Building Your Financial House

Building Your Financial House

Sometimes it’s hard to see the forest for the trees.

You get so caught up in all the individual financial decisions that have to be made each day that you never take a step back to think about how it all fits together.

But a good financial plan isn’t series of one-off decisions. It’s a coordinated set of tools and strategies that work together to help you achieve your desired end goal.

In this post I’d like to share a framework for thinking about how all of these individual pieces fit together to help you reach your goals. And to do so I’m going to compare creating a financial plan to building a house.

Now just to be up front, I’m just about the least handy person you will ever meet and know next to nothing about what it actually takes to build a house.

So if you do and this isn’t exactly what building a house looks like, I hope you’ll cut me some slack 😉

Note: This post was adapted from my talk at The Dad 2.0 Summit just over a week ago. It was a fantastic event designed to advance the role and perception of fathers in the modern world. I would highly encourage you to check it out.

Step 1: Create the blueprint

When you build a house, you don’t dive right into building.

Before a single nail is hammered, you create a blueprint. The blueprint lays out exactly what you want the house to look like and turns that vision into a set of precise measurements and steps needed to make that vision a reality.

Similarly, a good financial plan doesn’t start with a flurry of activity or a checklist of to-dos. Instead, it starts with a vision for what success means to you.

And by that I mean what kind of live do you want to live? What are your personal goals? What are your personal values? What are the opportunities you want to provide for both yourself and your children?

Those are the things that really matter. The financial stuff is just there to support them.

By clearly defining the kind of LIFE you want to live, you can set meaningful financial goals to help you get there.

Step 2: Lay the foundation

The next step in building a house is laying the foundation. This is the base upon which everything else is built.

Your financial foundation is your system for managing money. That is, taking the money that’s coming in and directing it where you want it to go.

Now, this doesn’t have to be a traditional budget. There are plenty of other ways to do it.

But you need some kind of system that allows you to be purposeful with your money if you want to make consistent progress towards your biggest goals.

Step 3: Raise the walls

Once your house’s foundation is set, you can start building the frame and putting up the walls and roof. These are your basic protections against the outside world, keeping you safe and secure in the face of wind, rain, snow, and the like.

And you can build financial protections as well. Things like an emergency fund, insurance, and basic estate planning protect you from some of the bad stuff that life could throw your way.

These aren’t the most enjoyable decisions to make, just like the walls and roof aren’t the most exciting part of your house. But getting these financial pieces in place ensures that your family will always have the financial resources it needs, no matter what.

Step 4: Make it yours

Finally, once your house is built, you can throw up a basketball hoop, plant your garden, paint the walls, make your man cave, and all the other things that turn it from a house into your home.

Financially, this final step involves things like investing, paying off debt, saving for college, and maybe even starting a business or traveling the world.

These are the decisions that create the freedom and opportunity for you and your family to build a life you enjoy.

Build your financial house

Whether it’s a house or a financial plan, the goal is to create something better than the sum of its parts.

Because when you start with a clear vision of what you’re working towards, and when you understand the tools and resources at your disposal and how they fit together, you can build something you love that will last a lifetime.

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  • amber tree March 1, 2016

    This post is a great summary on the high level steps to get your financial goals on track. Step 1 and 2 are key. Once you have these in place, the rest will follow. Even a swimming pool becomes an option 😉

    We have finally reached stage 4 now. It does not mean we forget the first 3. We regularly redo step 1 and 2 and check the situation of the walls.

    If only more people did this.

    • Matt Becker March 1, 2016

      Nice work making it to step 4! And I love that you bring up the point about checking back in on steps 1 and 2 as well. You’re absolutely right. None of this is ever set in stone. A good plan is always evolving.

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