As the financial world grows ever more complex – and so too does the financial planning advice delivered to navigate it – it is sometimes difficult to keep a handle on the fundamental guiding principles that are the essence of good financial planning. Yet ultimately, some would make the case that if you can’t boil down the value you deliver and the basic tenets of your advice to a very concise statement, you haven’t really identified the essence of financial planning. So what would be YOUR basic financial planning advice, if you had to boil it down to only a sentence or two?
Today’s blog post was inspired by a short piece I read via Twitter last week from Cam Marston of Generational Insights, who pointed out in his blog a recent survey that found almost 1/3rd of Millenials (the youngest generation, born from approximately 1980 – 2000) see Twitter and Facebook as a valuable source of financial news and investment advice, yet only 10% of them see financial advisors as the most valuable source of financial advice! In response, financial planner Jude Boudreaux of Upperline Financial put forth an interesting question: if Millenials are boiling financial advice down to Twitter, what would your advice be in 140 characters or less?
Accordingly, here are the top dozen responses we received:
– Manage your risk, save more, spend less, diversify, give back, pay it forward, and call me to talk about this. – Melissa Liu
– Set horizons 4 distributions; diversify among asset classes 4 vol; overweight low; underweight high. – @drthorpe
– Focus on what you can control: risk, costs, taxes, goals & priorities & review to reconfirm regularly. – @RussThornton
– Spend less than u earn, create emergency fund, diversify investments for long-term, monitor quarterly, enjoy life & hav fun! – @PaulEPuckett
– Set a budget, save more/spend less, create goals & invest accordingly, insure/protect your family, create emergency fund. – @toddgreider
– Know your goal. Save 10% of pay min. Insure life, health, disability. Track exps. Learn from mistakes. 3 mos of exps in cash. – @HJudeBoudreaux
–  Save as much as you reasonable can  avoid large losses  behave  plan on living on 4% in retirement. – @behaviorgap
– Do a budget. Spend less, save more. CYA with insurance. Diversify investments. Do a will. Make a Plan. Stick 2 it. – @RealityFPS
– Save more, spend less, reduce your taxes, and pay off your debt for a worry-free retirement. – @MortgageNudge
– Live providently. Prepare tenaciously. Save consistently. Invest wisely. Insure prudently. Never retire from living life. – @BSimiskey
Although the responses here do run the gamut, I thought there were a few interesting themes of note…
– The idea of saving more and/or spending less is nearly universal. There is a strong focus on spending reasonably.
– Similarly, having an emergency fund is a common theme throughout the advice snippets.
– A number of planners mentioned the importance of diversifying investments and/or "not doing anything stupid" with the portfolio; proper insurance was also a common theme
– A few planners quote well-known planner Dick Wagner’s famously simple advice: "Save more, spend less, and don’t do anything stupid."
On the other hand, what’s missing is also notable. I was struck by the fact that, although perhaps implied indirectly in the "save more/spend less" focus, only one planner mentioned debt management in their advice, notwithstanding the fact that excessive debt problems plague many Americans these days. Similarly, there was no mention whatsoever of cultivating our human capital – maintaining a job and/or improving our ability to earn income over the years, not to mention the importance of ensuring that we actually are happy in the work that we do.
In truth, I think the statements – what they include and what they don’t – speaks to the focus of financial planning itself these days, which tends to be oriented more towards saving and investing on the financial balance sheet, and not so much towards other aspects of the financial world, such as our employment income/human capital, or the liability side of the balance sheet.
I have to admit my own favorites from the last are the last two in particular. And what would my own advice be? Here’s my best two tries, trying to incorporate many of the ideas from above (and borrowing heavily from @BSimiskey and Dick Wagner!) in 140 characters or less (ok, the first one is a little long):
– Prepare tenaciously. Live providently. Save consistently. Invest wisely. Insure prudently. Use debt judiciously. Work happily. Call w/ questions.
– Save more, spend less, don’t do anything stupid, and call me with any questions.
So what do you think? What’s your advice in 140 characters or less? Do you think these tips are good and helpful? Is there anything missing? Is this an accurate reflection on the state of financial planning itself?