The One Page Financial Plan

There might not be anything that has been more influential on our finances than creating a One Page Financial Plan. A One Page Financial Plan is a key ingredient to positive behavior change and responsible stewardship.

A One Page Financial Plan is a simple one page document that has three sections: Values, Goals, and Actions. This document can act as a filter as you make spending and lifestyle decisions. When you’re clear about your values, goals, and actions, it becomes easy to spot purchases or lifestyle decisions that don’t align with what is important to you.

Values

This is the most important section of your plan. Your values are the foundation of your financial plan. When you’re clear on your values, decisions are easier. “Spending money in a way that’s aligned with what we value will bring us more happiness.” - Carl Richards, author of The One Page Financial Plan.

Most people never take the time to actually write down their values. This is even more important to do if you’re married. You and your spouse don’t have to value all the same things, but it’s likely that there’s some overlap. It’s important that you’re on the same page and agree with what’s most important. Oxford languages defines a value as “a person's principles or standards of behavior; one's judgment of what is important in life.” This section can be as simple as listing 3-5 things that you (and your spouse if you’re married) think are important. An example could look like this:

1. Quality time with family

2. Travel

3. Active lifestyle

4. Generosity

5. Minimalism

You can list them as one word or a short phrase, or you can write a longer sentence or two explaining each value. Do whatever works for you.

Another way to complete the values section of your plan is to craft what Carl Richards’ calls a “statement of financial purpose.” Instead of a list of your values, a statement of financial purpose boils down what’s most important to you into just a sentence or two. A couple examples of a statement of financial purpose:

“Time with my family, mainly outside, and serving in my church and community.”

”Be generous with our time, talent, and money. Give precedence to relationships, experiences, and travel.”

Whether you choose to make a bulleted list of your values or write a statement of financial purpose does not matter. The point is to create something that can be used as a filter through which you can make decisions.

Goals

The next section of a One Page Financial Plan is the goals section. Similarly to the values section, this should be a short list of 3-5 financial goals. It can have a mix of short term goals (save for a house down payment) and long term goals (save for retirement by age 55). If you’re struggling to think of some financial goals, two that should be on every One Page Financial Plan are your spending finish line and your saving finish line. Gregory Baumer and John Cortines talk about spending and saving finish lines in detail in their book, God and Money.

Your spending finish line is essentially what you’ve decided to “cap” your personal spending at, even if your income continues to rise. After your income and spending rise to the point where you hit your spending finish line, you commit to putting excess income to savings and giving, rather than increasing your lifestyle. To be clear, you’re still saving and giving before you reach your spending finish line.

Your saving finish line is how much you need to save to be financially independent (able to retire). After you hit your saving finish line, you don’t need to save for your financial future anymore, and can direct all income that exceeds your spending to giving generously. If you don’t know how to come up with your savings finish line, just divide your spending finish line by 0.04. For example, if your spending finish line is $60,000, your saving finish line is $1,500,000 ($60,000/0.04). This is a back of the envelope way to determine your saving finish line. While it has some merit, consider working with a Certified Financial Planner™ to get a more accurate saving finish line that takes into account your personal situation. Below is an example of the goals section of a One Page Financial Plan:

1. Spending finish line = $60,000

2. Saving finish line = $1,500,000

3. Save for house down payment

4. Donate 15% of income to charity

5. Meet our saving finish line by age 55

Your goals will naturally change over time as you accomplish them and your priorities change. Ideally your finish lines won’t change much. Every increase to your spending finish line has an exponential impact on your saving finish line. Avoid the constant hamster wheel of “more” by trying to stick to your original finish lines.

Actions

The last section of your One Page Financial Plan is the Actions section. This is a list of actions you can take to make progress on your goals. These are short term, and should be reevaluated around every 90 days. Keep the list short and focus on what will have the biggest impact on your goals. Below is an example of the Actions section:

1. Save $1,000 per month in house down payment fund

2. Set up recurring donations to our favorite charities

3. Allocate bonuses and raises 1/3 each to giving, saving, and spending

Making good financial decisions is easy when you’ve already defined what actions you need to take to achieve your goals.

A One Page Financial Plan is a living document that gets updated regularly as life happens. It lays out a plan to achieving your goals, while making sure your goals are actually aligned with what is most important to you. When you start with your values, you’re more likely to actually take the action needed to accomplish your goals. That’s the power of the One Page Financial plan.