“In preparing for battle I have always found that plans are useless but planning is indispensable”
-Dwight D Eisenhower
“A good plan today is better than a perfect plan tomorrow”
-George S Patton
“Have a bias toward action- let’s see something happen now, You can break the big plan into small steps and the first step right away.”
We all have a vision of the future. It is more detailed for some of us than others. Depending on our outlook, it may be a future seen through rose color glasses, seen through the prism of a glass half empty or anything in between. Every day that we experience gives us new information to process and to integrate into our theories on how the future will play out. Whatever our vision of the future is today, it is wrong. We don’t know how much or in what direction, but it is wrong. That doesn’t mean that we should not plan for our future or take action today, for the value is not in the plan, but in the planning process. Let’s take a look at the planning process and it’s value in this week’s Inside Look at Building Towards Wealth.
When I look back at my personal history I am amazed at how wrong I envisioned the future at every step. My journey over the 30 years, which is as far back as I can remember having real plans, has been an interesting journey. One that has led me to this moment in which I am very happy, but not a journey I could have foreseen.
If I think about my life was like 20 years ago when I started in the financial services industry and the massive change to the industry and the turns my career has taken it would have been nearly unimaginable.
If we look back 12 years ago when I moved back to Chicago, after 4 years in Dallas, and quite honestly the mess I was when I came back from that disappointing period in my life. I could not have foreseen my path over the following decade.
If we take a look back at seven years ago when I went on my first date with my now wife, There is no way I could have known we would be married with two children.
We certainly couldn’t have predicted what 2020 would have brought. I don’t think anybody predicted all this.
That is to say that the plans that we lay out, are almost always wrong. Every time we get a little bit better at guessing, but every single imagined future was just a guess.
It also does not mean that there was no value in the planning process and taking action. Every action taken took us closer to getting it right and we learn from every outcome.
I’m a big believer in spending lots of time on the big decisions and not a lot on the small ones. Most decisions can be changed pretty easily. A no today can be a yes tomorrow, and vice versa.
If we make a decision that is wrong be willing to admit it and change course. Do not get married to a decision and go down in flames because of it.
The value in planning, and particularly in financial planning, is not in some grand plan that pretends to know just exactly how much you are going to spend on every expense down to your cable bill in retirement. The real value is in the continuous planning process, the continuous conversations about and updating of that financial plan
Think about the explorers of the past. They had a map that was drawn by someone with incomplete knowledge of the world and therefore the map was incomplete. It probably didn’t show every obstacle and the explorers had to improvise along the way. They kept updating their maps and each action, whether right or wrong, added to their knowledge and the eventual perfecting of their map.
This is also true of our own personal planning process. We just try to keep updating and getting better and better maps. Making our journey better at every turn.
People are sometimes put off by the planning process or don’t begin the financial planning process, because they think they must plan out their future and all of their goals today and that once they make some decisions about their life 20 years down the road that they must keep to it. That is simply not the case.
We continue to make alterations and updates to our plans. Regular conversations need to be had to see how to best modify these plans. We know things are gonna change, and the value comes in the continuous dialogue and the value is the planning process. That is the value, not the actual plan itself.
When you create a plan in my profession we have all sorts of fancy software and Monte Carlo simulations and such that will produce these wonderful 200-page plans. In those plans it has every detail mapped out to the penny of what you’re going to spend in your retirement, how much you will earn in your career, and the return you will make on your investments.
As soon as you put that on paper it is wrong. You don’t know how wrong or in what way is going to be wrong, but you can say with a high degree of probability that it will not happen exactly as you lay it out.
Imagine someone with a plan who was planning on retiring in 2007 and just think how that plan looked by the end of 2008. We can point to many such instances throughout history.
You would not open a business, realize something was not working, and keep doing what wasn’t working until you were out of business, would you?
As someone who runs a business, I can tell you that I am always trying something to improve the business and am constantly finding out what does not work. Over my 20 years in business, I have found lots of things that don’t work and lots of things that stopped working. I have become better over my years of being ok with being wrong and changing course to what is a better action plan.
If we think about companies that have done this the best Apple comes to mind.
Apple’s greatest reinventions came when it turned its attention away from computers and toward hand-held devices. The iPod and iPhone were not the first MP3 player or smartphone, but their Zen-like design and advanced touchscreen technology revolutionized the gadget industry.
All of this is to say we should all plan heavily in our lives and know that our plans are probably wrong. Woking together with a CPA, consultant, financial planner, or coach can have huge upsides in working through your planning process. They have traveled this road before and have their refined maps ready to help.
The value is to all of this is in the process. Plan well, take action, gather data from your actions, adjust your plan, repeat.