What you need to know about financial planning

Who should have a financial plan?
It doesn’t matter how old you are, where you are in your career or whether you are retired – Everyone should be doing financial planning, said Karen Schaeffer, certified financial planner and co-founder of Schaeffer Financial in Rockville, Md. Shaeffer is also the chair-elect of the Financial Planner Standards Board.

“This is the 21st century,” Schaeffer said in an interview with For Your Benefit hosts Bob Leins and Tammy Flanagan.

“Life got a little complicated, and no longer can you get up, be a nice person, go to work and expect to retire and be financially secure,” she said.

The “mystery of money” can turn people off from financial planning, but, Schaeffer said, “Quite frankly, it really isn’t as complicated as it sounds.”


The first step to financial planning is to evaluate where you are in your life and to identify priorities. Some people must stop and ask themselves why they are not getting anywhere financially and figure out what is confusing to them, Schaeffer said.

What is asset allocation?
Asset allocation simply means putting your money someplace to reach your goals.

“If we just put it under the mattress, it’s not going to grow, and yet everything we’re trying to spend the money on is growing in cost,” Schaeffer said. “So we have to do something with the money.”

Every allocation option has pros and cons. “The idea is to find the right mix of choices to meet my particular goals,” she said.

Systematic investment
Generally, people have been scared out of the market, but they are not scared to invest when the market is performing well. “That’s the opposite of what a good investor does,” Schaeffer said.

She added, “The best day to buy is when everyone is pointing out everything that could possibly go wrong.”

Schaeffer pointed out that the market recovers before the economy. The front-page headlines point to unemployment and a down economy, but the a company that is “lean and mean” is actually making money, she said.

Instead of picking one day out of the year to invest, Schaeffer recommends setting aside some money every month to invest in stocks.

“Systematically investing is the actually best way to manage human nature risk,” she said.