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How Do You Know if Your Financial Plan is Working for You?

How Do You Know if Your Financial Plan is Working for You?

| February 09, 2018

An effective financial strategy can help reduce stress in your life. But the question is I hear most often is, “How can I tell when my financial plan is working?
Here are some preliminary questions you can ask yourself to help you assess how your financial strategy is working for you.

1. It is a good fit for me?

People tend to think they’ll have to live a life of restriction if they start to develop a financial plan. But really, your financial strategy should allow you to have fun in your life.

You want to make sure you have enough money to pay for those activities and values you hold dear, whether it’s travel, car racing or supporting your favorite charity.

2. Will my plan work in a strong and weak economy? Will it allow me to have financial resources in the face of changing economic or life circumstances?

A lot of financial plans are not plans at all. They are a single product (stock or mutual fund) or collection of products (such as stocks, mutual funds, bonds, target date funds, etc.) that someone has perhaps referred to as a “plan.”

Make sure your financial plan provides you with the financial flexibility, liquidity and control you need to manage a major stock market correction, a sustained economic downturn, the loss of your job or a sudden change in your health.

A well-conceived and implemented financial plan or strategy will consider your life goals, values, and particular situation. Most often, a financial strategy will use the strengths of multiple financial products to help you achieve your stated financial goals.

3. Is your money growing, yet protected from loss?

You work hard to make your money.

Why lose any of it? With all the financial products and analysis tools available today, there’s absolutely no need to expose yourself any more risk than you feel is necessary. For example, using annuities, you can both grow your money and protect it from loss.

4. Do you feel confident that you understand how your income, tax liability and expenses will be coordinated to optimize your retirement?

Taxes and fees erode your wealth. I encounter a lot of people who are paying excess income tax in their retirement.


Because they did not plan on how to optimize their income from qualified plans (e.g., 401(k), 403(b), IRA, etc.) and Social Security. With no strategic financial plan, you can end up paying more taxes than you need to.

5. Do you know what you’re doing and why?

Financial products can be very complicated. I study financial contracts and financial markets for a living so my clients don’t have to. But you do need to understand the components of your financial strategy and how all the parts work together. Seek out someone you feel comfortable asking the same question to twice or even three times.

6. Can you sleep at night?

If it’s 3 am and you are awake, staring at the ceiling because you are worried about some aspect of your financial life, clearly your financial strategy is not working for you.

An effective, well understood financial plan creates financial flexibility, growth, safety, access to cash, protection and, most importantly, peace of mind.