What are these fashionable concepts and how dangerous they are. He’s unwillingly, but everyone is constantly implementing his own financial plan. Even if you have a financial plan that you don’t have. And even when you imagined something very precisely to which you are trying to keep yourself. Yet most of these processes are stuck. But why aren’t we able to go through our own plans?
What is Financial Planning? The purpose of financial planning is to tailor our financial resources to our ideas and thereby realize what we want.
Motivation is not strong enough during the financial perspective
Plans should be ranked to understand why we don’t get from 1 to 2:
- Immediate goals
- Goals in the medium term (1-3 years of income)
- Long-term goals (over 3+ years)
In humans, the self-rewarding reflex is working instinctively, which is strongly supported by the gathering inclination inherited from homo sapiens. What does this mean in the life of a 21st century man? Everything immediately and preferably yesterday.
The main narrative of all financial plans is the same:
- children’s future
Then why is it that most of us are never able to achieve these goals? The answer is in human impatience and self-rewarding reflex. It is very difficult to inject into our brain and soul to pull ourselves together for years and to sacrifice everything for which the end result is not guaranteed at all!
Is a sparrow better today than a bustard tomorrow?
Most people are afraid to risk it. Home or retirement is a risk that is never guaranteed . We may never be able to achieve these goals with all our efforts. And over time, our motivation is shaking, ceasing, and transforming. They are replaced by secondary “typical goals”:
- buying a car
- dream holiday
- restaurant, entertainment
- computer, phone
The problem is always caused by the “ority”, that is, we see and live everything in the frame. The financial plan is like a diet that will not work if we are hungry. A good diet is consciously assembled and cares about our extra needs beyond our basic needs!
I think most of the financial plans, on the other hand, are specifically silly, because they always put everything under one goal. Its effectiveness depends solely on the strength of motivation. And then we can hope that our motivation will be stronger than the more easy and quicker access to side-by-side goals.
With smart goals, you need to make a smart financial plan
If we define smart goals, we never lose focus. We can minimize the risk that a side-way would be too easily displaced from our journey. This is crucial, as we can only achieve our goals that truly determine our lives.
This is so nice and good, but it is not self-evident that everyone sets the right goals. And if the goals are wrong, we can erode our whole plan by building on totally wrong bases. That’s why I always use LICO (opportunity, time, goal-oriented) tactics.
I can define smart and realistic goals by LICO, because I take my own possibilities into account, I can define the time and the goals instead of dreams, and I can plan their realization. So I will never miss anything, and I can really set good savings targets!
It is not very smart to constantly redesign
The bad financial plan is that we are constantly redesigning, changing the direction we have chosen for ourselves and our family. Those who do so are NEVER able to achieve their goals by themselves, since they always start from zero.
They are those who are controlled by their desires and determined by their dreams. They never get to one of the two.
What is the smart financial plan?
The key to creating a smart financial plan is that you are always on target-oriented, assessing the time horizon and the financial resources available. You ask yourself the most important question (and answer it): “How will I achieve my goal?”
The answer is the implementation plan itself, which acts as a kind of automatic system. You don’t have to convince yourself every month before you make a payment and keep working for a good purpose.