For someone who preaches the value of financial plans and holds a designation with the word PLANNER in it, this might sound hypocritical:
A plan itself is relatively worthless.
And this stretches beyond financial plans. I’m talking about marketing plans for business, strategic plans for non-profits, kid self-employment plans for families, career plans for workers.
Why do I say this? Because life happens. Nothing in these plans happens in a nice, tidy, projected linear fashion as we want them to. Things get outdated. Goals shift. Circumstances change. New opportunities arise. Other opportunities disappear. Regulations evolve.
Plans have a relatively short shelf life.
Just like the image above, of which I red-lined my limited artistic ability last week at the beach capturing, we should write our plans in sand, not stone.
It’s easy to say then “Well, what’s the point of creating a plan knowing it’s going to change anyway?” And it’s a fair question – and to address it we need a bit of a paradigm shift.
Rather than focusing on the outcome – the plan – we should focus on the process – the planning.
The planning is where the benefit lies. It’s in this process, when we take time to really think about our resources, our goals, our values, our opportunities, our threats (<flash back of college business course on SWOT analysis>) that we derive a plethora of information, insights, and strategies. Walking through a plan helps prioritize and crystallize our decisions on what to do, or what not to do.
And once we go through it once – we should expect to go through it again. And again.
It’s why I’m a huge proponent of a One Page Financial Plan. We can use software that automatically updates the thousands of pages of projections as we play with the levers of inputs and assumptions, and we’ll need to do this as life happens. And then summarize that into a simple document that’s easy to update as soon as things change.
It’s foolish to create a plan – financial plan or otherwise – and expect to place it on our desk and have everything happen accordingly page by page. It doesn’t work. A One Page Plan sums everything up, captures what’s most important to us, and says “Do this now” or “Do this later.” And when things inevitably change – things within our control and things outside our control – we update it.
When choosing a name for this site, I intentionally chose an active, ongoing verb in Calibrating. It’s not Calibrate. It’s not Calibrated. It’s Calibrating, because the process of aligning our values to our wealth is an ongoing process – not a one-time set-it-and-forget-it exercise.
In much the same way, financial planning isn’t just the final plan, no matter how elegant, beautiful, flexible and precise it may be. It’s the ongoing process that provides the most value.
Granted: having a plan is better than NOT having a plan. But we can’t stop once the plan is initially completed.
Plans are great. Planning is better.