The Dangers of Hard Work with No Financial Plan

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Financial Plan

I come from a long line of hard workers.  Nearly everyone in my family, especially my dad’s side, has an incredible work ethic.  You’d never be able to call them lazy by any stretch of the imagination. They’re always on the go, and they’re the type of people you can count on when you need help.

HOWEVER, most of them are dead broke. Most are saddled with large debt payments of all kinds, and minimal to non-existent savings accounts. They live paycheck-to-paycheck, and always have, despite the fact that most of them have always worked well beyond 40 hours a week.

How can they be so diligent in their work ethic and yet still struggle for money? Simple:  They have no financial plan.

What is a Personal Financial Plan?


A personal financial plan is different things to different people. In a nutshell, a financial plan is a map or a pathway for your money. How do you get a financial plan?  It’s simple, really.

You might identify with the above types of people. We did for years.  Both Rick and I have always worked, and worked hard.

Even after I became a stay-at-home mom in 2003, I still worked, almost always, at some type of side hustle. Yet we were always broke, and still managed to end up with a massive amount of debt, and it wasn’t due to lavish spending.

It was because we had no financial plan.

Now, before you write me off, know that I am not talking about the type of financial plan you get from the financial advisor down the street.  I’m talking about your own personal financial plan.

Three Steps to Creating Your Personal Financial Plan


First, you must determine your monetary goals.   Short, medium, and long-range goals. Some ideas? A short-term goal might be to pay off your credit card debt within six months, or save up the money for your kid’s braces in six months.

A medium-range goal might be to save cash for a new-to-you car or to pay off a home equity line that’s been hanging over your head. A long-term goal might be to have enough money in your retirement account that you can retire early, pay off your mortgage early, or accumulate enough passive income so that you can quit your day job.

The point is to make sure you have those goals set, and write them down, displaying them prominently, so that you use that list in order to make spending decisions.

The Second part of your personal financial plan is to choose to spend accordingly, prioritizing your income. This means that when you make spending decisions, you make them based on whether or not they are in line with your short, medium and long-term goals.

This doesn’t mean that you’re not allowed to have fun anymore – it just means that maybe, instead of ordering pizza three times a week, you order out once a week, putting the extra funds toward your goals. Make sense? It’s not about not having fun, it’s about utilizing your money in the way that’s most important, and most beneficial, to you and/or your family.

Third, and equally as important, you must revisit your goals on a monthly basis.  Why?

A) To determine if you are on track to meet those goals

B) To assess whether or not those goals have been met/need to be changed.

If we skip step A, we run the risk of falling back into life with no financial plan. Checking regularly to make sure we’re on track with our plan helps us to see if we need to reign in our spending or make other changes so that we don’t abandon or fail at our plan.

If we skip step B, we run the risk of working for goals that no longer apply or are important to our lives, which will make it easier to get off track.

People with no money and loads of debt often come from long lines of people with no money and loads of debt.  Dave Ramsey calls this your “family tree”.

Poor Money Management Can Be Generational


When we first came to the realization that we were carrying a dangerous amount of debt, I thought for a long time about how all of our family members also shared lots of these same struggles, for several generations back. Then we decided that we didn’t want to pass that same heritage down to our own kids and grandkids, so we chose to be different – we chose to make, and stick to, our own personal financial plan, so that money was under our control, instead of the other way around.

You see, all of the hard work in the world, and all of the money in the world, won’t do you a darn bit of good if you have no financial plan.  The money will disappear out of your hands like water from a faucet, and you’ll be stuck just as broke as when you first started earning money.

Don’t let that happen to you.  Don’t let all of your hard work be for naught because you have no plan.  Make a purpose for your money and your life today.


How do you spend your money? Do you evaluate purchase decisions against your financial plan? Does your family?


Photo courtesy of: Kevin Wong

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Laurie is a wife, mother to 4, and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.


