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The Financial Planning Puzzle

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By Gary Silverman

In the midst of doing a puzzle with my wife, I realized it was a great metaphor for financial planning.

Imagine receiving a pile of puzzle pieces and being told to put them together. Hey, it’s possible, but it’s not easy. At least it’s not until you look at the picture on the front of the box.

It’s the same with your financial life. Putting together all of the pieces without first contemplating what the picture will look like will leave you lost and confused. That is why any kind of planning, including financial planning, begins with goals. Your goals are the picture you are aiming for, what your planning should create.

The next step in puzzle making is assembling the edge pieces to create the frame.  In life, these are the easily seen parts — your income, expenses, assets, and liabilities.  Do you have any known spending coming up like a roof that is starting to leak or a car that’s wobbling? This is also the knowledge of how much you can put into your IRA each year, your marginal tax bracket, and your investment risk tolerance.  You cannot create a puzzle without these boundaries, so it’s best to identify them as soon as possible.

Once the borders are assembled on our puzzle, the identifiable subsections, such as houses, birds, or distinctive plants are the next elements that get our attention. Knowing that you need to pay attention to such things as retirement, risk management, or college funding in order to make the picture of your life take the concrete shape you envisioned, is the essence of this life’s puzzle. Assembling all the correct elements isn’t as easy and clear-cut as the edge pieces, but if you take them one-by-one, the job is a lot easier.

You can even farm out some of the work. I’m responsible for transforming those scattered blue pieces into clouds and water. I have a knack for noticing the patterns. There are those in life who receive the training you may not be able or willing to get in order to see these elements of Life’s Big Picture. Investment managers, insurance specialists, estate attorneys, tax experts, and financial planners are all examples of people you can hire to sort out these middle pieces.

Those clouds, birds and houses don’t create much of anything floating out there as isolated parts of the puzzle.  My wife and I need to still work to connect the sections together. The same is true with financial planning. All of the elements are part of one picture.  What you do in your investments can affect your taxes. Your tax situation may influence what you do with your estate plans. Estate needs may change how you invest. All of your parts need to work together.

Just like with a puzzle, throughout the process you look back at the picture on the box. It reminds you what it is you are trying to build. It gives you both direction and help. Take a look—has the college funding edged its way too far into your income? Is it time to re-establish your boundaries? The picture you’ve created for yourself– your goals and dreams for your financial life– is right there. You just have to look to be reminded.

Gary Silverman holds the Certified Financial Planner (CFP®) license, and is a member of the Financial Planning Association (FPA®). Gary is the founder of Personal Money Planning, a retirement planning and investment advisory firm, and is a Qualified Kingdom Advisor.

Find out more about Personal Money Planning at the company website or follow on Facebook.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.


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