Wednesday, August 1

Planning Works

I must apologize for the infrequent posting schedule. I've been very busy this summer with all the changes going on in my world....

Today I had lunch with an old friend and we talked about some of these changes and all the decisions that need to be made. I told him that once I made up my mind about the new direction my career was headed, it seemed to get easier to make the decisions along the way because I could tell which ones would further my objective.

I was thinking about that conversation again and realizing how many areas of life this can be applied to. There are so many cases in which we are asked to make decisions - sometimes large, life-altering decisions - and we don't have time to think about it for weeks and gather advice and weigh our options. Some opportunities come very suddenly, and we can either grab them or let them pass.

I believe that the key to making good choices under pressure lies in planning. Planning works on many levels and provides benefits that range from immediate to long term. And I think that your personal finances are perhaps one of the best places to apply this, for it will surely pay off. In addition to helping you make decisions, here are just three other ways that planning pays off for personal finance:

  1. Vision
    The road to financial freedom is very long when you are standing at the beginning. It can be tempting to fulfill all of today's wants and let tomorrow take care of itself. But with planning you can see a vision of the future that is more appealing than the seductions of the present. You can keep your eye on the goal and know that you are moving toward it.
  2. Updates
    Good plans are never static. They are revisited on a regular basis, as well as whenever things change significantly. This may include things like updating your will and insurance when you first have kids, or adjusting your savings level to build in room for a sabbatical. You don't need to get it right once and for all, you just need to make a plan that makes sense right now and keep it up to date as you move through your life stages.
  3. Backups and contingencies
    Planners are ready for emergencies. With planning, unexpected expenses may be inconvenient but they are rarely catastrophic. A good financial plan considers an emergency fund very early on. It may be an actual pot of money in the bank, or perhaps a line of credit waiting to be used only in special cases. But either way, a job loss or sudden large expense can be taken care of.
I know that I need to update my financial plans and get ready for the next few years. I will post more on how I plan to do this in the coming days.


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