As I type this sentence, you can purchase a fancy Viking 7 refrigerator/freezer online for just under $30,000 (that’s $2K off). Or you could drive to your local home improvement store and get a Whirlpool model on sale for $1,499. Which one’s “better”?
It depends.
Suppose you buy the Viking and park it in your garage, where it sits unused and maybe even unboxed for 10 years. Meanwhile your neighbor opts for the “no-bells or whistles” Whirlpool, brings it in her kitchen, plugs it in, and fills it up. Question: Who’s more likely to enjoy refrigerated food for the next decade?
This is the problem I see with too many financial plans. People pay for them and never use them. The plans never get “plugged in.”
Folks sit down with an experienced financial planner and answer questions about their goals and objectives. They discuss their income, investments, and retirement plans. They consider various options for buying insurance, eliminating debt, and creating an estate plan.
Once this step is done, many planners will then recommend a course of action (i.e., a “plan”) to get you from where you are now to where you say you want to go.
A few weeks later, they’ll deliver a beautifully bound report, complete with charts, graphs, and projections about your financial condition twenty or thirty years down the road. (I have written in this space previously about this kind of “top down” financial planning.)
The problem with this approach should be obvious: No one can know the future. Yet the nature of such “top down” financial plans often creates the illusion that planners possess special “fiscal fortune-telling” abilities.
I can assure you we do not.
This is why I subscribe to the “bottom up” approach. I start with today’s circumstances and focus on making clients as efficient as possible. Do all you can with what you have today.
But this approach—like the “top down” approach—also must be implemented to do any good. The plan has to become part of your daily, weekly, monthly actions. You’ve got to “plug it in” to your daily life.
General Dwight Eisenhower and his staff spent months planning the D-Day invasion of Europe to liberate France in 1944. Eventually they had to finalize their plans and hit the beaches of Normandy. Victory required more than good intentions—it took a good plan, well-executed.
So, it’s wise to learn and gather information before we act. Careful planning is vital. But when we don’t take action, it’s no longer planning—it’s procrastinating.
For many of us, that’s the weakest muscle in our body—our decision-making muscle. We hate to “pull the trigger” and make choices.
Decisions require change and most of us are hardwired to prefer the status quo—even if the status quo isn’t getting the job done.
So, do this—especially if you got a fancy financial plan that’s sitting in your file cabinet not being utilized. Go back to your planner (or someone you trust) and ask them to start over with you—this time with a firm commitment to implement.
Focus on the problems you can begin solving and the goals you can start chipping away at today. Then agree on the habits you need to implement right away to make your tomorrows as bright as possible—practices like saving, controlling your spending, paying off consumer debt, etc.
Then act. Get busy! Put the plan into action. Until you do, your plan is like that beautiful, expensive, useless refrigerator out in the garage that hasn’t even been plugged in! It may look good on the outside, but after a few months or years, I’d have real doubts about trusting what’s in it!
On that note, if you haven’t yet considered how you will turn your retirement nest egg into regular retirement income, I invite you to email me (bmoore@argentadvisors.com) for a link to take a free, 5-minute “RISA” quiz. It’s an ingenious tool that can help you figure out—based on your unique “financial personality”—the best plan for you to IMPLEMENT.
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