You can't succeed if you can't plan
If a business owner said to you that they run their business without a financial plan, what would you think? You’d think they were incompetent. Or perhaps lazy? Or both? But what do most families do? When you think about it, a family is actually a mini business. There is income, there are expenses and there is, hopefully, something left over to invest and to enjoy. So why don’t most families operate to a plan? After all, a personal plan helps you to see your financial direction and helps you stay (or get back!) on track. It’s a great comfort. One reason some people don’t put together a plan is a feeling of overwhelm, of being too busy, of feeling like life is too complex to keep track of all that. The good news is we can support you through the whole process and make it easy for you. But before we look at the ‘how‘ aspects, let’s consider 3 more reasons why a personal financial plan is such an important tool to help you achieve your financial goals and dreams. 1. Most of your money is already spoken for long before you get it The money you earn has already been promised to keep the electricity on, make loan repayments and pay for insurance. Most of what many people think of as budgeting is really honouring the commitments you have already have. Now since we are all honest people and plan to pay these bills, the first step is to track these bills and see what is left over for your day-to-day living. 2. Your day-to-day living money is spread all over the place… Some of your day-to-day living money is in the bank. Some is in your purse or wallet. Some is with your partner or children if you have them. You need a simple system that allows you to track day-to-day expenses such as fuel for your car, shopping and your discretionary spending expenses. We suggest you don’t attempt to keep track of every cent of your day-to-day living money. It’s not worth the effort for the benefit you’d get out of that level of detail. Instead, identify your main day-to-day expenses and make allowance for all other minor day-to-day expenses as a total expense. Here’s a key: You need a system that is so easy to use that you keep using it. 3. The Number 1 reason people give up is that they don’t have the right attitude It’s ALL in the attitude!
Have you ever attempted to create a personal financial plan and given up in frustration? What is the reason your attempt failed? Think about this… One of the top reasons—if not the top reason—so many people give up is perspective. Question: If you think of it as a penny-pinching sacrifice instead of a means for achieving your financial goals and dreams, how long are you likely to stick with it? Answer: Probably not very long. It’s like the difference between going on a diet and eating healthily. One is negative and restrictive; the other is positive and allows you to indulge every now and then and yet still achieve your goals. To increase your chances of success, work on your perspective first. Many people refuse to plan because of the negative connotation. If you’re one of them, try thinking of it as a ‘spending plan’ instead of a ‘budget’. Once you’ve attempted and failed, the bad feelings associated with any type of failure can keep you from trying again. Don’t give up! Let’s face it. Money is a tool that enables you to reach your goals in life. But the cold hard reality is that until you know where your money goes, you can’t make conscious decisions about how to use this tool effectively. A budget (or spending plan!) shows you exactly where your money goes and provides a clear plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a tertiary education, high quality health care, travel, or whatever your particular goals and dreams happen to be. And that’s exciting. Whatever YOU decide you want to save for and achieve, you can. With the right perspective, a focus and a plan.
Speak soon, Erika Gilbert