Many people might think that financial success is all about the money…I mean, yes, it is? In that it matters how much you can keep. And the more you keep, the more you can leverage that savings. But aside from investing strategy, there is so, soooooo much more to being financially successful. You might be surprised to learn that your resources are only one aspect of FIVE especially important areas of financial strategy.
I identified these 5 areas as I was perusing the World Health Organization’s website (yes, totally doing some light reading) and reading about health policy governance and execution. WHO laid out 5 strategies for success and I was all OHMYGOSH, this is what financial planning is! But it also helped me make sense of WHY some people are super successful with a plan, and some people aren’t.
Sometimes, the people who are most excited about getting started on a plan are the ones who peter out and never get anything done. Others might do a fantastic job of gathering data and seem to have a handle on day-to-day financial activities, but lack confidence in achieving the bigger picture. Some clients LOVE the spreadsheet-y side of planning but might not see (or feel) connections between their money and purpose. Others allow their environment or procrastination to throw them off track. So you see, it’s always about MORE than just the plan.The more money you keep, the more you can leverage that savings. But aside from investing strategy, there is so, soooooo much more to being financially successful. Click To Tweet
A financial plan is a very personalized and SPECIFIC roadmap to get people to their next financial level – and I believe that you can’t have a good financial plan unless it connects all of your specific dots into cohesive action. But even the best plan can fail if people aren’t doing their part in managing all strategic areas.
Here are those strategic areas:
- Engagement – To be financially successful, you have to be engaged… This means that you have to have reasonable interest in AND confidence that YOU control and affect results. Engagement also means that you’re motivated. In financial planning, I find that the more specific people can be, in linking purpose to their money, the more engaged they become.
- Governance/Accountability – To be financially successful, you need a process to manage AND INTERPRET data. This isn’t only about keeping statements organized or filing stuff in a timely manner – that is valuable, absolutely! But that is the historical data. Governance and accountability are also about knowing what your performance indicators are. What behaviors contribute to financial success? On an ongoing basis, what are the numbers that help determine if you’re moving toward or away from your financial vision?
- Model/Goal – This is about the financial plan. You can’t feel engaged and empowered, or really care about governance unless you’re moving toward your own personal financial vision. People who engage in financial planning (at least, with Creative Money) understand exactly how to allocate every dollar to make the most of their ENTIRE financial situation (again, retirement is important, but so is a lot of other stuff). You’re not just investing to invest; investments, cash savings…everything has more relevance when you map it out and see how one area might affect another area.
- Execution/Implementation – Once you have a model, then you need to execute on it. This is where a lot of people start to fall down, either with unrealistic plans, non-specific plans or quite simply, through procrastination. Sometimes, people don’t understand the connection or importance of executing on their plan. If you’ve decided to do something, like consolidate old accounts, things start to peter out if you haven’t connected it to your higher financial purpose. If any aspect of your financial plan isn’t meaningful to you, then you might never get around to doing it.
- Environment/Self Management – Many financial goals take time. Life happens and suddenly it’s been years since you actually assessed where things stand. Adaptability and support are key to making sure that you continue to refine your goals as you go, shift direction or revise goals to fit new life realities.
I’ll be discussing these areas more, but a good starting point would be to think about this with other projects you have completed, or other goals you have worked on. Where are you strongest? Where do you tend to struggle? And BTW, we can help with some ideas, wherever your challenge might be.