The 60-Second Financial Plan

In a world that runs on caffeine and social media, the only way to give financial tips or tricks is to do it in under a minute. Swipe, like, forward, delete, repeat. We live in an overstimulating technological world that seems only to accelerate. However, part of the mission of The Motivated M.D. is to ensure all who visit our site leave with something meaningful. As such, I wanted to experiment with a new idea. Yes, blog posts can be helpful, informative, and entertaining, but can they provide meaningful financial helps efficiently? Hopefully The 60-Second Financial Plan can do all of these things and more. Let’s see!

What is a financial plan?

I previously wrote a post titled How to Write a Financial Plan. In that post, I spend significantly more time hashing out the details of a well-written financial plan. However, for the sake of this article, it is crucial that we review the basics.  

A financial plan is a roadmap. It is a written statement that is created for an individual, family, or business that helps define how your money will be spent. It further helps determine how your money will be prioritized. Often, these financial plans establish a working relationship with a financial professional but are tailored to fit your goals. In short, it is a list of your financial priorities that guides your spending.  

Why does a financial plan matter?

Why does a financial plan matter, you ask? The human psyche is emotional, easily influenced, and sometimes illogical. A financial plan seeks an unemotional, educational, and evidenced-based approach to your finances. To be blunter, it aims to remove your emotional investments so you can make your money have the most significant impact on your financial goals.  

As we navigate life, we will be constantly inundated with needs, wants, expectations, and lifestyle creep. Having a concrete plan for your money can keep you grounded. Often these plans act as a litmus test for your decisions. Does this expense help me reach my goals? Is this expense an emergency? If not, maybe you should ‘sit on it’ for a beat before purchasing. It may just be a phase…

Financial plans matter because humans are not always the best with their money. Plain and simple. However, a well-thought-out and objective financial plan can take the emotion out of your expenses and keep you on the pathway toward long-term success.  

Why make The 60-Second Financial Plan?

So, if financial plans are so important, why make The 60-Second Financial Plan? Shouldn’t more thought go into it? Well, yes, of course. However, for our current tech-savvy, lightning-fast fingertip generation, I thought creating a quick financial plan that individuals can modify themselves may be a beneficial exercises.

The 60-Second Financial Plan that follows is not meant to be dogmatic. It is intended to synthesize the overwhelming consensus on how money should be prioritized as you exit training. Not every professional or physician has the time (or care) to create a financial plan from scratch. It takes time and research to understand how your money should be prioritized. With this, I hope to take some of the brainpower out of it and hopefully save individual time. They can then spend their precious time tweaking what I have created to fit their needs. So here it is… The 60-Second Financial Plan! 

The 60-Second Financial Plan

1. Build a budget

• Create an honest, transparent, and comprehensive budget using your pay stubs, credit card statements, and banking statements
• Create the budget using user-friendly software (Microsoft Excel, Google Sheets, etc.)
• If you would like a FREE Microsoft Excel budgeting spreadsheet that already does most of this for you, subscribe to our newsletter!

2. Live below your means

• Using the budget you created, determine your fixed expenses (expenses you will have to pay monthly or annually no matter what (rent/mortgage, utilities, car payment, childcare, etc.)
• Budget your household so that you are living on less than you make
• Cut unnecessary costs to make the math work (less eating out, fewer streaming services, less expensive vacations, etc.)

3. Create an emergency fund

• Build an emergency fund of 3-to-6 months’ worth of living expenses
• Make sure this emergency fund can cover all your complete living expenses for the duration of time you choose
• House this money in an easily accessible account so you can access it quickly
• List what constitutes an ‘emergency’ (i.e., unemployment, car wreck, A/C purchase, etc.)