  • I’m like you Laurie- I come from a long line of people who are hard workers but broke. My husband grew up in a family with a totally different mindset- also hard workers, but very goal-oriented and good with money. I am grateful that I met him, because I think I was kind of on the path of most of the rest of my family members until I met my husband and realized that there could be a different money path in life! Great post.

  • One of my father’s brothers was working as an engineer in one of the company but I remember almost every month he always owed money from my father because he was short of his budget. And my father told me it was because of my uncle’s bad lifestyle that’s why he was living paycheck to paycheck.

  • Laurie, I agree that poor money management is passed from generation to generation. However I would rather describe it as a “learned behavior”. Children usually imitate the behavior or their parents, good or bad, by following their example. I am a firm believe that financial education can help others break the “poor money management” cycle like you decided to do, great job!

    In addition, I have always described financial planning as the process in which we accomplish our life’s goals and objectives through sound financial management. The accumulation of wealth should not be the objective of a financial plan, but living an awesome life!

    • Hi Jonathan, I completely agree with you about it being a learned behavior. As kids, we never saw any people but broke people, so we always just assumed that some were rich, some were poor, and that we had “fallen” by lot, so to speak, into the “poor” or “broke” bunch. It wasn’t until years later, after I’d read The Millionaire Next Door, that I understood that we had a choice in the matter. Love what you said about the goal of a financial plan being to live an awesome life – right on! 🙂

  • This is such an important lesson. It makes me think of all the athletes who made millions and then went bankrupt after their retirement. You need to have a plan for what you will do with your money, even though it’s harder than ever to find time to do that when you are likely working long hours and are focused on your work and not the financial result of your work.

  • I like the re-assessing your goals to see if you are on track. It’s one thing to make a goal and another to actually execute it!

  • I couldn’t agree more Laurie. I think that not having a plan and not doing things purposefully is what gets a lot of people into trouble, no matter how much money they make. The people who get what they want out of life are the ones who take purposeful steps to get there.

  • I totally agree that poor money management can be generational. I know so many people who work hard and have nothing to show it, just like their parents. Fortunately, change can be made!

  • The Warrior says:

    I am the poster child for this example.

    My parents worked hard but not smart. They didn’t manage or handle money well. They overspent and then overspent some more. They didn’t follow a budget. They turned a blind eye to all financial problems they had.

    All they really had to do early on was stop, breathe, and start addressing their financial problems with a slim budget and a plan. The plan would have been extremely helpful.

    I love my parents to death, but their financial practices not only made their life more difficult today, but also more difficult for me to learn how to manage money.

    The Warrior

  • People certainly follow what they know, even if it never really made their family happy. My parents never got much into debt, but never talked to us about money either. I think if you do make a plan, it’s very important to share it with your kids so they know how to make the right financial decisions for themselves. I think anyone can get off track, but if that knowledge is there, at least you can build on that to turn things around.

  • It’s really important to match hard work with good financial sense, because no matter how hard we work, if our only source of income is our salary, we will not be able to make our lives easier and better.

  • Laurie, it’s great that you stopped poor money management and will be passing on good money managing skills to your kids. I was fortunate that my parents were hard-working and good with money and I followed in their footsteps. Their frugal ways have been ingrained in my head. My wife’s parents were also very hard-working and frugal…which is the way my wife is…so we’re a good fit.

  • Really great article! I come from a family with divided opinion on financial planning: my dad was a frugal type of guy who managed to saved in a personal account a big sum of money, while my mom couldn’t understand the notion of financial responsibility. Up to this day my mother usually ends up with no money left to spend before her new paycheck, even though she earns more than the average wage here in Romania and about as much as we (my wife, my newborn and I) need every month. For some reason, she never has enough, she never has a plan, she always buys based on an impulse and never plans ahead. Unfortunately, that was passed onto me and I had great difficulty to be more responsible with our finances. Fortunately, I managed to do it and even though I have my weak moment, we’re doing pretty well overall.

