As we travel down the road to financial independence, it’s time to consider one huge missing piece to the puzzle — exactly where are we going and how will we know when we get there? In other words, we need a plan.
Fortunately or unfortunately, depending on how you look at it, we each have different starting and ending points. This means that some of you are further along on the journey than others so I can only make some generalizations and you will need to individualize your plan to fit your specific situation.
Though you may not have realized it, we’ve actually been building up to this point and it is now time to put the pieces together that we have and to add some that we may have missed. Every good plan starts with a money mindset that is ready for success so start by reviewing the money strengths and weaknesses you uncovered in your money autobiography. Depending on what you found, you may need to rid yourself of some limiting thoughts and behaviors that could hold you back. Next review your goals. These provide the parameters for your overall plan and the motivation to keep going. Another element to review is your list of investments, and add to it any other assets you own such as a home. And then there is your budget — the food or fuel that keeps you moving forward.
Once you collect this information, you can begin to assemble your financial plan. Here is an outline for a basic plan:
1. List your goals: What you want to accomplish, including what it will take to complete them (money, education, etc.), and your time frame.
2. Analyze where you are now, include a list of your assets: Things you own (don’t forget career assets) — and liabilities (things you owe), as well as the amount of money (from your budget) that you have available to put toward your goals.
3. For each goal calculate the gap you need to fill. To do this, subtract anything you already have available to put towards the goal such as current savings from what it will take to complete it.
4. Compile a list of as many obstacles as you can think of that could stop or impede your journey to financial independence such as a negative money mindset, a lack of insurance, etc. and then next to each one list a strategy you can use to overcome it.
5. Create a workable plan that is designed to fill the gaps you outlined in No. 3 and to overcome any obstacles that could stop you. Be sure to include checkpoints along the way so that you can stay on track.
I know I have thrown at lot at you, and I promise we will revisit these elements again as we continue on the journey because this is a very important piece and it can literally make or break your journey. So stay with me.
P.S. My thanks to all of the beautiful women who signed up to be a part of the Women & Money blog advisory group. If you haven’t done so and would like to be a part of this dynamic group, visit www.WiseWealthyWomen.com and sign up or email me at ps@mindingyourmoney.net.
Patricia Stallworth, CFP® and CDFA, is the president of PS Worth, a financial education company, the author of Minding Your Money, and the host of the Minding Your Money Minute™. Learn more by visiting MindingYourMoney.net.