Here is a note to my two daughters who are preparing to graduate from college on financial planning and goal setting.

David Barfield, March 2007

We have been working with a financial planner (Walt) to help us determine how best to use the financial resource given to us in Mom’s Dad’s estate. Below is an abbreviated version of what the planning took us through that I recommend you work through as you consider your financial future. You have been blessed with a college education without any debt, a good career for the days ahead, and a decent car to start off life. This can be a great launching pad for your financial life or can be wasted depending on what you do now.

Walt brought us through something called value-based financial planning.

1) Draft your financial values (which you should revisit annually) – He asked us to write down values we had that money would help to accomplish. Think about this question long and hard. Again, what do you want to do that money will help you with? Write them first broadly as values. Then think about the specifics of how money can help you accomplish this list.

Here is our initial list of values (in no particular order):   

Our values that money can help with:

• Provide for needs of family – food, shelter, clothing, transportation, etc.
• As needed, assist with the care of my Mom as long as she lives
• Be a good stewards of what God provides. It is all His.
• Maintain good health (club memberships; exercise equipment)
• Learn and grow throughout life (going back to school, books, etc)
• Live debt free
• Be productive (computers, cell phones, etc)
• Give generously to the work God has called us to and to those in need which He has burdened us with (CBC, persecuted church).
• Stay connected with family (e.g. vacations; scrap booking resources, a good camera)
• Retirement – Not burden our kids in our retirement years with caring for us (without sufficient financial resources to help). How much is enough?
• Provide for education and training of each family member so they can be all that they were meant to be
• Continue to be a blessing to our children as they go through various phases of life
• Be involved in the lives of others (what do I need financially?) E.g. – a home that is a ministry-platform.
• Be a blessing to our grandchildren (a college fund)

2) Draft your financial goals (again, revise annually) – Once the financial values are determined, they are translated into financial goals. Walt encouraged us to determine what, how much, when, how we will feel when it is accomplished. Examples:

• Replace vehicle, 4 years from now, $10,000 (I don’t do the feeling part).
• Special family vacation to celebrate graduations, 2007, $ 3,000.
• Etc.

Once you have your values and goals, your budget is much better informed so I would encourage you to do the above first.

These goals much be yours or you will not stick with them.

3) Establish a budget and financial plan – After we established our goals, Walt helped us come up with a financial plan to allow us to get there. We will update it annually, including the tweaking of underlying values and goals.

Finally, below are some of my thoughts and recommendations on the priority of giving and savings in your financial plan.

First, Give. All we have is God’s. We are to give to His work. I believe I do better in life living on 90% and giving 10% back to God than giving less. God’s word does not prescribe a number for New Testament believers but I recommend you give 10% as a starting point for this stage in life.

Second, work aggressively to establish an emergency fund of 3 months of your salary. If you save 10% of your salary for this purpose, it will take you roughly 3 years to get to this point. See if you can somehow get a jump start on this (as you need some emergency fund to start with) and go more aggressively if you are able. Put it in a separate account (an ING).

Third, you need to save for major expenses you can anticipate.

a) Car. We have helped you get a recent used car to start with. Now pretend you have a car payment, Put away $150 to $200 in a fund to replace this car in 4 or 5 years. By then you should have enough for your next car. Again, make this separate from your emergency fund.

b) Determine what other major expenses you need to save toward (house down payment, other). Save as much as you can toward these objectives in an account separate from your regular checking account, car fund, emergency fund. You will not regret it.

I would love to help you through this. Let me know.

Dad