Execution

One can have a good financial plan but nothing is achieved until the plan is executed. Otherwise, it just stays on the shelf collecting dust.

The hardest part of the financial planning process is not in constructing the plan but in implementing. This requires a measure of discipline because one will often be confronted with proposals to spend or purchase or invest outside the plan.

In life, there is often the need to choose between enjoying now and saving for a later time. The new age adage that urges living for the present does not equate to spending for the present. It just means not worrying about the future. Saving and investing for the future according to a plan provides for better financial control in the longer term. It is the basis for not worrying about the future.

Of course, implementation of a plan does not mean sticking blindly to it. There is a need to monitor progress and review circumstances regularly, say every six or twelve months.

Monitoring progress is like looking at the road signs and the dashboard while driving. It serves to indicate how far off or behind a person is so that he can take corrective action fast and not leave the chosen path until it is too late to get back on track. For example, if there is a need to put aside a fixed sum of savings per month for retirement, but this is not being achieved because of higher spending, some non-essential expenses such as clubbing could be curtailed.

Reviewing circumstances is also important because these may change and adversely affect the achievability of the plan. It is like looking at the road conditions ahead while driving. If there is a roadblock, then an alternative route is chosen. Similarly, if a review indicates that the tax regulation has changed such that an erstwhile tax-advantageous investment is no longer so, consideration may be given to switch out to another investment class.

If the financial planning process and the choices that require decision making seem to be painfully complex, it would be good to consult a financial planner. While a good understanding of theory is essential, the skill in financial planning depends largely on experience. So choose a financial planner well because overall financial planning, which is for life, is more important than say an individual financial decision such as the purchase of a car or an investment.

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