How Do I Get Back On Track?
As the saying goes, “life is what happens when you are busy planning for something else.” There is truth to this statement and it has relevance to your financial planning habits. Things don’t always go according to plan, and sometimes we fall behind on achieving our goals. Sometimes our spending gets out of control, sometimes we unexpectedly suffer a job loss, or a medical condition.
The first thing to keep in mind is that it is important to act immediately to take steps to get yourself back on course. The second thing is to know that if you had a plan, you are ahead of the game because you don’t have to start from the beginning of the plan process. If you don’t have a plan already established, there is never a better time than when you financial goals are under stress.
In either case, refer to the basics of your plan. Review your long-term and intermediate goals. Look at them to see where you can “make up lost ground,” either by deferring some of the expenses associated with the goals, or reassessing that a more inexpensive version of the goal is suitable (a 10-day European vacation instead of a 21-day vacation). You can look at pushing back your retirement age. You can also look at other forms of perhaps previously unexamined forms of income (a second job, changes in investment strategy that could yield higher returns, etc). Bear in mind that the goals is not to get you back on track immediately; you do not, in other words, want to throw all your cash into a high-reward/high-risk equity strategy.
You want to employ the same principles to getting back on track that you used to get on track with a plan in the first place.
For many people, this will simply mean some period of reduced expenses, and your plan will help you to identify areas where you can cut back, or eliminate altogether.