The final step in the system is all about checking in and making sure that the plan you created and are following is still working best for you.
The reason for doing this is because when you make a plan, you’re making your best guess about what will happen in the future. Of course, your guess is as educated as possible but none of us know what the future holds and so we need to regularly check in to see if our guess was correct as the future becomes the present.
As you can probably agree, one of the only things guaranteed in life is change. This will either be initiated by you internally or initiated for you externally. Let’s look at a couple of common examples of change that I’ve seen in my time as a Financial Adviser.
Relationship situation changes (marriage, divorce, widowed, have kids etc)
Career situation changes (start business, grow business, close business, new job, promotion, change of careers, etc)
Health situation changes (become ill or injured, want to focus on health more than career, mental health/stress, need to take time off due to health condition for yourself or a loved one)
Change of goals (achieve goals and set new ones, no longer interested in initial goal, other life changes lower goal priority, new goals take priority, etc)
Change of values (initially valued wealth and status but now value family and less stress)
Forced career changes (redundancy, company liquidation)
Global or National economic changes (recession, interest rate rises, etc)
Investment market changes (property prices fall, share prices fall, etc)
Product changes (fees increase, interest rates increase, features change, etc)
As you can see, there are a number of things that can change in your life and situation which will impact your plan and ability to be consistent with your required behaviours/efforts. Also, there is usually an interplay between the internal and external changes as one usually affects the other and vice versa. It’s not a simple or separate thing that can be dealt with easily. They all have ripple effects to the other changes and your plan itself. Therefore, it pays to keep an eye on your plan to see if it needs to be adjusted to better suit your situation after taking into account your constant life changes.
Another thing that I often see with clients that usually warrants adjusting their plan, is that they realise the plan and the associated behaviours they said they could follow are not as comfortable or sustainable as they first thought. That’s because, as I said above, when putting the plan together they were making guesses about what they would do. But once they reached that point and it became a reality, they had to re-assess (with more accurate information) whether or not that is actually doable for them.
A common example of this that I see with Financial Planning clients, is that they often over estimate how much they’re willing to save on a regular basis. They may say they can and want to save $1,000 a month. And so that is what we use as a starting point when creating their plan. But when we catch up for our quarterly progress meetings, I often find, they haven’t stuck at it and so we usually discuss the consequences (pros and cons) of reducing it to a more comfortable level. From that discussion, the clients can then make an informed decision about whether or not to suck it up and be more disciplined or to reduce it to a level where they will actually stick at it. Either way it’s a helpful exercise for helping them make actual progress towards actual goals.
And there you have it! That’s the final step for finding your Financial Planning Sweet Spot. Once again, I can’t stress enough the importance of following each step in its correct order and not skipping or rushing any step because they really do lead into each other and help everything work as best as possible.
Now whilst I may have initially shared these steps as a list to make articulating the framework simpler, the truth is, the steps are cyclical.
They are to be repeated often. By that I mean, as part of doing Step 5) Adjustment you will go back to Step 1) Awareness. That’s because going back to step 1 helps you become aware of the changes (internal and external) that have occurred which then leads to making the necessary adjustments to improve your planning, action and consistency steps. Following that, it’s just rinse and repeat until you reach your goals! (And once you reach your goals, it's then time to set new goals and use the 5 Step System all over again.)
For my Financial Planning clients, we usually move through this system on a yearly basis. Each time we do it is less cumbersome then the last time and certainly much less cumbersome than the first time because with each cycle we are refining the plan. The adjustments required are usually less and less each time we move through the cycle. However, every now and then some big changes come along, and we need to head in a new direction which takes us back to a similar situation as the first time. Regardless of that though, it’s always easier to adjust if we have already been through the 5 steps cycle a few times before.
And there you have it! That concludes the 5 Steps (and the blog series). Hopefully, by now you have a good understanding of what you need to do to complete all 5 steps and find your own Financial Planning Sweet Spot. The trick here is to not get too overwhelmed and fall back into procrastination. As long as you complete each step, one at a time, you will be able to move forward.
If you’ve read this post and/or the rest of the series, then you’re likely someone who wants to improve themselves financially and/or personally. If that’s you, then do yourself a favour and just get started with a small step. That is, get started at the first step of Step 1) Awareness. All you have to do is write down the goals you want to achieve over 1,5 & 10 years. From there you can then ask yourself why you want those things, why they are important to you (or not) and refine your goals until they are what you really want. Once you have that, just move onto the next steps for Step 1 until it's completed and then do the same for all 5 steps. Slow progress is still progress.
If you have any questions or would like some help moving through the steps, feel free to touch base via email or phone.