"There is nothing permanent except change." – Heraclitus
In its ultimate simplicity, a financial plan is a road map. It takes you from point A to point B. Hopefully gets you over a river or two, maybe through a mountain pass, finally to your destination. But the moment the map is printed, the world has changed and you have to take into consideration that there will be bridges down, passes closed and other challenges in your way.
Let’s fast forward to today, we have an amazing amount of information at our fingertips. Open up your smart phone, set your destination and it will direct you to where you want to go. Bridge down? Follow this road. Mountain pass closed? Take that road. Traffic? No problem! What seems like a simple smart phone application can get you to your destination with much more certainty than ever in history.
It’s amazing what technology can do.
Financial planning used to be scribbles on a sheet of paper which were supposed to be taken as financial gospel of investment how to. Perhaps a spreadsheet to make some more difficult calculations. For many, a nice computer program would plug in data and spit out a brilliant financial plan bound in leather with a pretty logo on the front. And then it sits on your shelf collecting dust.
Why aren’t these bookends more useful? Because the moment the plan is printed, it’s out of date. I remember when I got out of college I was given one of those dust collectors. It said that I needed to cut down on ramen noodles because my zero beneficiaries needed more life insurance to protect them in case I die. And since I only had about $50 extra per month, that I should invest all of it in a Roth to be financially independent at 60 and since I made no money then, it would work fine!
So much has changed in the years since that applying anything from that 56-page financial plan to my financial life today would be laughable. And in my experience, that holds true for everyone. To cite Heraclitus, “There is nothing permanent except change.” Shouldn’t that wisdom of the ancients be applied to giving advice?
When a financial plan is completed, that’s when I actually start financial planning. When all information is accurate, financial data is feeding real time, and we’re satisfied that we have the potential pitfalls challenging our assumptions, only then is the conversation meaningful. Thankfully technology has made this much easier than being a cartographer, and more dynamic to make sure it isn’t out-of-date.
Progress changes everything. If you want to know how our systems work, I’m happy to discuss with you. When it comes to your own financial planning, make sure it’s keeping up with you.