All good plans cover four parts:
- Standards I wish to use to govern my life
- Strategic goals I wish to achieve.
- Tactics that will help me achieve my strategic goals
- Logistics, being how I implement tactics
Many people think tactics and strategy are the same thing. Despite what advertisers would have you think, they are not . For example, there is no such thing as a pension strategy. There are pension plan tactics that help achieve the strategic goal of providing retirement income. The connector between the two is the answer to the “How?” question.
“How?” is goal seeking. Goal seeking comes in five parts:
- What specifically, and as narrowly defined as possible, am I trying to achieve? Something like, pay off $25,000 on my mortgage by noon on the 10th of December 2022.
- What specific resources will I use to achieve that goal? $300 per month plus an interest saving will be close. I will adjust for a raise I may get in the interim.
- Who will be responsible for doing it? Could be me, my spouse or maybe a pre-authorized debit at the bank.
- How will I monitor achievement? Could be a semi-annual review of the mortgage statements. In a shorter time frame, there is little to do but be sure the bank cleared the extra payment.
- Who will check that it is done? Like a teacher who checks homework. Things that will be investigated are done better than things that are not. For some tactics, an external advisor can be responsible for the 3Rs of implementing. Record Review Revise.
- What conditions will force revisions?
The advantage of narrow and specific goals is that they are easy to understand and easy to check. They sometimes are too ambitious though and you should always retain the ability to modify. If you lose your job, other rules will apply. Specific tactical goals that are impossible, show up quickly and people learn about how their resources and goals fit together.
Modifying strategic goals based on different parameters. They are incapable of a 3R review.
Financial planning is not the most important thing in your life. There are many strategic goals that are unrelated to finance. Things like raise healthy and productive children. Be a good spouse. Be mentally and physically healthy. Contribute to your community.
Good financial planning will not automatically achieve those goals for you, but weak financial planning will make it more difficult.
As in personnel management, money is a dysfunctional motivator. More than needed will not help much, but too little will harm.
The purpose of planning is to balance your life across time based on your preferred lifestyle, available resources, prevailing risks, and your strategic vision.It is about assigning meaning to your financial life.
Tactical methods are tools and techniques. Choosing tools wisely is part of planning and you cannot do that until you know what they are trying to achieve.
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. firstname.lastname@example.org 866-285-7772