Of All the Reasons to Have a Financial Plan, Here's the Best One

“Once we believe in ourselves, we can risk curiosity, wonder, spontaneous delight, or any experience that reveals the human spirit.” ~ E.E. Cummings

Perhaps it is because I grew up with a mother who for many years was a professional musician, and continued singing long after she “retired” and pivoted to a new career. Whether she was performing a solo show or with her band, she/they always practiced before the gig.

With that as my example, I never take the stage (whether it is literally a stage or simply space in the front of a room) without practicing my presentation several times. I practice not to feel less nervous, but to be fully present and to do and be my best in that moment.

Plus, practicing helps me feel confident that no matter what happens after I am introduced, I can handle it.

How about you? In what situations do you feel most confident? What are you doing; who else is present; what are your surroundings? And when was the last time you felt this way; when was the last time you said, “I got this!”?

On the flip side, what situations leave you feeling the least confident? What marks the difference between your most and least confident situations?

The Confidence Equation

You and I both know that no one is born with confidence – or that internal belief of, “I can handle it.” Confidence is a cultivated by-product of many things. Yet, we often forget about two of its most important elements: practice + time.

Of course, you are well acquainted with this equation. Just scan what you described above. If you dissect what you’ve written, what you feel most confident about is probably because you’re great at it. And you’re probably great at it because of how often you do it. In other words, the state of being confident is due, in part, to your investment of practice and time.

If the number “1” represents least confident and “10” most, how would you rate the way you handle money – on a day-to-day and long-terms basis? Do you feel equally confident about the different aspects of money (e.g., saving vs. earning)?

The thing about confidence is that it spans a spectrum, and it is not static.

And from my perspective, one of the best reasons to have a financial plan is the role it plays in boosting your financial and emotional confidence with money. Plus, it helps you navigate the spectrum. Sure, a plan doesn’t prevent you from experiencing setbacks or making mistakes. Nor does it always mitigate chaos. But responding to these, with grace, can be quite challenging without one.

When it comes to money, a financial plan is how you benefit from practice and time. It’s a way to pull together the pieces of your finances as if you are completing a puzzle. It gives you a holistic point of view of your money, while also helping you see the inter-connectedness of the distinct pieces or areas.

It’s how you manage your response to what the numbers are…or aren’t.

Yet, many people – approximately 70% of Americans according to a Gallup poll – don’t have one.

What is a financial plan – really? Whether it is text-based or visual (think mind map), it is a document to help you assess the costs and resources required to achieve your goals. It provides clarity about what you have and what you need. But that’s not all!

So on the off chance you fall in the 70% camp, and I still haven’t convinced you of the power of having a financial plan here or here, perhaps the reasons noted below will be your tipping point.

12 Reasons Why

Here are a dozen reasons why (and how) a financial plan can boost your confidence (and thus your success). A plan…

(1) Helps you maintain a positive frame of mind. This is especially useful when an unexpected setback occurs or you make a mistake in your analysis and projections. The plan serves as your roadmap for getting back on track after being derailed.

(2) Helps you manage your self-talk. Remember, confidence spans a spectrum. So sometimes it is high; at others, not so much. When you’re confidence takes a hit and is on low end, reviewing your plan can reorient you – prompting you to speak encouraging words to yourself (instead of self-defeating ones).

(3) Helps you embrace the beliefs you want and identify the ones that no longer serve you.

(4) Is where you own your values because it typically reflects what is important to you.

(5) Can support you when you become paralyzed by self-doubt and unable to make the next move or decision. Reviewing your plan helps you to recall what you were thinking when you created it, while at the same time re-connecting you with your vision.

(6) Can help you respond to stress in a healthy way.

(7) Can help you focus on practicing the habits that move you forward and doing less of those habits that hold you back.

(8) Can help you be content – otherwise known as making the most of what you do have, rather than being bummed out about what you don’t have or how long it is taking you to reach your goal/s.

(9) Makes money less of a mystery because it lays out where your money is going as well as the trade-offs you need to make (or consider) as you work to close the gap between where you are and want to be.

(10) Helps you adjust your numbers and expectations as the complexity of your responsibilities shift.

(11) Gives you a “starting” point for measuring your progress each time you check-in.

(12) Reminds you that you are in charge – even during those times when other, outside factors leave you feeling otherwise.

What I hope you notice is how few of the above reasons are directly tied to crunching the numbers. Your plan certainly “hosts” the numbers and tends to cause you to save more. But the thing people tend to overlook is this: A financial plan is less about the numbers (gasp!) and more about the behavior it shapes!

Therefore, what choices do you need to make today to bring about what you desire in the future.

Because of all the reasons to have a financial plan, here’s the best one: It boosts your financial and emotional confidence so that you can say in good and challenging times, “I got this!”

But, only if you have one. -:)

 

p.s. Who would you know that may want to join us for the next Comfort Circle™ dinner? It’s on Monday, January 29th at 6:30pm, and the theme is – “Creating Your One-Page Financial Plan.” Click here to RSVP by 24 January (or to grab the link to share).

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