What are the Key Components of a Strong Financial Plan?

What Are The Key Components Of A Strong Financial Plan?

Money management without clear purpose is like driving without a destination—you might move forward, but you'll never arrive where you truly want to be. This episode dives deep into the three foundational pillars that make the difference between simply having money and having a purposeful financial plan.

Cody Stansell shares why your cash position might matter more than your overall net worth, explaining that even millionaires feel financial anxiety when they're cash-strapped. He recommends maintaining 6-12 months of expenses in liquid assets to prevent emotional decision-making during market downturns and provide true financial confidence. Beyond emergency protection, this liquidity gives you the freedom to seize opportunities when others are forced to sell.

We explore the surprising reality that many couples—even those who've been married for decades—have never had meaningful conversations about their financial goals. Cody draws a compelling parallel between financial planning and personal training: just as a fitness program requires clear objectives, your money needs direction to work effectively for you. The episode walks through practical conversation starters to help you and your spouse align your financial vision.

The discussion culminates with a detailed breakdown of the "bucket strategy" for retirement planning—a three-tiered approach that provides immediate security while still allowing for long-term growth. By segmenting your investments based on when you'll need the funds, you create both psychological comfort and financial efficiency. Whether you're two years or two decades from retirement, this framework offers a balanced approach to risk management that works in all market conditions.

To learn more about Steadfast Wealth Planning visit:
https://www.SteadfastWealthPlanning.com
Steadfast Wealth Planning
5550 Granite Pkwy, STE 270
Plano, TX 75024
469-606-2040

Episode Transcript

Speaker 1 (00:04):
Welcome to the Steadfast Wealth Planning
Podcast, where faith andfinancial wisdom come together.
Hosted by Cody Stansel, ownerand senior wealth advisor, we
provide comprehensiveChristian-based financial
planning to help families,individuals and business owners
build a life they're proud tolive.
From investment management andtax planning to preparing for

(00:25):
retirement, we're here to guideyou with clarity, integrity and
purpose.
Let's get started.

Speaker 2 (00:37):
A strong financial plan is more than just saving
money.
It's about making intentional,faith-driven decisions that
align with your long-term goals.
Welcome back everyone.
I'm Sophia Yvette, co-hostslash producer.
Back in the studio with CodyStansel, senior Wealth Advisor
for Steadfast Wealth Planning.
Cody, how's it going?

Speaker 3 (00:59):
Hey Sophia, it is going well.
It's springtime, it's warmingup.
I'm excited for it.
How are you doing?

Speaker 2 (01:06):
I'm doing great, cody , and, yes, it is perfect day
and it's a perfect time.
So, Cody, can you inform ourlisteners as to what are the key
components of a strongfinancial plan?

Speaker 3 (01:21):
Yes, absolutely.
There are several keycomponents.
It's kind of like what's mostimportant to a car the tires or
the engine?
Right, it's both right.
You can't do it without eitherone.
So there's a lot of keycomponents to a financial plan.
But good investments withoutadequate life insurance can be
disastrous.
Right, saving enough money isgreat, but not knowing how to

(01:45):
spend it down the road, whatdoes that do you?
It doesn't do you any good.
So there's a lot of aspectsthat kind of play into one
another, but three came to thetop of my mind when this
question came up.
Number one is having a goodcash position and a good
emergency fund.
I know it sounds simple, kindof like if you ask a doctor, you

(02:05):
know what's the best way tolose 10 pounds Diet and exercise
.
You know it's a simplerecommendation but sometimes
hard to fill out.
Having a good cash position ofsix to 12 months of expenses
really goes a long way.
Having that liquidity preventyou from making rash decisions

(02:26):
if life happens right.
So having a good cash positionif you're laid off, it allows
you more time to actually, youknow, wait for that right job
instead of just having to takethe first job right.
Having good cash also allowsyou to not have to sell
long-term investments forshort-term needs if something

(02:49):
went awry.
Right, it prevents you frommaking bad decisions.
When the investment market goesdown, you will wish you had
adequate cash in a good cashposition to buy low right.
Good liquidity and good cashwill kind of solve right.
Good liquidity and good cashwill kind of solve.
Psychology will tell you youcould be a multi-millionaire

(03:09):
with your house businessinvestments.
But if you feel tight day today with your cash, a lot of
studies are out there that youdo not feel wealthy.
Right is how your cash is inthat present moment.
I have a lot of clients, a lotof money.
They're doing quite well, butwhen they run into a cash
strapped situation they feel theanxiety, even though they have

(03:32):
millions of dollars.
So having a good cash positionis really an important one.
So that's the first one.
The second one I'd say isknowing what you want.
So knowing your goals, knowingwhat you want your money to do,
it's much simpler to focus onaccomplishing those goals once
you know what you're actuallytrying to accomplish.
I meet with clients all thetime.

