Building an Ongoing Relationship with Your Plans

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Congratulations, you’ve built a plan! Now what? So often, that is the end. Once you have the plan, the goal is just to stick to it.

However, at GoalBased Investors, we don’t believe that building a plan is a one-time activity. A plan should be something that evolves over time.

It should be something that you check in on more than once a year. It should be used as a tool to monitor progress, adjust as circumstances change and ultimately develop the game plan that meets your needs at any given moment.

A Plan is like Your Financial Thermostat

You can think of your plan like your financial thermostat. It can tell you when it’s time to turn up the heat, when you can pull back to cool things down or even when it’s time to change the settings.

Think about a thermostat. You start by setting an ideal temperature. Then, you make choices about how you want to get there. You tell your thermostat what temperature is too cold, and it needs to kick on the heat. Or vice versa, which temperature is too hot and the AC needs to come on. 

Your thermostat puts you on track to that ideal 70 degrees and then checks in on itself every so often to make sure it’s still on target. 

Just like a thermostat, you have a “temperature” you’ve set in your plan – a goal. Then, you’ve made an initial set of choices – savings amount, time horizon, investments – that should put you on the path to get there. 

Each of the choices in your plan help you make progress toward your goal. In financial planning, we use points to measure that progress. We’ve talked about the idea of planning with points in previous posts that you can read for more details.

But in short, when you measure progress towards a financial goal, 100 points represents expected success in meeting that goal. Every decision you make – how much you can save, how long you can wait to reach your goal, etc. – earns you points that move you closer to (or potentially farther away from) 100.

Points are like degrees on your thermostat. Both are ways of measuring progress toward a goal. 

As your thermostat is getting your house to the target temperature, it’s making choices that are adding degrees to your house. This is similar to you making choices that are adding points to your plan.

Adjusting Your Plan to Stay on Track

You’ll keep making choices – saving a little more, waiting a little longer to reach your goal – until you have a plan that puts you on track for the points you need to reach your goal. 

However, when you check back in on that plan a week, a month, or a year later, things will inevitably have changed. Maybe you weren’t actually able to save as much as you thought one month, or you got a new job, or the markets dropped and your money didn’t grow as fast as it should have.

Luckily, it’s ok! You can adjust your settings to get back on track. 

If you’re behind, you may have to “turn up the heat” by saving a little more. Or perhaps your plan is ahead, and you can cool things off by shortening the time till you reach your goal or re-allocating some of your savings elsewhere. 

The great thing is that it’s up to you which settings you choose to adjust to put you back on course to that ideal temperature. 

Finding the Strategy that Works for You

Everyone has their own preferences for what they can do more of when the “heat” needs to come on and where they prefer to cut back when it’s time to “cool off”. Or perhaps, the temperature needs to be reset all together.

You’re in control. The plan can tell you when action needs to be taken and then you decide what to do. Remember, the longer you wait, the larger the adjustments you might need to make. 

And there are always experts available to help, whether it’s understanding the right actions to take or getting help with investments. If you want to learn more about how a financial advisor can benefit your plan, read our article on cracking the code for a better conversation with advisors.

Ready to get started on building plans for your goals? Click here to sign up for early access to the GBI app.