9 Characteristics of an Ideal Financial Plan

Effective financial planning isn’t just about growing wealth. It’s about creating a comprehensive system that works for you both now and in the future.

There are nine essential characteristics of an ideal financial plan. These are detailed in the bestselling book What Would the Rockefellers Do? by Garrett Gunderson. Click here to get your free copy now.

The ideal financial plan gives you the following benefits:

1. Systematic flow of money into the plan.
2. Return on the money
3. Availability of funds when needed (liquidity).
4. Minimum taxes during accumulation.
5. Minimum taxes on distribution.
6. Ease of distribution.
7. Contingencies for death, disability, and emergencies.
8. Minimize the loss of money.
9. Flexibility to change the plan.

Let’s discuss each of these:

1. Systematic Flow of Money into the Plan

An effective financial plan requires consistent and systematic contributions. This creates momentum and ensures your financial strategy remains robust and sustainable over the long term.

Automatic saving is critical. This means setting up regular transfers into your financial accounts before you have a chance to spend that money ensures disciplined growth.

The wealthy approach this systematically. They often set up automatic transfers on payday to ensure their wealth-building strategy takes priority over discretionary spending.

This is why we encourage our clients to use our proprietary cash flow management software.

2. Return on the Money

Your financial plan should generate meaningful returns on your capital. This doesn’t necessarily mean chasing the highest possible returns. But it does mean your money should be working for you consistently.

The Rockefeller Method emphasizes that return is about more than just percentages. It’s about having your money produce predictable results while keeping risk manageable.

This is why we emphasize using properly structured optimally funded whole life insurance at the center of your plan. It combines guaranteed minimum returns with dividend potential. This creates reliable growth without excessive volatility.

3. Availability of Funds When Needed

The wealthy understand that true wealth isn’t just about accumulation—it’s about having options. Having access to money through vehicles like cash value life insurance allows you to seize opportunities. This is because you can do it without going through extensive loan applications or facing uncertain approval processes.

4. Minimum Taxes During Accumulation

Tax efficiency during the wealth-building phase is essential. Every dollar lost to unnecessary taxation is a dollar that can’t compound for your future.

The Rockefeller Method leverages financial structures that allow for tax-advantaged growth. When properly structured, optimally funded whole life insurance allow funds to grow without the drag of annual income taxation. This maximizes the power of compound growth.

5. Minimum Taxes on Distribution

Just as important as tax efficiency during accumulation is minimizing taxes when you access or distribute your money. An ideal financial plan includes strategies for tax-efficient withdrawals and transfers.

This is a key advantage of the Rockefeller Method, which uses life insurance and trusts to create tax-advantaged distributions and wealth transfers to heirs. This potentially saves millions in taxes over generations.

6. Ease of Distribution

The Rockefeller Method emphasizes financial vehicles that provide flexibility in how and when you access your money. Retirement accounts come with age-based penalties or complex withdrawal rules. But properly structured optimally funded whole life insurance gives you control over your distributions.

7. Contingencies for Death, Disability, and Emergencies

Perhaps the most critical aspect of a financial plan is having protection against unforeseen events. Without this protection, even the best investment strategy can be derailed by unexpected life circumstances.

The Rockefeller Method places high importance on risk transfer through appropriate insurance coverage. This includes not just death benefits but also living benefits. Things like disability protection and access to cash during emergencies. These ensure that your family remains financially secure regardless of circumstances.

8. Minimize the Loss of Money

The wealthy focus on capital preservation first, then growth. The Rockefeller Method utilizes financial vehicles with guaranteed principal protection. This ensures that market volatility doesn’t permanently destroy your wealth.

9. Flexibility to Change the Plan

The Rockefeller Method emphasizes creating flexible financial structures that can evolve with you. This allows you to adjust your strategy as your goals change, tax laws shift, or economic conditions transform. And you can do this without having to completely rebuild your financial foundation.

Rules for Implementing the Ideal Financial Plan

Here are the rules for implementing the ideal financial plan:

1. Build your Cash Flow Structure: Create a system that prioritizes saving first, not last. This helps you track money accurately and make better financial decisions while preventing lifestyle creep.
2. Save a minimum of 15% of each paycheck: Failing to save at least 15% of your income leaves you vulnerable to wealth-eroding factors.
3. Maintain 3-12 months of liquid savings: Keep between three months of expenses and up to 12 months of income in liquid savings to protect yourself during emergencies.
4. Maximize protection in all areas: Protect against liability, disability, and death to maximize your chances of reaching your financial potential.
5. Eliminate, Reduce, or Restructure Debt: Bad debt can destroy your financial model. Work toward eliminating it or restructuring it into good debt.
6. Avoid Compounding Taxable Interest: Compounding taxable interest creates compound taxation that erodes wealth. Transfer earned interest to your income reservoir.
7. Contribute to Retirement Accounts: After implementing rules 3-5, contribute to retirement accounts up to employer match but no more than half your gross annual savings rate.
8. Become an investor: Invest in assets that produce income taxed more efficiently than your paycheck to maximize the velocity and efficiency of your dollars.
9. Maintain, Balance, and Monitor Your Financial Model: Periodically rebalance your financial model to adjust for changing life circumstances and economic conditions.

When properly implemented, these characteristics and rules create a financial plan designed to organize your financial life. They simplify your financial decision-making and make each dollar work efficiently. They give you peace of mind. They increase protection against risk. They provide greater retirement income and enable you to leave a meaningful legacy.

To learn more, get your free copy of What Would the Rockefellers Do? now.