Procrastination is not a Plan

Your financial plan should be about more than numbers and money, it should be about life where your finances are simply a collection of resources to be drawn upon or added to. Consequently, you will find the experience much more rewarding if you focus on the life outcomes you desire and use the choice assessment as a means of measuring if those choices are attainable. Whether the assessment is good or bad is simply relative to your own perceptions and overall desires.

Very few of us ever get excited about the idea of building a financial plan because:

  1. ⬥ We don’t believe we are wealthy enough to need one
  2. ⬥ We can’t see the point
  3. ⬥ It’s all numbers and ignores our lives
  4. ⬥ It’s too expensive

Consequently, we choose to put off building our financial for another day. The reality however is, most of us need a plan (regardless of wealth). Building a financial plan must be neither number/data heavy nor expensive, you simply need change how you think about planning. It starts with understanding the objective of your financial plan.

Unless you are in the top 1-2% of wealthy Canadians, your financial plan has 2 key objectives, ensuring you don’t make bad choices that will leave you in financial difficulties and diving you a frame work that brings together the life you want to live with the resources available to you (mainly time & money). Consequently, being wealthy enough not to need one really means being very wealthy.

When you do decide to start, don’t confuse a financial plan with a budget.  A budget is there to help you with your day to day / week to week cash flow and is concerned with the how much of every dollar goes where. If you start your planning process with a budgeting exercise you will find the whole experience painful and will likely stop as quickly as you start. Your financial plan is about the big picture and longer-term projections.  Details are important but you need to start with the big picture refining the details as you go.

You can’t escape the numbers, that is a harsh reality, but the numbers don’t have to be hard. Remember a financial plan is about making projections into the future. Updating account balances and spending habits everyday won’t make your plan any more robust or accurate. If you are building your own model, make sure the basis of your model is sound and captures the complexity of taxes and financial mathematics.  Alternatively, if you are going to use a pre-built platform, use on that not only covers the financial math and taxes, but one which

  1. ⬥ Will help you make guess about the future
  2. ⬥ Is flexible enough to be easily revised
  3. ⬥ Enables you to describe the life you want and not just your money

Better Money Choices is one of those tools.

The final reason most of us shy away from planning, cost. Probably the worst reason of all. Spending several thousand dollars for a financial planner to build your plan sounds like a lot, and if they do all the building, it is expensive (only you can describe your life and it takes some time).  However, a good financial planner can engage you in your life and deliver you a 10x return simply by helping you make better choices – just be sure they do not have a hidden agenda of selling you investment products with hefty commission.  At the other end, Google Sheets is totally free, (excluding the frustration building the model might cause.  Somewhere in the middle are Better Money Choices and its peers, for a few dollars a month you can build your own plan and continually update and revise, the heavy lifting is done for you.

It is time to stop asking what your financial plan might cost, but rather what not having one might cost you.  The sooner you stop procrastinating and start building your financial plan the better things will be over the long term.