In the previous post, we started to look at what you need to do with the one-page financial plan. Here, we'll look at some further steps.
Hit the Smaller Goals
We need to follow the same process we looked at in the previous blog, though it’ll likely be a bit simpler, for the smaller goals. Don’t forget, you can use ‘pots’ to differentiate money between different goals. If you have a plan to buy a camper van in five years’ time, then you might want to use a different account for that goal and mention that on the plan, but other than that, your goals and actions on the plan should look pretty similar as for the big goal.
Motivations
Pure practicalities aside, I think that your plan should have space for your motivations, as well. WHY are you working so hard towards your goal? So, put on your motivations, on your one-page financial plan.
If your drive towards achieving FI is to give you more time to volunteer with the Air Cadets, or the animal shelter, or to spend more time ballroom dancing with your partner, then note that down. Having the reasons in front of you will focus the mind, and more importantly, it will focus the will, to enable you to stick to the plan and your savings goals.
One way to really amplify the effect of this is include your motivations in terms of your values. So rather than just say, “I want to be financially free so that I can spend five days a week ballroom dancing,” how could you frame that in the context of what it would mean for you to be financially free?
How would others view you? Does that matter? How would your nearest and dearest view you? How would you view yourself? What would it make you feel? What would it do for your soul to be financially free, to know that you had set a goal and met it? What would that do for you, in terms of your emotional life, your psychological wellbeing?
How would it feel to be an example to others, to be somebody who has delivered on their goals, by taking consistent action week in week out, year in, year out? If this is important to you, write it down. Note down how you’d feel yourself.
“It would be wonderful to be debt-free, to be able not to have to work. This would make me feel good and much less anxious.” Write down both the internal and external motivations for achieving your goals.
Threats
I also think it’s worth making a note of any potential threats to the success of your plans, too. It’s important to keep these front of mind too, so that you can head them off as they arise. If you know you have a tendency to overspend in the January sales, or if you find yourself reviewing specs for a new laptop that you know you don’t really need for three more years, then write that stuff down.
If apathy is a threat, then note that down too. Write it down however you like, perhaps as if the plan was talking to you: “Be careful of buying unnecessary new equipment for photography when you know you’re already too busy to actually take any pictures with the kit you’ve got.”
If you know you have a tendency to check your investments too often, then address that. If you think you may well panic when there’s a serious market decline, then your one-page financial plan would be a great place to add a reminder that the declines are temporary but the advance of markets is permanent.
Foundations
I think that your one-page financial plan is a good place to remind ourselves of our solid foundation; to know that the plan won’t be completely drained if the worst happens. Make a space for including your protection programme. It doesn’t have to be too detailed.
Make a note of the three risks, for both you and your partner if applicable, and note how much would be paid if you die, are unable to work or if you suffer a critical illness. The detail can be in a file somewhere, but that’ll do to serve as a reminder that our plans are based on solid rock.
Review Rate
Finally, you should set a date for reviewing your one-page financial plan. I reckon that formal reviews should be completed annually, but if you wanted, you could set a three-month review schedule, just for the one-pager. At that review, you could update the values (how much you’ve saved and what you need to do) and decide whether to up the contribution or not.
I love simplifying things, but maybe you want something more detailed. But why? The whole point is to keep you on track. You’ve done the planning, so the purpose of this plan is to serve as a reminder you can keep handy, whether it’s in your budget book, your diary or as a note in your phone.
I’ve provided a template plan which you can download to get a sense of what the thing might look like, but don’t stick slavishly to this. Add in what you feel is necessary to serve the purpose. It’s about the goals, the actions you need to take, the motivations and threats and the reassurance of the foundation you have put in place.
Ready for the next topic – how to review effectively?
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