What if we told you that the best way to start making a financial plan is to start making some guesses? Or that the hidden truth about personal finance is that it is much more about the personal than the financial? The financial matters, of course, but too many people become paralyzed with fear of not knowing enough when even the best financial experts can't predict market success.

Enter The One-Page Financial Plan: A Simple Way to be Smart About Your Money, by financial advisor and NY Times columnist Carl Richards. In this new book, Richards shares the one question that should be at the heart of your personal finance strategy: "Why is money important to me?" The answer is different for everyone, but it's a solid foundation for making a long-term plan.

Using his accessible, emotionally-intelligent sketches and common-sense advice, Richards answers all of the questions he's asked most commonly, such as:

• How much should I really save?
• What should I think about insurance?
• How can I find a real financial advisor?

The One Page Financial Plan helps demystify the planning process so readers can figure out where they stand on key financial issues and where they want to go, in order to narrow the gap between the two.

About the Author

Carl Richards is a certified financial planner and a columnist for the New York Times, where he has a weekly "Sketch Guy" column. He is also a columnist for Morningstar Magazine and a contributor to Yahoo Finance. Richards is a popular keynote speaker and is the Director of Investor Education for the BAM ALLIANCE. Visit www.onepagefinancialplan.com.

Q&A with Carl Richards

1.     At The New York Times you're known as "The Sketch Guy." Why do you think the sketches are so helpful when discussing personal finance?

There's a prominent belief that anything that has to do with money has to be complex. It's an unfortunate consequence of the information age we live in. There's more and more personal finance and investment information out there, and people have a hard time discerning what's actually useful in terms of making a decision. My goal with the sketches is to help people understand the decision they're making by condensing the problem to a single point. I think the combination of minimalism, a little humor, and the simple tools I use (a sharpie and piece of cardstock) gives these issues an air of approachability.

2.     The One-Page Financial Plan is unlike most books about personal finance in that it deals with our anxieties about planning as much as the plans themselves. What compelled you to write it?

My experience, both personally and professionally, has taught me that it's the emotional issues surrounding financial planning that are most important. The goal of this book was to give people a map of this complex emotional landscape so they can build that solid foundation to address other important issues as well. But until we recognize and establish our values and goals, it doesn't do much good to address those other issues.

3.     Describe the relationship between our emotions and how we handle our money.

Most of us expect money to be about math. We know 2 + 2 always equals 4. It doesn't matter how scared, or excited, how nervous, or fearful I am; it always equals 4. We expect money to be the same way. But because money is a tool for us to accomplish the things that are most important to us, it's emotional. We're dealing with our fears and our worries, our greatest dreams and hopes. We should be prepared for those conversations to be emotional.

4.     You write in-depth about the uniqueness of everyone's financial situation and goals. Are there any generalizations that can be made when personal finance is so personal?

If we all just operated on some of the general rules of thumb (save 10% of your income, buy low cost mutual funds and hold onto them for a long time, etc.), we would probably be better off than 99% of our neighbors. But it is important to understand that the people who came up with those rules don't know you. We all need to take enough ownership of our own situation to apply those guidelines to our own situation. I think general rules of thumb are really just a starting place.

5.     What is the most common misunderstanding about investing for the average American family?

Not recognizing how irrational we can behave when it comes to our investments. One of the most common mistakes we make is buying high and selling low—exactly the opposite of what we should do. When the market's doing well, our neighbors are excited, and news is good on television, we feel like buying. Then when the market goes down, everybody's scared. Separate the emotion from investing. Warren Buffet said it best: "Be fearful when others are greedy, and greedy when others are fearful." And while that sounds simple, it's really challenging because it goes against our impulse to do whatever the group is doing.

6.     What's the best approach to having conversation about money with your spouse or kids?

The first step is to actually start talking about money with your family. Use whatever approach works for you, but commit to the process of having these conversations. If your kids ask questions, don't brush them off. Start involving them with the family finances. Secondly, understand that these conversations are going to be emotional, especially with a spouse or partner.  But stay committed. When things get emotional, learn to say, "Time out! We'll continue this tomorrow, but it's going to be OK because we're committed to having this discussion."

7.     Tracking spending habits can be tedious and overwhelming. What would you suggest for people who struggle with budgeting?

I love the old saying, "The calendar and the check book never lie." The goal of tracking your spending is to provide awareness. We're not doing it as a stick to beat ourselves up with. We're doing it so that we can make better, more informed, and more aligned decisions toward that goal to be happy. We need to learn to say in a nonjudgmental way, "Oh that's interesting, I didn't know I spent that much there." 

8.     What do you mean when you suggest hiring a "Real Financial Advisor"?

A "Real Financial Advisor" is somebody who takes the time to thoroughly diagnose before they prescribe. It's a professional who's really good at what they do, who actually listens to you. We want somebody that knows our goals and our values really well standing between us and "The Big Mistake", so that when we're thinking about doing something irrational, they can remind us of what we said when we were thinking clearly.

9.     What is the 72-hour rule, and why did you instate it?

It first happened for me in the early days of Amazon Prime. Amazon Prime made it so easy for me to satisfy instant gratification when it came to books. I would read someone's recommendation, quickly buy the book, and two days later it would be at my house. I realized one day that I had a lot of unread books; books that maybe I shouldn't have really purchased because I didn't need them or have the time to read them. So I made a rule: any new book I want to buy has to sit in my shopping cart for 72 hours. I was shocked after a couple weeks how many books just stayed in my shopping cart. I didn't go back 72 hours later and complete the purchase. I just left them in my shopping cart. This rule really curbed my impulsive online shopping.

10.  After I've created my One-Page Financial Plan, how can I avoid common budgeting, saving, and investing pitfalls?

Planning is a process. I'm asking you to commit to the continuous process of financial planning, not the actual document. When things change (which they will), make changes accordingly, adapt, and reevaluate. Your One-Page Financial Plan should just act as a touchstone that you revisit when you have to make other decisions or when things change. Reevaluate, reevaluate, reevaluate.