4. Purchase necessary insurance coverage

• Ensure you are insured against the unexpected, and purchase necessary policies where appropriate.
• Purchase term-life insurance (preferably before you complete residency/fellowship). If you are still trying to figure out where to start shopping for the best policy, here are the Top 5 Life Insurance Agents for Physicians.  
• Purchase long-term disability insurance (preferably before you complete residency/fellowship). Again, if you are unsure where to shop for this policy, here are the Top 5 Disability Insurance Agents for Physicians.
• Determine if short-term disability insurance is necessary. Typically your emergency fund can cover this duration, or your employer does. However, everyone’s situation is different.
• Purchase an Umbrella insurance policy. This helps further helps protect your assets. If you wish to learn more, check out Why Every Physician Needs Umbrella Insurance Now.
• Purchase malpractice insurance if not already provided by your employer, or you wish to increase your coverage.

5. Automate your savings

• If your employer offers a retirement ‘match,’ get it. Do not leave free money on the table
• Make sure your retirement contribution is automatically deducted before receiving your paycheck
• Max out your annual retirement contribution if able

6. Prioritize high-interest debt (5% or higher)

• Any debt you carry higher than 5% (credit card debt, car loans, high-interest student debt) makes this a top priority, with income remaining.
• Eliminate credit card debt immediately.
• If you have high-interest student loans, determine if pursuing Public Service Loan Forgiveness (PSLF) suits you. If you need more clarification, seek professional advice to help answer this question.
• If you determine you will NOT pursue PSLF, refinance as many times as necessary to lower your interest rate and aggressively pay down this debt.

7. Maximize your retirement savings

• With your high-interest debt tackled, or at least on autopilot, you must ensure you maximize your retirement contributions and build your nest egg.  
• Make sure you are maxing out your employer retirement savings plan if offered.
• Consider maxing this out annually if offered a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA).
• After this, other investment vehicles to consider include: 401(k)s, 403(b)s, individual 401(k)s, backdoor Roth IRAs, SEP-IRAs, SIMPLE IRAs, etc.  
• Check out this quick reference from The White Coat Investor on What order should I fund my investing accounts in!

8. Prioritize low-interest debt (4% or lower)

• After you have tackled your high-interest debt and maxed out your savings, now focus on the lower-interest debt that remains. Determining how aggressively you pay this off is up to you. 
• Here it is slightly trickier to know if you should pay down the remaining debt or invest, especially if your real rate of return is greater than 4%. If you need clarification about what to do, check out Should Doctors Pay Down Debt or Invest?

9. Determine your long-term financial goals

• You have almost made it through; now you have more freedom with where you go next.
• Determine your personal and financial long-term goals. 
• If in a relationship, this is best discussed together. Here are some questions to consider:
  • How much do you need to save for retirement? What age do you want to retire? What kind of lifestyle do you want in retirement?
  • Do you wish to purchase/upgrade your home?
  • Do you have children? How much do you wish to pay for their education?
  • Have you created a living will?
  • Do you wish to take more vacations?

10. Seek professional financial help

• Lastly, I encourage anyone executing their financial plan to meet with a licensed financial professional to have them review your plan. This often brings peace of mind and a different perspective.

There you have it, the 60-Second Financial Plan. It is overly simplistic, but if you build on this, you will likely start your financial journey with a sense of direction and sure footing. Now that you have reviewed the plan make it your own!

Tailor The 60-Second Financial Plan to fit your needs.

As mentioned above, the 60 Second Financial Plan is meant to be a blueprint for your financial plan. Everyone’s financial situation is different, often meaning your financial plan should be tailored to fit your needs. This financial plan is only a consideration. 

Those in the personal finance community may have a different tier of priorities. Many often discuss how to prioritize investment savings versus paying down debt. This is an age-old question, one that I have written about previously. The conclusion… it depends on you! Are you debt averse? What are your long-term goals? How much debt do you have? What is the interest on that debt? All of these nuances will affect your financial plan. That is fine and encouraged. Make it your own and run with it!

Take home points

A well-written financial plan can set you on an unwavering course toward financial prosperity. The 60-second financial plan is an exercise I was interested in, and if it even helps out a single individual, then all the work this blog post took will be worth it. To all looking to get a jumpstart on their financial goals, I would be honored if you started here! However, I hope this post fuels your interest in personal finance and helps you move the needle ever closer to a brighter financial future. Thank you for reading. Leave a comment down below!  

Stay motivated!

The Motivated M.D.

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