Financial Planning Made Simple

Q: What’s the difference between DIY financial planning and hiring an advisor?

Doing it yourself means you’re both the architect and the builder. 📐 Hiring an advisor 👔 is like bringing in a builder who’s built hundreds of homes—they understand design, structure, and how to weather storms. You bring the vision; they help make it real.

FREQUENTLY ASKED QUESTIONS

Part 2.1: Filling Out Your Net Worth Statement

What is a Net Worth Statement?

A Net Worth Statement is a snapshot of what you own (assets) minus what you owe (liabilities). It shows your financial starting point so you can measure progress over time.

What should I include under assets?

List cash and cash equivalents (checking, savings, money market, short-term CDs, T-bills), investment accounts (taxable brokerage and retirement accounts like IRAs/401(k)s), and personal-use assets (home, vehicles, jewelry, collectibles). If you plan to liquidate something for future goals, add an “Illiquid Investments” section (rental property, business interests, valuable collections).

What should I include under liabilities?

Include the current balances on your mortgage, car loans, student loans, credit cards, and personal loans. You don’t need interest rates or payment amounts in the Net Worth Statement—just the balances.

How do I calculate my net worth?

Add up all asset categories to get Total Assets. Add up all debts to get Total Liabilities. Then calculate: Net Worth = Total Assets − Total Liabilities.

How often should I update my Net Worth Statement?

Quarterly works for most people. Update monthly if you’re in a focused season of change, or at least annually to track long-term progress.

Where do long-term CDs and inherited IRAs go?

Long-term CDs can be a separate “Investment Assets” or “Other Investments” line. Inherited IRAs belong under retirement accounts with your other tax-advantaged accounts.

Want to know exactly where you stand financially?
Head back to Part 2.1: Filling Out Your Net Worth Statement 🧾 and walk through the process step by step 💡 using the same template I use with my clients 📊.

Financial Plan: Do You Really Need an Advisor

Can I really build my own financial plan?

Yes, you can! 🛠️ If you’re organized, comfortable with numbers, and willing to learn, you can create a basic financial plan using templates for net worth, cash flow, and spending. Just remember—a solid plan takes time, structure, and accountability.

What’s the difference between DIY financial planning and hiring an advisor?

Doing it yourself means you’re both the architect and the builder. 📐 Hiring an advisor 👔 is like bringing in a builder who’s built hundreds of homes—they may better understand design, structure, and how to weather financial storms. You bring the vision; they help make it real.

How do I know if I’m ready to manage my finances on my own?

If you understand your cash flow, have a system for saving and investing, and feel confident making decisions, you may be ready. 🧭 But if you often delay decisions, feel overwhelmed, or aren’t sure where to start, an advisor can help you build momentum and stay on track.

What are the risks of doing my own financial plan?

The biggest risk is blind spots. 👀 Like my story about my dad the ophthalmologist—experts can miss what’s close to home. DIY planners sometimes overlook tax implications, insurance needs, or estate issues. A good advisor helps you catch what you can’t see.

How much does working with a financial advisor usually cost?

It depends on the advisor and your needs. 💰 Some charge a percentage of assets, others a flat or hourly fee. The key is value—what peace of mind, time savings, and long-term results do you get in return? Think of it like paying an architect to design a safe, beautiful home.

Can I start my plan myself and bring in an advisor later?

Absolutely! 👷 Many people start with basic templates or online tools, then hire an advisor once things get more complex. That’s often the best of both worlds—you build a foundation yourself, then bring in professional guidance when it matters most.

🧱 Ready to see how the DIY vs. advisor debate really plays out?

👉 Read Financial Plan: Do You Really Need an Advisor?

Part 3: What Will Retirement Really Cost You?

Why should retirement be my first financial goal after buying a home?

Because once you’ve secured shelter, your next basic human need is long-term security. Retirement planning ensures your future self has income when your ability to earn declines.

What’s the difference between human capital and financial capital?

Human capital is your energy, skills, and time — what earns your income. Financial capital is the money you’ve already saved. Over time, you’re trading one for the other.

How do I move money from human capital to financial capital?

Through automatic, periodic investing — payroll deductions into a 401(k), 403(b), 457, SIMPLE, or SEP plan. Consistency is what transfers wealth from your working years into your freedom years.

What if I’m self-employed or a solo-preneur?

You can automate contributions too. Link your business operating account to your retirement plan and schedule regular transfers. Your CPA or payroll provider can help set this up.

What is Dollar Cost Averaging and why does it matter?

It’s investing the same dollar amount at regular intervals, regardless of market conditions. It smooths out volatility and potentially builds wealth quietly over time.

How do I estimate what I’ll spend in retirement?

A commonly used rule of thumb: take your current annual spending and multiply by 80%. That gives you a quick, realistic first estimate — you can refine it later.

How do I know how much I’ll need saved by retirement?

Subtract your expected income sources (Social Security, pensions, rental income) from your total retirement spending need. The remainder is what your portfolio must generate.

What’s a safe withdrawal rate to plan for?

For most people, 4 to 4.5% per year is a reasonable starting point. Divide your annual income need by that rate to find your target portfolio size.

What if that number feels impossible?

Don’t panic. Start small and stay consistent. Regular investing and time in the market can achieve more than you think — especially if you automate it.

How often should I update my net worth?

Quarterly is great when you’re just getting started and building momentum. Once you’re on track, annual updates are enough to stay accountable and motivated.

Is retirement planning really that simple?

Yes. The math is simple — sixth-grade level. What’s hard is the discipline to keep saving, investing, and trusting time to work in your favor.

What tools can I use to stay on track?

A simple Google Sheets or Excel spreadsheet works fine. Track your net worth, contributions, and progress toward your retirement number. Automate as much as you can.