In mathematics the most desired description of the proof of a theorem is, “It is elegant.” The same description should be true of your financial plan.

Elegance is not a thing by itself, it is a collection of things that work together to provide the result:

  1. It can be expressed simply
  2. It uses refined tools
  3. The solution includes insight into why it must be so.
  4. It is efficient
  5. It is durable
  6. It can be part of the solution to another problem.

A financial plan is part of a person’s life plan. All life plans have limits – Resources,  and financial planning is how you get the most from them.

Financial plans become efficient when they achieve life plan purposes with minimum waste. Without a clear plan, many things look possible or even important and turn out to have been useless. Starting late wastes one of the two key resources – time.

Financial plans become efficient by using techniques and tools that have developed over time. Life insurance, for example, is a tool that mitigates the financial risk of dying at an inopportune time. Modern insurance is based on ideas that are centuries old, but which uses state of the art calculation and distribution abilities.

Tools are the distilled experience of mankind. Use them.

Long commitment to a plan is difficult. We get bored. When the plan intuitively demonstrates the why it must be so, you have motivation to continue. Why is a powerful motivator. It automatically includes why not. Why not clarifies and helps sustain energy when others suggest your way may fail.

Most of all, it is simple.

Even simple things can be difficult to do. Why make it even harder? Complexity is the enemy. Complexity is a tool used by shoddy advisors who win when they sow an idea and some confusion. Confusion is a costly environment for decision making.

If it is simple, you will be able to explain it to yourself and communicate it to others. It is like an idea attributed to Einstein.

“If you can’t explain it to a six year old, you don’t understand it yourself.”

You can’t start with simple. Great simplicity comes from vast knowledge and experience. Warren Buffett makes investing look easy and after doing it for 75 years,  it should be. He knows things at a barely conscious level that took decades to learn.

Don’t be too ambitious.  Start with learning fundamentals and evolve your plan. Evolved plans always look simple once they have matured. But not often before. 

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

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