Broker Check
Financial Plan Case Study: Creating a Financial System is a Critical First Step

Financial Plan Case Study: Creating a Financial System is a Critical First Step

January 26, 2024

“Goals are good for setting a direction, but systems are best for making progress.” 

– James Clear in Atomic Habits


As January draws to a close, your 2024 goals are probably very clear, but your path to achieve them may be a little more hazy. One of the primary reasons that New Year's resolutions fall by the wayside so quickly is that people know what they want to achieve but they don’t know how. That makes sense - if they knew how to achieve the goal, they might have done so already. 

This is especially true with financial goals - despite the enormous amount of information available, many people don't know how to implement their own plan that helps them achieve their own goals. Layering on the media’s tendency to turn today’s news into a forecast of negative events to come in the financial markets, the state of the economy, and quite frankly the state of the nation, it's no wonder that so many people need guidance to be able to put a clear plan in place to achieve their goals.

This is, in fact, exactly what our firm is built for - our goal is to help smart individuals who want to be good stewards of their money to be confident in their financial decision-making so they can use their money to have the lives they want. 

In a time where there's so many distractions, it's easy to get distracted. James Clear talks about this in his book, Atomic Habits, and in this short article. He outlines what we all know to be true: goals don't become a reality without a system. This is why our firm leads our client relationships with our financial planning process - it allows us to build the scaffolding our clients need to not only achieve their goals but to be able to measure their progress along the way. 

For example, a client family may come to us with some basic financial groundwork: emergency funds, life insurance policies, and contributions into a traditional 401(k). They have checked all of the basic boxes that they have been taught as financial rules of thumb. But do any of their financial decisions actually achieve their own personal goals? Let's break it down.

Emergency funds: These are cash reserves you would rely on if you had an unexpected event. But the possibility of unexpected events in your life may be very different from the possibility of unexpected events in someone else's life. A business owner with teenage children may have a higher level of risk of unexpected events than a retired person with fully grown children and grandchildren.

Life Insurance: The majority of our clients don't understand either their actual insurance needs or the policies they already own when they first come to us. They may have “2x my salary” in coverage, or even an insurance policy that was sold to them years ago that they don't understand, and yet still pay for. But without assessing the client’s actual risk, it's impossible to know if those policies even make sense. A properly designed financial plan assesses that risk very specifically per family and dictates not just the amount of insurance but the type of insurance that fits the need.

401(k) plans: Americans have been taught, with good reason, to max out their 401(k) plans - most Americans don't save enough for retirement, so this default recommendation is meant to encourage people to prepare properly. However, it may not be right for all households. If you have other large financial priorities such as college tuition, business costs, expenses for the care of older family members, or even other investment opportunities such as private investments, it may not make sense to max out your 401(k). In a future case study, we will talk more about some of these options and also how and when you may fund the Roth side of your retirement. 

So how do you create a financial system? 

Start with our Pick One philosophy - instead of trying to tackle all of your goals at once, take one step at a time and identify the primary financial goal you want to achieve first. Then outline not only the steps you need to take but also how you will measure those steps. Let’s use a simple example: emergency funds for a family with two working parents (one a corporate employee, one a business owner), two teenagers, and aging parents. 

Pick One Goal: You want to have enough emergency funds.

Confident Decision: You plan to build cash reserves to the level that any emergency that you can realistically imagine in your life could be handled with those funds. This will reduce your stress and keep you from using credit cards or a line of credit for these expenses.

Measurement: Make a list of the emergencies that may come up for your family, including a job loss (for the corporate employee) or downturn in business income (for the business owner). Compare those expenses to your current emergency funds. Create a calendar with deadlines to save to achieve this goal, and a list of expenses you will forego to accumulate these funds. 

Accountability: A monthly review of the funds accumulated. And a review of expenses you will give up if you are not meeting your goals. Also, a date that you will make a more specific plan to reduce expenses if you are not accumulating funds at the pace you  planned. 

Accumulating emergency funds is a finite example that is simple to understand. Most financial decisions are more complex and require more “if/then” analysis so that goals are properly prioritized and resources are directed to the right places. Priorities will be different for each person, and sometimes within families. They will also get shuffled year by year with life changes, so you should expect this to be an iterative process. 

Now that we have laid the groundwork for how to make a financial decision, we will dive into more specific case studies throughout the year. You should have started receiving your tax documents for 2023, and we will start with some tax strategies in our next case study article - stay tuned!

If you received this article as a forward from a friend and want to join our community, or if you need help with your financial scaffolding, drop us a note at

Debra Brennan Tagg is a CERTIFIED FINANCIAL PLANNER™ Professional and the creator of the DBT360 Financial Plan, a proprietary program that helps her clients prioritize their goals, leverage their resources, and address their risks. She is the president of BFS Advisory Group and teaches the public and the financial services industry about the importance of values-based financial planning and investor education.