Create a Financial Plan You Can Stick With

The past few years have included a series of economic ups and downs, which were complicated further by challenging external factors. When you set out to create a financial plan at the start of 2020, you probably weren’t expecting a global pandemic, international warfare, layoffs, market instability or sky-high inflation. 

Through those challenges, many people learned the value of emergency funds and backup plans. They saw how quickly things can change. 

Do you approach financial planning differently now? Should you? In light of some of the chaos the past few years have brought, here are some tips for creating a financial plan you can stick with:

Build a Resilient Financial Plan

Even if you knew everything that was going to happen in 2020 and beyond, the hope is that your financial plan wouldn’t have changed all that much. Why? Because the best financial plans are resilient. They’re built with the knowledge that hardships will come, and you should expect the unexpected. That’s why we stress the importance of things like healthy emergency funds and diversified portfolios. The unexpected will come. It’s a guarantee. And your financial plan should be able to carry you through most unforeseen circumstances.

Reflect on the Past

When you look back on the recent financial strains in our country (and worldwide,) try asking yourself these questions:

• How did your finances hold up through all the turbulence of the past few years? 
• Did you feel like you had what you needed, or were you stressed about the state of your finances? 
• Was there anything you had done beforehand that helped you during downturns? 
• How did you manage high inflation costs, and did you have to make changes in response to higher prices?

We work hard to create savings and a portfolio that can handle stress, but actually going through it is a different story. It’s also a golden opportunity, even if it doesn’t feel like it at the time. Reflecting on how your own financial situation weathered this time can show you your true strengths and weak points, and help you move forward with a better plan.

Make Things Easy on Yourself

Self-reflection is essential in financial planning. No one is a perfect money manager. We all have our strengths and weaknesses. But money can be a particularly sensitive topic for many people, and so instead of attacking their challenges head-on, they ignore them.

It is always better to face your financial situation than it is to bury your head in the sand. Once you do that, you can start to pinpoint the things that get in your way so you can make true progress.

Some people need to work with an accountability partner, like a financial planner. Others benefit from automating as much as they possibly can, so they can prioritize their money goals automatically. If the challenges of the past few years have left you feeling dissatisfied with your financial situation or your ability to make an effective plan, don’t worry: you’re not alone. It hasn’t been easy, and there have been plenty of curveballs. But hindsight is 20/20, and you can start fresh with a new perspective.

Look at the Long Term Financial Plan

Over the course of your life, you’re going to run into several financial challenges at a micro and macro level. So don’t get hung up on the occasional bad year or series of bad years. We have seen time and time again that long-term, passive investing works, and that balanced portfolios are good at riding out storms.

Time and consistency are powerful tools in building wealth. So when you’re building a financial plan you can stick with, try looking at the retirement you want and the legacy you want to leave behind. Keep your eye on those goals, and use them to figure out what you need to do right now to get there. If you get off track, know that there are many roads to your ultimate goals, and many tools, methods and people who can help you find your way again.