Does a Financial Plan Make Your Cringe? – Part 2

If financial planning is a cumbersome exercise, here are six (6) steps you can take to make the process a more fun & engaging experience: 1. Schedule time to plan >> Really. One of the biggest challenges to planning (financial or otherwise) is setting aside a block of time to do it. Accordingly, don’t operate with the expectation that you will complete your plan in one sitting. A better approach is to give yourself thirty-days to create your plan, and within that period of time complete the next five steps. 2. Have a brainstorming session (or two, three) >> During this time, simply have an uncensored brain dump of your goals. Rather than listing your goals using a vertical approach, try documenting your goals using an approach called mind mapping. I love mind mapping because I believe it is a more expansive way to think about what you want to have, do and be.  The picture above is an example. Place your name in the center and note all of your goals as extensions or spokes from the middle. IMPORTANT: Don’t worry just yet about categorizing them as financial vs. non-financial or ranking them by time (short, medium, or long-term) or identifying the goals that are connected. That happens next! For now, just think and write!! 3. Create a to-do list of habits >> For each goal listed in step #2, specify details such as the financial component, if any; your target “Achieve By” date;  the dependent relationship that may exist between goals; and what habit you will need to consistently do and how often in order to contribute...

Does a Financial Plan Make You Cringe? – Part 1

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!...