The Best Place To Start When Financially Planning Your Future

Someone recently asked me, “Where do I start with financial planning?”

There are many facets to financial planning and it can be overwhelming at times, but we all have to start somewhere.

First, develop a plan to get out of debt.

If you are not in debt, then you can skip to step two.  If you are in debt, then you need to develop a plan to pay off loans due and other debts.  If you only have a small amount of debt and/or if you have the discipline to create and follow a budget then you should be able to make a basic plan in several hours (a good introductory budgeting tool is mint.com).  If your situation is more complex, you may need to consult a financial advisor or consider some online resources.  Here is a great first resource for trying to move past debt (https://www.nerdwallet.com/blog/how-to-handle-debt/)

Second, create an emergency fund.

The general recommendation is to have 3 to 6 months’ worth of living expenses in an emergency fund. What does that mean? Cash in the bank. You need liquidity when it comes to an emergency fund. Three months would be appropriate if you have more than one income earner, multiple sources of income, and/or some other significant assets.  Six months is recommended for families with only one income earner.  Some people prefer to have more cash on hand and some circumstances may dictate that, but as a baseline 3 to 6 months is a good place to start.

Third, consider your life insurance needs.

In some circumstances, this may be the number one priority, but start with the understanding that life insurance should always be there to address a need.  A classic example of insurance need is this: a young family has one income earner and one stay-at-home parent. If the working parent dies or is severely injured and cannot collect any form of disability payment, the surviving parent would need resources to cover expenses for the family.  Another classic need, that often overlaps with the previous example, is a couple with mortgage debt. Life insurance can potentially be used to eliminate that debt after a death.  It is also important to consider disability insurance for these examples as well.  And finally, there may be other needs to address such as the need for liquidity if you’re tied up in delays over an inheritance, or business partnership dispute. Insurance can help. These need to be discussed with a financial advisor or insurance agent. However, if you do fall into one of the first two examples mentioned then you need to consider life insurance a top priority.

These essential steps are the first you can take on the journey to financial independence.  My experience is that starting is the hardest part, so set aside a free day or weekend with your family to sit down, plan, research, and set up what you need. These few hours could save you months or years of stress and worry.


EARTH EQUITY ADVISORS IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

How Do You Handle Transitions?

One of my favorite aspects of growing up in Asheville was that we experienced four distinct seasons.  When I grew up and lived in other parts of the country, I appreciated this distinction, and now understand that it matches my curiosity and excitement about what may happen next as change unfolds. My basic personality type seeks out change, and I look forward to the seasonal transitions as nature showcases something new in each one. As we enter the fall season, many of us become aware of the shifting feeling of a transition.  It can show up as an uncertain rumbling of anxiety, or as excitement as the crisp fresh air replaces the summer heat.  How do you handle transitions, whether it is the change of seasons, a new job or home, or a major life transition from a divorce or loss of a loved one?  Our core personality may influence how we approach these chapters, and influence our coping ability.

There are two types of change: external (marriage/divorce, having children, moving, changing jobs) and internal (how attitudes toward change are shaped).

Change theorists surmise there are three stages of change (source):

Stage 1: grieving whatever you are letting go of

Stage 2: period of doubt and uncertainty, where most of the action is internal, i.e. how you’re processing the change

Stage 3: light at the end of the tunnel, where plans begin to take shape and action is ready to be enacted. This is the period where hope for a better outcome begins to take hold

Finding coping mechanisms helps with navigating transition, especially the big ones. (source)

  • Expect a certain amount of anxiety or depression. Even positive changes often mean the loss of something in our lives, i.e. changing jobs means saying goodbye to coworkers we’ve come to think of as friends, buying a house or moving to another state could mean leaving behind a beloved home full of memories, or saying goodbye to friends.
  • Realize this is a new chapter. While acknowledging the losses is healthy, avoid living in the past, and this can be accomplished by thinking of the new thing as a fresh start.
  • Think positively about the transition bringing opportunity. The expression, “When one door closes, another opens,” may be clichéd, but it can also be true. Perhaps a career transition forced by a layoff can become an opportunity to learn a new skill to take your expertise in another, more exciting direction.
  • Avoid stagnation. The longer you take to get started on your new journey, the more chance there is to become inured in routine that feels comfortable but may not be very fulfilling
  • Have a support system. Going through change alone is daunting to say the least, but relying on friends, family, or counselors/coaches can help you maintain your momentum and move forward.
  • Make sure your expectations and timeframes are realistic. There will be difficulties associated with the changes, but taking them one at a time helps keep them from being overwhelming. Biting off more than you can chew is a quick path to giving up. However, by taking the change in manageable chunks helps you not only navigate the transition, but when you look back, you can see how far you’ve come. If you’re visual, make a list and mark how long the tasks take to do, and by the time you’re near completion, you can see how far you’ve come. For example, someone wanting to change careers may need a degree to enter the desired new field. That’s a big obstacle, but going about it one class at a time, they can manage it in smaller doses and before long, degree in hand, they can begin their chosen path and be proud of progress made.

At Earth Equity Advisors, we have noticed that our biggest competition is often not another financial firm, but inertia.

Some people explore responsible investing, yet feel overwhelmed with the thought of moving accounts and establishing a relationship with a new financial advisor.  They may even cringe with they open their statement and see that some long-held investments do not match their values, yet making a change feels like it will take more energy than they can muster up.

At a recent conference, the keynote speaker referenced a psychologist’s statement that as consumers, our first decision to buy a product or service is from the right side of the brain—how it feels to us, rather than all the analytics of price, value, product quality, etc. that come from the left side of the brain.  When it feels right to you, making changes and navigating the transition can feel empowering and positive.

Here’s to embracing change as we enter fall, and cheering nature as the leaves change color—they make transition look easy