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Why Good Financial Planning is More Than Just a Plan

It sounds simple, but it’s where so many people fail.  The foundation of your successful financial future is having a written plan.  This plan should cover your goals, objectives and dreams and how you plan to achieve them.  The key to success is to make this a process where you revisit it on a consistent basis, preferably every year. 

A good financial plan should have the following elements:

  • It is in writing (either in electronic form or on paper)
  • It is crafted based on your goals and objectives
  • It contains a balance sheet
  • It determines whether you can achieve your goals based on your current financial position and investment activity.  It answers the age old question:  am I on the right path?
  • It should consider risks that could derail the plan and how to offset those risks
  • It is part of a regular financial review

Unfortunately, some people’s experience with financial planning is hiring a planner who gathers a number of documents, asks a plethora of questions and then produces a report whose thickness rivals an old college textbook.  While impressive as it gathers dust on the bookshelf, this misses the point:  the key is the planning, not the plan! It is imperative that these topics are regularly reviewed and updated to reflect changing life circumstances.

Finally, successful planning is a process.  We recommend that you get in the habit of periodically examining your major financial objectives.  As President Dwight Eisenhower once said “plans are nothing; planning is everything.”