Seth Godin made an interesting point recently. “Our culture is organized around transactions, but they’re a distraction” Starting a business is not as important as running it. Preparing for your job and flourishing in it, are more important than getting the job. Marriage is more important than the wedding.
I know that planning and executing a brilliant wedding is very difficult and expensive. The memory lasts and that is valuable, but the marriage is what really matters.
So it is with a financial plan.
Creating a financial plan is a bit complicated and requires some skill, but it is mostly not important. It is a transition to a new and better way of organizing one’s life. Once you realize that it begins to make sense.
The important parts of financial planning happen after the plan is complete.
The 3 Rs.
Record. Keep track of how you are doing and what you are doing. Good decisions rely on competent information. The next step cannot be accomplished without it.
Review. You will learn from what went wrong, or more right than you thought. That is why you need the template. The budget for year to year things. Don’t spend much time on things that worked. Understand the variances. It is okay to have variances. You will learn from them. Understand why they occur. Wrong estimate is the most common reason.
Revise. It is not okay to keep making the same mistakes. Revision may be simple, but you need the cue to look for the better way. Once you understand the problem/opportunity. Begin again with a new template.
It is what you do after the plan is finished that will make a success or failure of your efforts.
All financial planning is about using scarce resources better. Planning helps people reach goals that are otherwise unattainable. It helps them do it more easily or sooner or cheaper. It breaks into three parts. Strategy, know the answers to “W” questions. What, When, Who, What with, and Where. Why gives depth to the what question and provides motivation.
A good strategic view isolates purpose and allows comparison of the answers to the tactical “How” questions. That often requires the value of specialists who can help with technique. Specialists also help with Logistics – actually executing the parts.
Good helpers can make your life much easier. Advisors can be your conscience and your coach. They can help you avoid the most serious impediment to your success – your emotions. They can be a sounding board for changes you might consider. They can be your cheerleader. They have access to information that you could need.
Marriage is more important than wedding and operating a financial plan is more important than creating a perfect one. Good plans evolve. Pay attention to the process and do not get caught up in the event that signifies the change.
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. email@example.com 866-285-7772