A priest once told his congregation he had good news and bad news – “The good news” he said “is we have finally enough money to build our much needed community centre this year. The bad news it’s still out there in your pockets !”
Completing a financial plan for any project is essential let alone your own personal plan, and the first part of that task is to actually start it. John Lowe of Money Doctors shows how to do it in just 15 minutes – a must read :
I used to be a dreadful worrier. (Stick with me on this, because it is relevant.) I would lie awake at two in the morning asking myself where I had gone wrong and a voice would answer back: ‘This is going to take more than one night.’ Then I had the good fortune to work with a successful entrepreneur who, for the purposes of this article, I shall call Peter, because that happens to be his name.
The thing I noticed straightaway about Peter was that he had elevated list-making to an art form. Before he wanted to achieve something important – start a business, raise millions of euro a year for charity, launch a takeover – he would prepare a list of all the different steps involved.
Anyway, as someone who has elevated plagiarism to an art form, I copied him and, although I cheat (I often write down things I have already done for the satisfaction of being able to cross them off), I have found that the simple process of listing has dealt a deathblow to my nocturnal fretting.
What does this have to do with the subject of planning ? If more people realised that financial planning was nothing more than a bit of glorified list-making, they might be keener to take it on.
What a financial plan will do for you
I’ll cut to the chase. Financial plans are powerful amulet. This is what a good, well-executed financial plan could do for you:
- Wipe out all your personal debts.
- Help you pay off your mortgage early.
- Make sure you never have to borrow again.
- Help you build up plenty of savings.
- Ensure that your money achieves the highest possible return.
- Give you enough money to retire early.
- Protect you and your dependants against financial hardship.
- Offer you financial freedom.
- Make you wealthy enough to never have to worry about the future, whatever it may bring.
Think I am overpromising or exaggerating? If anything, I am erring on the side of caution. A good financial plan can make you invincible.
Financial planning in a nutshell
What exactly is a financial plan? Perhaps the easiest way to explain how they work is to use an analogy:
If you were driving from Copenhagen to Zagreb – heaven knows why, but you are – and you don’t have one of those wizard satellite navigation systems, you would not choose a road at random and hope for the best, would you? No, you wouldn’t. You would plan your journey. If you encountered diversions, you would get out the map and decide on a new route. Throughout the journey, you would check on your progress.
Your financial plan should have the same qualities. That is to say, it should help you reach your destination, make your journey as fast as possible and stop you from wasting time, energy and, of course, money.
Next week in part 2 how to get started with your plan and learn what your financial objectives should encompass.