Why Your Financial Plan Isn't Working

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When it comes to life and money, an old adage rings true: make a plan or plan to fail. Making a financial plan and executing it to perfection is a straightforward way to build wealth, yet it’s easier said than done.

If we’re being honest, it’s actually really hard.

A good financial plan should take your past into consideration, hone in on a detailed understanding of your present circumstances, and cast a clear vision of the financial future you hope to build. It should also contain crystal clear action steps with built-in systems to ensure that planned steps don’t simply become unexecuted goals.

The truth is that for most people, there are several components of their financial plan that aren’t working as planned. They look great on paper, but when it comes to the actual execution of the plan, the results paint a different picture.

If you feel your financial plan isn’t working, there could be several reasons. Take a look at these three common financial planning problems and take action on the suggestions we offer below.

1. Your Financial Plan Doesn’t Exist

It sounds pretty obvious, but financial success hinges on the existence of an actual plan. When it comes to winning with money, winging it isn’t a realistic option.

Most people don’t plan to drift onward without a financial plan in place, per se. The reasons why many people have no financial plan in place vary greatly:

You don’t know where to start when creating a financial plan.
You have made several efforts to put together a financial plan, but you get overwhelmed and never finish.
You aren’t sure about the current money challenges you face and how to overcome them.
You aren’t really sure what you hope to accomplish financially.

The bottom line for most people who don’t have a financial plan is pretty simple:

It’s easier to keep on doing what you’re doing than it is to make changes. But if you don’t change your actions, your circumstances won’t change either.

Recommended Action Steps

If you don’t have a financial plan in place, you need to treat this like the true emergency that it is! Every week that goes by without a plan in place represents lost time and money. Even if you’re overwhelmed and not sure where to begin, you need to make a commitment, today, to put a simple financial plan in place as soon as possible.

Your plan doesn’t need to be overly complicated. We recommend starting with an extremely basic financial plan. It’s so simple, in fact, you could write it on the back of a napkin:

List your current monthly income, total expenses, and debt totals. If you’re not sure about your debt totals, you can get this information for free via Credit Sesame. If you don’t have a budget in place, make a plan to create a budget as soon as possible.
Write out 3-5 simple money goals you would like achieve. These goals will vary greatly depending on your circumstances, we but we recommend creating a mix of short-term and long-term goals. For example, “Save $1,000 for next spring’s vacation” or “Pay off my student loan debt.” Don’t worry about how you’re going execute your goals yet. Just get them written down.
List any and all obstacles or challenges that stand in your way of accomplishing the goals you wrote above.
Brainstorm solutions or action steps you could take to overcome the challenges and obstacles you listed above.

Starting with a simple five minute financial plan like the one above can be surprisingly effective, and it is always more effective than having no plan at all.

2. You Have a Financial Plan, But It Doesn’t Get Executed

Read this slowly: Your financial plan will never be perfect!

If you’re like us, you will naturally want to spend time learning more and more about what makes a successful financial plan. And that’s a good thing! As we learned from Schoolhouse Rock, knowledge is power, right?

Well, that’s kinda true. Knowledge without execution is pretty useless.

When we created this little personal finance website, we chose the name Finance Superhero for a simple reason. A superhero is largely an ordinary person who commits to taking extraordinary action.

Again, a plan is great, but you absolutely must take action on your plan. You must create simple systems and habits and put them in place to track and analyze your execution of your plan. In other words, you need to commit and go all-in.

A note for perfectionists out there: It can be really tempting to remain in an information-gathering stage when putting together a plan. We’re not discouraging you from studying books, reading blogs, and watching videos to expand your knowledge. But if you’re not putting new knowledge into practice, you’re wasting your time.

So how do you make sure your plan gets executed?

Recommended Action Steps

If you have a plan written down but have trouble sticking to it, these tips will help.

Write down the reasons why you want to achieve the goals laid out in your plan.
Make sure your goals are really your goals.
Visualize what it will feel like when you achieve your goals. What new opportunities will open up when you achieve them?
If your goals seem overwhelming, break them down into smaller chunks. For example, instead of trying to save $1,000 for next year’s vacation, aim to save $60 each week.
Accept the fact that some circumstances will always be out of your control. You may need to adjust timelines and goals when you hit bumps in the road.

3. You’re Not Measuring the Success (and Failure) of Your Actions

Sorry if this is sounding like a broken record at this point, but it’s worth repeating: Your financial plan won’t be perfect.

Undoubtedly, you’re going to experience surprises, changes, and bumps in the road when it comes to executing your plan. And that’s all the more reason to build some fluidity and flexibility into your plan (more on that below).

But believe it or not, it’s not those hiccups along the way that are causing your plan to fail.

Your financial plan isn’t working because you’re not measuring the results of your actions.

There is no reason to build a financial plan in the first place if you’re not going to track and analyze your progress on a regular basis.

Recommended Action Steps

Follow these tips to build a system to track the implementation and success of actions designed to help you reach your goals.

Plan to measure your actions and progress at a regular time each week or month (depending on your goals). Put it in your calendar and set up an appointment reminder in your calendar app so you don’t forget to do this! Remember, goals that aren’t measured do not get achieved.
When you make satisfactory progress, make note of what is working.
Likewise, when your progress is slow, analyze the causes and write them down.
Make adjustments to your goals and action plan slowly and deliberately. Don’t rush into judgment too early, and don’t make hasty changes just for the sake of change. Action for its own sake may feel like progress, but you could just be spinning your wheels.

Wrap-up

A good financial plan doesn’t have to be complicated. It doesn’t require spreadsheets and formulas, either. If you have an accurate understanding of your financial past, true understanding of your current circumstances, and a clear vision for the future you want to create, you have everything you need to create a solid financial plan — and implement it successfully!

Remember, you are the biggest facilitator of change and success when it comes to your money. Commit now to taking action and you will get results.

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