In fact, Robin Jones of First Command Financial Services cautioned against using generic rules. Financial planning has become more complicated because of increased longevity, rising health care costs, uncertainty about government policies such as Social Security, and more personal responsibility for financial matters. These variables cannot be condensed into a single figure appropriate for everyone.
As Ted McLyman of Apexx Behavioral Financial Group said, "If it were that easy, everybody would be financially well off!"
Will Rogers of Ameriprise Financial Services said a financial plan must be consistent with a client's individual values. That means there is no cookie-cutter plan.
Will Caywood of Fehrman Investment Group also emphasized having a plan. Plans generally start with attainable short-term and long-term goals. These would include retirement, but also much more.
Eric Swierski of Valic Financial Advisors said short-term goals might include vacations and new cars, while long-term goals include life insurance, college education and debt reduction. Having attainable goals makes saving enjoyable, Caywood said.
Once goals have been set, an action plan is needed. It is easy to say "save more, spend less," but as anyone who has tried to lose weight by "exercising more, eating less" knows, you need to know how to save more or spend less. Caywood suggested using a reverse budget, saving the amount needed to reach a goal, then spending what's left.
The vehicle used for saving might involve an alphabet soup of investment options, such as 529 plans, 401(k)s, or MMDAs. These vehicles offer a variety of expected returns.
Jones said most people focus far more on returns, neglecting the time of their investment or the amount they invest.
In fact, Caywood said, studies have found that investor behavior has more to do with accumulated saving than fund performance.
So the main conclusion from our collection of experts is that personal finance is very behavioral. McLyman said, "It's not about the financial stuff; it's all about you."
Simon Medcalfe is a professor at Augusta State University.