In the previous post, we looked at why reviewing you plans is so important. This time, we'll look at what you need to do.
Everything You Need to DO
1. Update the Goals
Let’s start by reviewing our goals. Remember that they need to be MT. That is measurable and time bound. The first thing to do is to reassess the number for each of your goals. Are they still at the same level they were when you set them?
Do you now have your eye on a bigger and better camper van than before? Has your FI figure changed? In light of a family change, have your required expenses fallen or risen, such that you’ll need to rethink your number?
Then ask: have your timescales changed? Have you traded the old man in for someone ten years younger who looks like a ‘Strictly’ professional? Your timescales might change because you’ll want to retire earlier, or perhaps your health has taken a turn for the worse and so you want to bring forward some goals.
At the very least, you’ll be a year nearer to the goals you set last time, and so the timescale needs to be reduced by a year if nothing else. On a higher level still, you should ask whether your goals set last year are still relevant. Do they still excite you? Do they still resonate? Are both of you (if applicable) still on board. Update your goals so they’re fresh.
2. Check Progress
Once the goals are updated, we need to check our progress made towards them, which will require some calculation. We’ll need to start with our current position, work out the difference between where we are and where we want to be, and then account for inflation.
It’s vital not to get disheartened at this point, but that won’t be easy. It’s quite possible that despite your saving throughout the year, thanks to a pull-back in markets, you’re worse off this year than you were last year. Disaster, right? You’re a year closer to your goal but you’ve taken a step backwards.
Not a disaster, no. This is going to be one of those occasions where you look again at your motivations for working towards the goals and set your face towards them again. You might need to make an adjustment – more on that in a sec – but understand that these years will be much less frequent than years where you’ve made great progress.
The purpose of this step is to refocus our intention on what we need to do to reach our goals. Progress will be better or worse, and sometimes for reasons outside your control. But if you didn’t review things and left it for years before checking how you were doing, then your adjustments might have to be pretty significant.
For instance, you may find that you have to double your savings rate or something like that. Regular reviews will mean that any adjustments along the way should be fairly palatable.