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Financial Freedom Is Merely Organized Common Sense
More About “What Is Financial Planning For?”
What is it for is an interesting question about almost anything. The financial planning version article is here. The idea for financial planning is basically connect up what you want, with what you have to get it with and the tools available to make the whole thing efficient. You probably need help with the tools.
There is a problem in doing a financial plan that many people fall prey to. Parts of them at least, have a shelf life. Done once, done forever is not possible.
The idea of a plan is to know the things you want, when you want them, and who is involved. Match these with your resources and the tools and methods available to achieve your goals. The plan you made five years ago may still be close but it will not be ideal for a few reasons.
None of us have static lives.
- Your wants may have changed
- Your resources may have changed
- Your time horizon is different
- There may be more or fewer people involved.
On the other side of the equation, products, laws and techniques will have changed. Even the application of unchanged product will be different. 10-year renewable term is a great idea for a young person. Pretty weak for a retiree. Your needs evolve and it is really just a question of when you adapt product to them. Similarly, risk profile moves. Older people usually prefer investments that are predictable, younger people like growth more than predictability.
Financial plans work if you adapt a 3 R approach. Record, review and revise. If you don’t know what is happening, you will have trouble adapting. Adaptation is the part of planning that provides value.
Think of your plan as a template. What you expect to happen, not what will happen. As the actual result varies, you will be able to notice easily and then decide how to adapt. That is much like a business comparing actual to budget. Some things are wrong because the budget is wrong. Others are wrong because the world changed.
It is baffling how many people think their financial plan is durable. It is not going to last because it is a theoretical look at your circumstances and the world at a point in time. Some of the best planning is done by the military and their theorists have known for a long time how plans end up.
“No plan survives first contact with the main body of the enemy force.” Helmut Von Moltke the Elder
Similarly your plan will not last long in the real world.
Sun Tzu pointed out that success required you to know two things. Everything you can learn about the enemy and everything about yourself. In a financial plan, the enemy is the mostly unknown outside world. We are each the protagonist, but few of us work through who we are and what we want in enough detail to make it useful.
Seth Godin recently said this:
A ten-year plan is absurd. Impossible, not particularly worth wasting time on. On the other hand, a ten-year commitment is precisely what’s required if you want to be sure to make an impact.
You will benefit from the services of a guide. Advisors spend their time and effort in your outside world. They can help you clarify your goals. They can help you stay on track by recording information and helping you revise things that can improve. There is a price to pay and a benefit to be received. Paying nothing frequently costs more.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. don@moneyfyi.com 866-285-7772
moneyFYI 
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IQBAL AHMED KHAN
Thank you