Federal Employees and Financial Planning

Definition:  A financial plan is a thought process based on what each person considers important and necessary in their life.


A financial plan helps to identify what we want, how to get it and how to keep it. The financial plan drives the entire process and is the determing factor as to whether you successfully reach your retirements goals.  In devising a financial plan, we must make choices in order to maximize our ability to accomplish our goals with varied resources in our retirement years.  We measure our values, those beliefs or ideas we consider important or desirable.  Our values have a lot of influence on our goals, choices and decision-making. As we grow older our values will most likely change.

When we make decisions, circumstances and events in our lives often cause us to make other decisions based on decisions we have already made.  In essence, one decision can bring about the need to make additional decisions.  In the economic world, those decisions are called “Satellite” decisions.

In making decisions we often have to make trade-offs.  We give up something now to get something better tomorrow that will ultimately benefit us in the future.  We save now so that our retirement years will be spent in comfort and security.  The trade-off is defined as an “Opportunity Cost.”  Planning for our retirement future requires a basic lesson in finance and economics as demonstrated by some of the terms we will use in our discussion.

There are 3 kinds of people when it comes to spending money.  There are those who live from paycheck to paycheck.  There are those who never have enough money and then there are those who absolutely ‘Get it.’

The people, who absolutely get it, didn’t just by some click of a pair of ruby slippers suddenly end up in OZ, a stratosphere off-limits to the rest of us; they had a financial plan and they followed the plan.  They understand that goals must be Specific, Measurable, Attainable, Realistic and Time related – the Goals must be SMART.

The folks that get it also understand the ‘Reality’ of resources in that they are limited or different at best, specifically in retirement.  They exercise self-control and “Restraint’.  They are not impulse spenders.  They also know the benefit of accepting ‘Responsibility’ in financial planning rather than taking on the consequences of not having a plan.

Equally as important, people who get it, know intimately the value of saving for a rainy day.  They spend within or below their means and are not reluctant to share with others.  Renowned financier and philanthropist, Warren Buffet, reputed to be one of the richest men in the world once stated on an interview with Larry King, former CNN TV personality, “I don’t need to spend a lot of money on clothes or houses or that kind of stuff, a comfortable pair of jeans and T-shirt is ok.” Eccentric he maybe, but he gets it because he has a plan that evolves as circumstances in his life change.

Building your financial plan must incorporate a high degree of flexibility because changes in your life’s circumstances are inevitable.

P. S.  Always Remember to Share What You Know.

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