Steadfast Wealth Planning Podcast

What are the Key Components of a Strong Financial Plan?

• Cody Stansell • Episode 2

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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

Speaker 1:

Welcome to the Steadfast Wealth Planning Podcast, where faith and financial wisdom come together. Hosted by Cody Stansel, owner and senior wealth advisor, we provide comprehensive Christian-based financial planning to help families, individuals and business owners build a life they're proud to live. From investment management and tax planning to preparing for retirement, we're here to guide you with clarity, integrity and purpose. Let's get started.

Speaker 2:

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-host slash producer. Back in the studio with Cody Stansel, senior Wealth Advisor for Steadfast Wealth Planning. Cody, how's it going?

Speaker 3:

Hey Sophia, it is going well. It's springtime, it's warming up. I'm excited for it. How are you doing?

Speaker 2:

I'm doing great, cody, and, yes, it is perfect day and it's a perfect time. So, Cody, can you inform our listeners as to what are the key components of a strong financial plan?

Speaker 3:

Yes, absolutely. There are several key components. It's kind of like what's most important to a car the tires or the engine? Right, it's both right. You can't do it without either one. So there's a lot of key components to a financial plan.

Speaker 3:

But good investments without adequate life insurance can be disastrous. Right, saving enough money is great, but not knowing how to spend it down the road, what does that do you? It doesn't do you any good. So there's a lot of aspects that kind of play into one another, but three came to the top of my mind when this question came up. Number one is having a good cash position and a good emergency fund. I know it sounds simple, kind of like if you ask a doctor, you know what's the best way to lose 10 pounds Diet and exercise. You know it's a simple recommendation but sometimes hard to fill out. Having a good cash position of six to 12 months of expenses really goes a long way. Having that liquidity prevent you from making rash decisions if life happens right. So having a good cash position if you're laid off, it allows you more time to actually, you know, wait for that right job instead of just having to take the first job right. Having good cash also allows you to not have to sell long-term investments for short-term needs if something went awry. Right, it prevents you from making bad decisions. When the investment market goes down, you will wish you had adequate cash in a good cash position to buy low right. Good liquidity and good cash will kind of solve right. Good liquidity and good cash will kind of solve. Psychology will tell you you could be a multi-millionaire with your house business investments. But if you feel tight day to day with your cash, a lot of studies are out there that you do not feel wealthy. Right is how your cash is in that present moment.

Speaker 3:

I have a lot of clients, a lot of money. They're doing quite well, but when they run into a cash strapped situation they feel the anxiety, even though they have millions of dollars. So having a good cash position is really an important one. So that's the first one. The second one I'd say is knowing what you want. So knowing your goals, knowing what you want your money to do, it's much simpler to focus on accomplishing those goals once you know what you're actually trying to accomplish. I meet with clients all the time. We sit down and say, okay, 10 years from now, what would you have told yourself today and they kind of just look at me like I don't really have a goal with this money. So if you want to retire at 62 and spend X amount each month in retirement, we can build a financial plan to get you there, right. But if it's just, oh yeah, I just want to make as much money as I can, it's like, well, it doesn't get us really anywhere. So it's really knowing what you want. We help clients with this every single day.

Speaker 3:

There's a lot of times that we get a husband and wife sit down and they haven't had this conversation. Sometimes the husband will say something and the wife will say I've never heard you say that before. Or one spouse will say something and the other spouse says I didn't know, you felt that way about retirement or spending. It's kind of like with a counselor. It makes you sit down and go over. You know, talking about money that isn't the most sexy topic to talk about on Friday night at dinner. So it's having those conversations and you know, hey, how do you see our finances from, you know, 10 years from now? So we kind of bring up those kinds of conversations that in that same vein, my wife is a personal trainer, and so if she has a new client come to her.

Speaker 3:

You know her first question is you know, what do you want to accomplish with your fitness goals? Right? And is it you want to lose weight, or do you want to be stronger, or you want to be able to play with your grandchildren 20 years from now? She has to know what your goals are before she can able to write a fitness plan and nutrition and all that. So financial planning is kind of the same way. You just have to know what your goals are.

Speaker 3:

The third one I would say is knowing how much risk to take, and it doesn't just mean with your investments, it means in life, it means, okay, cody, you told me how much cash is a big deal. But how much cash? Well, it depends on how much risk you're willing to take, right? Knowing the risk will help you prevent 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, especially when it comes to approaching retirement, knowing your risk level is a big question, right? And we get that question all the time. Should I be more aggressive with my investments? Should I be more conservative with my investments? And it's a big question to ask.

Speaker 3:

We use a bucket strategy, so we want you to have different dollar values in three different buckets, right? So if you are two to five years from retirement, we want you to have these three buckets One of them being about two to three years of income, set aside in a conservative portfolio, just in case the stock market comes down. You have 24 to 36 months of income just sitting right there. It prevents you from making rash decisions and selling your long-term investments for a short-term need, like we were talking about earlier. So that's the first bucket. Second bucket kind of the same vein, about two to three years of income, but a little bit more modest investments, a little bit more aggressive. You can still touch them if you needed to, if you still need to access them. They're not quite as conservative, but it's not stock market exposure and up and down, and up and down, and then the rest of your portfolio.

Speaker 3:

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 outpace inflation cost of living. That money has to grow for your future down the road if you have a long-term care need or anything like that.

Speaker 3:

So, real life example if you have a million dollars in your portfolio and you need to spend about $6,000 a month, the math would come out. We want you to have about 120 to $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 and then another $120,000 to $170,000 in a modest portfolio for a little bit of growth, but still some conservative nature, and then the remaining portion, whatever the math ends up being $500,000 to $700,000 for that growth. Right, that's going to go up, it's going to go down, it's going to go up, it's going to do what it's going to do.

Speaker 3:

But once again, that's for 2035, not 2025, right, and so that makes you feel like you don't just have $1 million invested. You're watching it go up and go down and have a silo view of your money and know that, no matter what, I'm going to be okay because I have conservative investments and liquidity right here for me. So, once again, that's three components I could probably name 20 of them, right, but those are 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 life insurance, that's a big one. Making sure your estate plan is in order and solid so your legacy lives on, that's a big one, right. So there's other topics, for sure, but those are three big ones that we see quite frequently.

Speaker 2:

Cody, we'll catch you on the next episode. Have a fantastic rest of your day.

Speaker 3:

You too, thanks, sophia.

Speaker 1:

Thanks for joining us on the Steadfast Wealth Planning Podcast. Ready to take the next step in your financial journey, visit steadfastwealthplanningcom for a complimentary consultation or call 469-606-2040. Smart planning, christian values, a life well lived. We'll see you next time.