I got a call from an old financial planning client the other day. She wanted to talk to me about preparing for her intended retirement in 10 years time. When we worked on her financial plan a 4 years ago, I had created a roadmap for her to be able to retire at age 60 and have plenty of money to travel. Happy with the work we did, she went off and didn’t think she needed any further help from me.
When we met up, she told me of all the action points she had implemented from the plan; all the fun and exciting bits. She had moved house and she and her family had gone to Australia on holidays. But she didn’t do any of the hard bits, like reducing her spending on clothes and eating out, paying herself less and diverting the money into a pension plan for her retirement. Now, instead of having to make a few tweaks and changes to her roadmap, we have to make big changes if she is going to be able to have the money she needs for retirement.
This is why when you engage in the financial planning process, it should be viewed as a journey and not as the final destination. Lots of things change over the years, some that you control, but most of them you can’t. Keeping your financial plan up to date means adjusting it as your life changes. Otherwise you will end up off course and need to take drastic, expensive action to get back on course (when you drive a car, you move the wheel a little bit to stay on course. You don’t wait until you are going to hit the kerb before turning sharply back on course).
You also need someone to be accountable to, someone who will give out to you for not making the hard decisions that will benefit you in the long run. Saving is boring and you won’t get that short term pleasure that you get from spending money. But then, it helps you avoid feeling miserable if you have no money in retirement or you have to work longer than you want to. By having regular updates with your financial planner, you can make adjustments to your plan and also get that kick up the arse if you don’t make the required adjustments.
So don’t think of a financial plan as a once off, you need to keep working on it. Keeping it up to date will mean that you will achieve your goals.
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