  • Interesting, I know quite a few workaholics that I’m not sure if they’re in debt or not, but they certainly have poor money habits. I wonder if there’s some relation. But I couldn’t agree with you more Laurie. Everyone needs a plan and it’s important to have goals – something that you’re working towards – and not just working for the sake of working.

  • Hi there. We spend our money wisely that’s for certain. No big purchase is made without first evaluating the cost and the alternatives available. Spending decisions are always made as a couple. Control of the financials is gearing us towards where we want to be. If it means analysing where we spend our money and changing our habits then so be it. You can’t expect to get to your goal without putting in some hard work.

    • Hey, Mr. CBB! You guys are the epitome of how the financial life turns out if there’s a plan. I love reading your reports each month, because it’s so evident that you have carefully planned out your financial life, and your end of month positive results show that it works!

  • I’ve been bad about revisiting and resetting/adjusting my goals. November was the first time since the new year that I checked in on my resolutions and started setting some shorter term goals. It really does make a difference.

  • Jim says:

    Great post Laurie, well said about poor habits being generational, you gotta break the cycle. Its like my family, we come from a long line of alcoholics and my mother was the first to have the courage to get sober, and by doing so she broke the cycle. From there she gained an understanding of the disease and a was able to educate us on the pitfalls. As a result, myself and my siblings have never really had a problem with alcohol. So kudos to you for being adamant about breaking your generational cycle, your kids will be much better off for it!!

  • I absolutely believe money woes can be generational. We do what we observe. Our financial literacy has eroded over the years and it shows. It scares me at times to think of all the poor money choices kids today have observed and internalized. On the flip side, I am so pleased to see the always growing community of people who want to get their financial lives together and teach their children how to avoid their mistakes. Everyone needs goals. They really help me make smart choices, knowing how it will impact my ability to achieve the things that matter most to me. Without that barometer, it’s very easy to spend mindlessly.

  • Great post 🙂

    Financial plans are essential, and I think I’ve gone planning crazy. I’m always looking at my plans and as you’ve said I’ve been setting short, medium and long term goals. They really do keep me motivated.

    My family are very bad with their money and none of them have savings so they end up borrowing money they can’t pay back. The worst part is that I live under the same roof as them so it makes things difficult at times as they don’t have the same mindset.

  • You can be the hardest worker in the world, and even make a ton of money….but you cannot outearn bad spending habits. 🙂

  • Yeah I absolutely do now! I’ve come too far to just blow all of my hard work. I only wish I had done it sooner.

  • E.M. says:

    Wow Laurie, you hit the nail on the head! This makes perfect sense for my family as well. My parents are hard workers, and don’t spend lavishly, but I don’t think they ever stopped to think what it was they were working for/toward. Sure, they were in debt, but I don’t think they truly believed they could pay it all off, which resulted in having no motivation. They went on and on working jobs they didn’t like to pay the bills. When push came to shove, though, they sold their house and fulfilled their dream of retiring by moving somewhere cheaper – because they had finally developed an end-game plan!

  • Jacob says:

    “choose to spend accordingly, prioritizing your income”

    THIS ^

    The key to a good financial plan is one that’s based around YOUR goals, and funnels your money toward those things, and away from other things. I think of it as setting up bumper lanes for your spending. You’re always rolling toward the goal, but there’s some flexibility in the middle 🙂

  • Dear Debt says:

    I am trying to work smarter, not harder! I’ve realized I’ve worked so hard for the last 10 years with little to show for it, but some fancy pieces of paper. My mom works very hard but doesn’t have much to show for it. It can definitely be generational and I am trying to start on the right path for my financial future.

    • Good for you, Melanie! This is what we’re doing too. It’s difficult to turn over a new leaf after years and years of just throwing money away on whatever suits your fancy and having no financial plan, but I know we’ll both be glad we changed our ways in the long run. 🙂

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