Planning is Easy, Sticking To It Isn’t
“Always plan for the fact that no plan ever goes according to plan” Simon Sinek
This quote, from Simon Sinek, always stuck with me. He is most famous for his book Start With Why and TED talk, but has become a business and leadership influencer.
It might seem strange for a financial planner to admit that a plan never goes according to plan, but it’s true. It’s the act of planning and reviewing it, rather than the plan itself which is the important part. It’s also why we’ll add in alternative scenarios where things might not go to plan.
Plan all you like, but you need to be able to stick to it
As most will know, I’ve had an eventful year or so. When I made the decision to leave my previous job, I made a plan on how I was going to get by. I had a 6 month non compete in the whole of financial services. That meant I wasn’t going to be working in what I do for 6 months, and so I wasn’t going to be earning. I needed to live off my savings. So I started saving for when the time came for me to pull the pin.
One thing led to another, and I ended up making a very quick decision to quit. I knew I had enough to scrape by, and thought I’d get a job doing something in the meantime. I quit and then had the most eventful day ever. I handed back my work laptop at 2pm on a Thursday, and then my youngest daughter, Katie, was born at 5.05pm on the very same day. All a sudden, I had no income and an extra mouth to feed.
What more motivation do you need?
But I had planned for it. Yes, I walked away earlier than I thought, but I thought I could manage. As time went on, you start to notice that things still affect you emotionally more than you thought.
Behavioural Finance – Head over Heart
There’s an area of finance called behavioural finance. It’s all about making decisions with your head, and sticking to them. Drown out the noise of all the news, the emotions when things happen and you should be OK if the plan was half decent.
I’d never properly experienced it or been aware of it. It was only by quitting, that I opened my eyes. I’ve always made plans and stuck to them. It was only when I started seeing my savings fall that I became aware of it. How your heart can rule your head when it comes to money.
The real point when I started to rethink if I made the right decision was when my savings came down below £10k. That’s when I started second guessing and starting thinking. Had I done the right thing?
I’ll never know what would have been. But sitting now, knowing that I’m doing something I enjoy with a renewed sense of purpose – I’m sure it is the right thing. But this got me thinking, all I was talking about was reducing £20k savings to £10k and starting to panic. That’s nothing compared to what our clients go through.
Imagine what it’s like if you retire? You go from earning decent money, to living off your pension. That would be scary. And I’ve never properly appreciated that.
Emotionally Prepare for your Financial Decisions
You will be watching your money decline. You’ve focussed on building your savings all your life. That completely reverses. You also have lots of time to fill. My first weeks and months of unemployed life were easily filled with a new born and my eldest daughter. The added benefit of my wife off on maternity leave, so I had plenty to be at, and plenty of company too. But that’s an exceptional circumstance.
Whether you planned for it, or something happened which meant you had to stop work, it isn’t easy. It’s bad if it’s a government imposed lockdown which made you close your doors. It’s worse if it’s an illness or injury which suddenly causes it. Too often we get caught up in the financial side of the planning. You need to pay attention to the emotional and mental consequences of it too.
Working in financial planning doesn’t mean we are only concerned about your money. We help you with planning your life first, and then we will do all we can do to make the finances work to be able to afford it.
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