is the template I use for myself. Also, keep in mind that later, we will incorporate the financial template into our master goals template. Let’s discuss each of these columns.
Big rocks first
Let me interrupt this train of thought to discuss a concept we previously mentioned. That’s big rocks first. Big rocks are the most important things in life you want to do. And, financially speaking, in your financial life, the most important thing you want to do is ensure that when you retire, you are financially secure. Ideally, you are financially secure earlier, but at a minimum, you want to be financially secure on your retirement date. I call this achievement “Your number.” Your number is the point that, no matter what happens, you will be able to enjoy the life of your choosing and be able to fully fund it. Not many people get to do this, but you can if you stay with the course and work hard at it. Let’s look at “Your Number”:
Your Number: Find the intersection of “Retirement” and “Target Savings” and label that “Your Number.” Before you can go any further, you absolutely must figure out what this figure should be, and you may need professional help from a financial advisor. You will also have to make some assumptions that will be factored into your lifetime goals plan. I talk extensively about this figure in both the course and my book, and this number is different for everyone, as everyone has a different financial need. Some people will not be able to reach the number they put in this block. Some will have to extend their retirement to do so. Like a medical issue, it’s best to determine this early and deal with it when you have the most time. It’s best to find small skin cancers on an annual check-up before it’s grown into something that is beyond treatment. I have a spreadsheet with some examples of this in the back of my book. Frankly, I don’t think I can do this figure justice in a blog post, so I’ll encourage you to take the course and read the book, but I will make a broad example for you to use here.
Let’s say you want to have $1,000,000 in your combined 401(k), IRA, and any taxable savings available for you to spend during your retirement. We will discuss this more, but assuming you desire to spend 4% of this amount annually over 30 years and adjusted for inflation, you can pretty much assume this is doable and follows generally accepted financial advice (Note 8). What that number would be is $40,000 a year in the first year. Can you live off that? Now, this may be a long time down the road from today, and we are not talking about inflation eating some of it up between today and when you need it. If the answer is no, I can’t live off of $40,000 a year, then you have a lot more thinking to do. Don’t worry; we’ll get into it later. Note that at this point, we are not talking about any other possible sources of income, just investment savings. This is why you have to stick with me so we can discover “the big picture.”
OK, so I’m going to stop here for this week. I’m guessing you understand why. We have covered a tremendous amount of information in a short period of time, and you have a lot to think about until next week when we will pick up with the overview of your financial template, Part 3. That’s all for this week!
What’s in it for Me
I’m sure you realize the value of being financially secure. Afterburner Success Partners can help you with that journey, and that’s what’s in it for you.
Call to Action
Sign up for the course, purchase the book, and spend time reviewing YOUR financial template. Begin thinking about “Your Number,” do some research, and get a general idea of what that number may look like for you. If you don’t have a financial advisor, consider starting to figure out who you may want to use as yours. Talk to friends and family for their recommendations; that’s always a good place to start.
Recommended Resources
Purchase and read The Millionaire Next Door by Thomas J. Stanley. This book is an excellent read on the seven common traits that show up again and again among those who have accumulated wealth. Click on the link in Note 9 to purchase.
Up Next
Overview of the Financial Template, Part 3.
Notes
Please note that as an Amazon Affiliate, I may earn a small commission on the sale of any of these recommended resources.
NMC Health, Why 60% of men won’t go to the doctor: https://www.mynmchealth.org/why-60-of-men-wont-go-to-the-doctor/
American Public Health Association, Health Rankings: https://www.apha.org/topics-and-issues/health-rankings
Thebalancemoney.com, U.S. Education Rankings Compared to Other Countries: https://www.thebalancemoney.com/the-u-s-is-losing-its-competitive-advantage-3306225
USAFacts, How are Americans Doing Financially? June 21, 2024: https://usafacts.org/articles/how-are-americans-doing-financially/
CNBC, 77% of Americans are anxious about their financial situation- here’s how to take control: https://www.cnbc.com/select/how-to-take-control-of-your-finances/
Foxbusiness.com, Americans’ credit card and household debt reach an all-time high:https://www.foxbusiness.com/economy/americans-credit-card-household-debt-reach-all-time-high
National Council on Aging (NCOA), Addressing the Nation’s Retirement Crisis: The 80%:https://www.ncoa.org/article/addressing-the-nations-retirement-crisis-the-80-percent-financially-struggling/
Charles Schwab, Beyond the 4% Rule: https://www.schwab.com/learn/story/beyond-4-rule-how-much-can-you-spend-retirement
The Millionaire Next Door by Thomas J. Stanley: https://amzn.to/3GB9boG