(03:54):
We sit down and say, okay, 10years from now, what would you
have told yourself today andthey kind of just look at me
like I don't really have a goalwith this money.
So if you want to retire at 62and spend X amount each month in
retirement, we can build afinancial plan to get you there,
right.
But if it's just, oh yeah, Ijust want to make as much money

(04:16):
as I can, it's like, well, itdoesn't get us really anywhere.
So it's really knowing what youwant.
We help clients with this everysingle day.
There's a lot of times that weget a husband and wife sit down
and they haven't had thisconversation.
Sometimes the husband will saysomething and the wife will say
I've never heard you say thatbefore.

(04:36):
Or one spouse will saysomething and the other spouse
says I didn't know, you feltthat way about retirement or
spending.
It's kind of like with acounselor.
It makes you sit down and goover.
You know, talking about moneythat isn't the most sexy topic
to talk about on Friday night atdinner.
So it's having thoseconversations and you know, hey,

(04:58):
how do you see our financesfrom, you know, 10 years from
now?
So we kind of bring up thosekinds of conversations that in
that same vein, my wife is apersonal trainer, and so if she
has a new client come to her.
You know her first question isyou know, what do you want to
accomplish with your fitnessgoals?
Right?
And is it you want to loseweight, or do you want to be

(05:20):
stronger, or you want to be ableto play with your grandchildren
20 years from now?
She has to know what your goalsare before she can able to
write a fitness plan andnutrition and all that.
So financial planning is kindof the same way.
You just have to know what yourgoals are.
The third one I would say isknowing how much risk to take,

(05:40):
and it doesn't just mean withyour investments, it means in
life, it means, okay, cody, youtold me how much cash is a big
deal.
But how much cash?
Well, it depends on how muchrisk you're willing to take,
right?
Knowing the risk will help youprevent to make rash decisions
like buying high and selling low.
We don't want to do that.
We want to do the opposite.
So for our clients, especiallywhen it comes to approaching

(06:04):
retirement, knowing your risklevel is a big question, right?
And we get that question allthe time.
Should I be more aggressivewith my investments?
Should I be more conservativewith my investments?
And it's a big question to ask.
We use a bucket strategy, so wewant you to have different
dollar values in three differentbuckets, right?

(06:26):
So if you are two to five yearsfrom retirement, we want you to
have these three buckets One ofthem being about two to three
years of income, set aside in aconservative portfolio, just in
case the stock market comes down.
You have 24 to 36 months ofincome just sitting right there.

(06:47):
It prevents you from makingrash decisions and selling your
long-term investments for ashort-term need, like we were
talking about earlier.
So that's the first bucket.
Second bucket kind of the samevein, about two to three years
of income, but a little bit moremodest investments, a little
bit more aggressive.
You can still touch them if youneeded to, if you still need to

(07:07):
access them.
They're not quite asconservative, but it's not stock
market exposure and up and down, and up and down, and then the
rest of your portfolio.
That's not for today, sophia,that's for 10 years from now,
sophia.
Right, we have to.
That's for 10 years from now,sophia.
Right, we have to outpaceinflation cost of living.
That money has to grow for yourfuture down the road if you

(07:32):
have a long-term care need oranything like that.
So, real life example if youhave a million dollars in your
portfolio and you need to spendabout $6,000 a month, the math
would come out.
We want you to have about 120to $175,000 a month, the math
would come out.
We want you to have about$120,000 to $175,000 in that
first bucket very conservative,it's always there if you need it

(07:52):
and then another $120,000 to$170,000 in a modest portfolio
for a little bit of growth, butstill some conservative nature,
and then the remaining portion,whatever the math ends up being
$500,000 to $700,000 for thatgrowth.
Right, that's going to go up,it's going to go down, it's

(08:12):
going to go up, it's going to dowhat it's going to do.
But once again, that's for 2035,not 2025, right, and so that
makes you feel like you don'tjust have $1 million invested.
You're watching it go up and godown and have a silo view of
your money and know that, nomatter what, I'm going to be
okay because I have conservativeinvestments and liquidity right

(08:34):
here for me.
So, once again, that's threecomponents I could probably name
20 of them, right, but thoseare three big ones that I see
from a lot of folks right now.
And there's other components,right, like protecting your
family and income with lifeinsurance, that's a big one.
Making sure your estate plan isin order and solid so your
legacy lives on, that's a bigone, right.

(08:56):
So there's other topics, forsure, but those are three big
ones that we see quitefrequently.

Speaker 2 (09:02):
Cody, we'll catch you on the next episode.
Have a fantastic rest of yourday.

Speaker 3 (09:07):
You too, thanks, sophia.

Speaker 1 (09:13):
Thanks for joining us on the Steadfast Wealth
Planning Podcast.
Ready to take the next step inyour financial journey, visit
steadfastwealthplanningcom for acomplimentary consultation or
call 469-606-2040.
Smart planning, christianvalues, a life well lived.
We'll see you next time.