3 Things EVERY Financial Plan Needs

September 20, 2016

3 Things Every Financial Plan Needs

Are you dumping your debt? Perhaps you’re currently saving to pay cash for a house. Or, maybe you’re working towards FIRE. There are many different worthwhile financial goals one can pursue.

And for each one of those goals, there are various paths that lead you there. Whatever your big-picture goal is, and whatever method you are using to achieve it, there are three essential things your financial plan needs.

In fact, I will be as bold as to say you likely won’t meet your goal UNLESS these three things are incorporated into your financial plan.

Ready? Here they are.

Contentment

The definition of contentment is “the state of being happy and satisfied.” Why is being content necessary for your financial plan? Most of us have plenty to be happy about and more than enough to be satisfied by. But, if we’re not content, then what we have will never be sufficient — no matter how much it is.

When you woke up this morning, you had a choice of shoes in your closet and probably a choice of cars in your driveway. You might even be fortunate enough to have a choice of homes. If you’re able to reflect on what you have and focus on being grateful, then your sense of contentment will kick in.

Contentment goes beyond the tangible, material things you possess. We have health. We have loved ones. We have Starbucks. Just kidding on that one — but in a sense, I’m not. We have a lot. Take stock every once in awhile so you don’t lose sight of all the things that are going for you.

Now, contentment doesn’t equate to complacency. Yes, you should set and aim to achieve your goals and work your financial plan, but if it’s not done from a perspective of contentment, you will never reach a point of satisfaction and in turn, you’ll always be chasing that next thing.

Hope

Hope is the fuel for the tank of your financial plan. Without it, you’ll go nowhere. Seriously. I’ve seen people go through the motions of budgeting and other healthy financial behaviors, but with reluctance and a firm belief that what they’re doing is not going to make a difference. And they proved themselves right — because they were without hope.

If you are attempting something challenging — like paying off your debt — without a belief and hope that you can do it, that lack of hope will cause you to stall, remain stagnant or worse, take steps backwards.

On the other hand, having hope will jumpstart your plan and propel you into action because you have a belief — hope — that you can achieve what you are working towards. Your actions are going to line up with your thoughts and beliefs — whatever they are.

Action

Your financial plan needs action. Obvious, right? Maybe not as obvious as we think. A lot of us know we want to end up in a good financial position, but we haven’t defined what that looks like nor have we identified the steps necessary to get us there.

As Yogi Berra put it, “If you don’t know where you are going, you’ll end up someplace else.” If you don’t put a specific plan into action and begin to follow it, then you will continue along the current path you are on. You will look up months or years from now and be in the same place you are today.

Make your financial plan a reality by identifying the specific action steps you need to take to achieve it.

Without contentment, hope, and action, your goals may never be realized. That’s the bad news. The good news is you have the ability to change that. Starting today, identify which of these three things you are deficient in and take the steps necessary to develop that area.

Which of these three things does your financial plan lack? What can you do to change that?

Are you dumping debt? Aiming for early retirement? If your financial plan does not include these three things, you may be wasting your time and effort.