Is it ok not to have a financial plan?

[Anonymous]

So DH and I are both poor planners. But we’re relatively conservative spenders and know how to live within our means. I do our taxes through TurboTax. We have the basics set up- a 401k through DH’s job, and have started college funds for the kids, have emergency spending money, and will have our house paid off by next year. After that, the only debt we will have is DH’s student loans.

We never had a budget, or planned out our expenses, and rarely do we even talk about our finances together.

Do you think this is ok? We are doing fine financially. But when I hear about others talking about tracking and planning expenses for the year and following a budget every year- it makes me wonder if we should be doing the same and if there is som great benefit to doing that. Because honestly it seems like a lot of work, and neither of us would rather not bother if it’s not necessary.

Thoughts?

[Anonymous]

You’re doing great. If it ain’t broke...

[Anonymous]

We don’t have a budget or track expenses either, but you need more in retirement than an employer 401k and a paid off house.

[Anonymous]

You essentially have a plan.... you just haven't organized it in a way that seems like a true "financial plan."

Based on your information, not sure you need a line by line budget. You seem to have a general sense of what you are spending, how to manage the cash flow, etc. You say your house will be paid off next year, so it sounds like your cash flow will increase. You probably need to come up with a plan for what you want to do with that cash.

It wouldn't hurt for you to meet with a financial planner, go over your financial goals, come up with a soft plan for how to reach those goals, etc.

But it also sounds like you are fine right now.

[Anonymous]

We don't have a budget (like you, conservative spenders with no problems living within our means), but we have worked with a financial planner on retirement planning, to get a realistic sense of what we will need to retire and how much we need to be putting away every year to get there (for a lot of people, maxing out a 401k every year isn't enough).

[Anonymous]

Anonymous wrote:We don’t have a budget or track expenses either, but you need more in retirement than an employer 401k and a paid off house.

Op here. We’ve maxed out the 401k. What other retirement investment should we look into? Once we pay off the house next year, we will have some room to put toward retirement. But would appreciate advice on where/how.

[Anonymous]

Anonymous wrote:We don’t have a budget or track expenses either, but you need more in retirement than an employer 401k and a paid off house.

I don't think that's necessarily true depending on the lifestyle you want to lead in retirement. Sure, if you're making $400K now and living a commensurate lifestyle you might need more but if you have a more typical income I think you could be fine on two maxed 401Ks. Social security will be around in one form or another even if it is at a reduced rate.

[Anonymous]

Anonymous wrote:You essentially have a plan.... you just haven't organized it in a way that seems like a true "financial plan."

Based on your information, not sure you need a line by line budget. You seem to have a general sense of what you are spending, how to manage the cash flow, etc. You say your house will be paid off next year, so it sounds like your cash flow will increase. You probably need to come up with a plan for what you want to do with that cash.

It wouldn't hurt for you to meet with a financial planner, go over your financial goals, come up with a soft plan for how to reach those goals, etc.

But it also sounds like you are fine right now.

Op here and I’m a little leery of financial planners— I feel like it’s hard to know who’s actually a really good one. And most are probably not great, or, untrustworthy. Do they really provide a great benefit?

[Anonymous]

Anonymous wrote:

Anonymous wrote:You essentially have a plan.... you just haven't organized it in a way that seems like a true "financial plan."

Based on your information, not sure you need a line by line budget. You seem to have a general sense of what you are spending, how to manage the cash flow, etc. You say your house will be paid off next year, so it sounds like your cash flow will increase. You probably need to come up with a plan for what you want to do with that cash.

It wouldn't hurt for you to meet with a financial planner, go over your financial goals, come up with a soft plan for how to reach those goals, etc.

But it also sounds like you are fine right now.

Op here and I’m a little leery of financial planners— I feel like it’s hard to know who’s actually a really good one. And most are probably not great, or, untrustworthy. Do they really provide a great benefit?

If you want to avoid financial planners, I would recommend getting some books from the library on financial planning to educate yourself about your needs and options. As much as you don't trust financial planners, you should trust random strangers on the internet even less.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You essentially have a plan.... you just haven't organized it in a way that seems like a true "financial plan."

Based on your information, not sure you need a line by line budget. You seem to have a general sense of what you are spending, how to manage the cash flow, etc. You say your house will be paid off next year, so it sounds like your cash flow will increase. You probably need to come up with a plan for what you want to do with that cash.

It wouldn't hurt for you to meet with a financial planner, go over your financial goals, come up with a soft plan for how to reach those goals, etc.

But it also sounds like you are fine right now.

Op here and I’m a little leery of financial planners— I feel like it’s hard to know who’s actually a really good one. And most are probably not great, or, untrustworthy. Do they really provide a great benefit?

If you want to avoid financial planners, I would recommend getting some books from the library on financial planning to educate yourself about your needs and options. As much as you don't trust financial planners, you should trust random strangers on the internet even less.

LOL. True.... I guess I was thinking that anonymous strangers on the internet have nothing to gain, so if anything it would be unwise advice as opposed to self-serving advice

[Anonymous]

We also are conservative spenders with maxed out 401(k) plans. Our house has been paid off for years. We have college savings as well as non 401(k) retirement savings. We have gone to a financial planner. He has been helpful, but I second being a bit leery of planners. Take the advice, but think through it before you implement it.

We are both cautious spenders, but have never done a budget.

[Anonymous]

We went to an hourly fee-based financial planner about 10 years ago (actually I think it was the week that Lehman fell apart...) and there was really not much benefit from our discussion with him aside from confirmation that we were on the right track. He made a few suggestions on which funds in my 401k that he recommended because they didn't contain overlapping assets but that was about the only useful information. We were already fairly well diversified (and even more so now with a rental property in the mix).

What I have found useful over the years since has been to track for myself what our balances are in retirement, savings, college, etc. I have a spreadsheet that I update at least once a quarter. We don't have a budget beyond "we'll need a new car in x years and the house will probably need y in repairs in the next two years" and making sure that we have that available. DH hates to think about money, so he let's me handle it, but I like to check in with him every so often even if it's just to say "hey, we have $x saved in each of the kids 529s right now".

What is the rate on your DH's student loans? How long would they take to pay off after the house is paid off?

[Anonymous]

Anonymous wrote:

Anonymous wrote:We don’t have a budget or track expenses either, but you need more in retirement than an employer 401k and a paid off house.

Op here. We’ve maxed out the 401k. What other retirement investment should we look into? Once we pay off the house next year, we will have some room to put toward retirement. But would appreciate advice on where/how.

NP here and the next best bet would be a Roth/backdoor Roth. Do some reading on the tax implications of doing this if you already have a traditional IRA or see if you can roll over your trad IRA to your current employer 401K before doing this. If none of those are options you could still put the money in a traditional and possibly non-deductible IRA.

[Anonymous]

Anonymous wrote:We don’t have a budget or track expenses either, but you need more in retirement than an employer 401k and a paid off house.

Why? We'll retire in a few years with about $3 million in our combined 401k's and about $1 million home equity. How exactly will that not be enough???

[Anonymous]

Anonymous wrote:

Anonymous wrote:We don’t have a budget or track expenses either, but you need more in retirement than an employer 401k and a paid off house.

Why? We'll retire in a few years with about $3 million in our combined 401k's and about $1 million home equity. How exactly will that not be enough???

Because this is DCUM and people here are crazy.