Some people are creative geniuses in the kitchen and others are all about the recipe. I fall firmly in the latter camp. As the recipe goes, so goes my cooking. That’s why I’ve been so focused on sharing my recipe for financial success with you over these last few weeks – I know the difference a solid recipe can make. In this, the final installment of the series, I’ll discuss the last ingredient, having an up-to-date financial plan. We’ll review several of the critical components of a useful financial plan and, yes, I will finally share the apple pie recipe that got this whole thing started.
Establish goals. Are you making apple pie or fettuccine alfredo? Without a clear objective, the only thing that’s certain is that you’ll never know if you’ve arrived. For financial goals this means establishing, at a minimum, a dollar amount and a date. Be realistic and create goals that get you fired up. Finances can actually be fun …if you’ve got a plan.
Gather and analyze data. You know where you want to be so now it’s time to take a look at where you currently stand (income, expenses, assets, and liabilities) and start to figure out how to reach those goals. As you put all the data in the hopper, it can be helpful to take advantage of online planning tools or a personal financial planner to help you assess what it all means.
Develop and implement a plan. Once the raw data is in, it’s then time to build an action plan to get you where you want to go. Systematic and detailed strategies to knock down debt, build savings, invest for the future, and protect your family should all be part of your plan. But a plan without action is nothing more than a piece of paper (or some errant electrons). So don’t just create your plan, put it into place by taking action. Remember, it doesn’t have to be complicated or hundreds of pages long, it’s just a clearly defined game plan to get what needs to be done accomplished.
Monitor and update plan. As someone who’s spent the last 20 years helping folks develop and implement financial plans I can say without hesitation (or regret) that a plan is generally obsolete soon after it’s printed. Why? Because life happens in the form of marriage, babies, divorce, moves, transitions, etc. What’s my point? Whenever you have a significant change in your life, it’s time to update your plan to keep it relevant, meaningful, and helpful.
All right, there you have it. With some careful thought, consideration and sometimes, a helping hand, your financial plan can be the roadmap to achieving your goals. I got my roadmap to apple pie making from allrecipes.com. Go there and checkout Grandma Ople’s Apple Pie…add a half teaspoon of cinnamon and you’ll be in pie heaven.
Posts in this series include:
Introduction: A Recipe For Financial Success
Part Two: A Tried and True Money Golden Rule
Part Three: Building A Base: Emergency Funds
Part Four: Save Now For Retirement
Part Five: No Fighting Over Leftovers
Part Six: Tying It All Together (this post)