Does a Financial Plan Make You Cringe? - Part 1 - Jacquette M. Timmons

October 4 – 10, 2010 is financial planning week. According to the Financial Planning Association, at least. And I couldn’t help but wonder: a) how many people are even aware of this, b) if people know what constitutes a financial plan, or c) if they even have a one? Actually, I couldn’t help but wonder how many people are like me: Walking around with all of the elements of a plan, but not an actual document that is the plan.

To explain, it might be helpful to state the six (6) elements of a full financial plan as practiced by most financial planners (the parenthetical comments will be explained):

  • Establish goals (have them written down)
  • Gather data (collect weekly & monthly using Quicken Deluxe)
  • Analyze & evaluate your status (analyze (hmm…); evaluate, yes – as in did I meet my goal?)
  • Develop a plan (for some goals, but not all)
  • Implement your plan (mostly)
  • Monitor your status and re-balance (monthly & yearly)

My performance as benchmarked to this list are the parenthetical statements. As you can see, I don’t completely hit the mark on each step; and, at times, this is frustrating because I feel like I should be better at this – especially given what I do in the world and my goal to “walk the walk.”  When I took a random, unscientific poll to my query, “Do you have a financial plan?,” the responses ranged from “I have a spreadsheet of expenses; I know what amount I want to save; I have a budget.” Each response was followed by, “What do you mean — a plan?”

Interesting!

We may not have a formal plan, but we do have the elements to help us make choices; we do have a semblance of a framework to help us convert the unknown into something tangible; we do have a mechanism for setting policies. So, can we give ourselves credit for the elements? Or, does it only count if you have a document?

I feel the reason some people cringe at the thought of a financial plan is that they don’t realize they have more of a “plan” than they are giving themselves credit for. I wonder if the disconnect between what we “believe” a plan should look like as compared to what we have is one of the reasons “financial planning” as a personal practice tends to fall short. What do you think?

Share This

Yes, we use cookies.

We use cookies to customize your experience, to improve the content we deliver to you, and sometimes to show you relevant advertising on social networking sites like Facebook or Instagram. Is that cool with you? (Of course, you can decline the tracking, and can continue to visit our website without any data sent to third party services.)