The First Step: The Journey of Financial Planning

There are many descriptions of financial planning, which makes it difficult to come up with an accurate definition. Sort of like art, the beauty or ugliness is in the eyes of the beholder. One thing that financial planning is not? A plan. I know—this is crazy talk, but read on if you’re intrigued.

Many clients, colleagues, and just plain folks have asked, “What is financial planning?” The stock answer is that it’s not just about money. But then what is it? Financial planning is a process and a journey. Lao Tzu said, “The journey of a thousand miles begins with one step.” No one can guarantee any of us a successful journey, but you won’t know if you don’t start.

Creating a financial plan is arduous and at times not very fun. You begin by collecting information about yourself and handing it over to a financial planner or advisor, who reviews it and makes judgments about your past financial decisions. Taking this first step is not easy for any of us. No matter how successful we think we are, we can feel fear and anxiety that we will be judged negatively. By far, this is the hardest step to take. But once we do, we can begin a journey that will help us clearly define at least the direction we want to go, if not the destination or the goals we aspire to.

Focus on the journey and not the destination. You may not know exactly your goals, but most of us have an idea of the direction we want to go. Use the financial planning process to first help you define the direction, then guide you along a path in that direction. Realize that the journey will be uncertain with periods of happiness followed by disappointment, some financial and some not. Lean on your adviser or planner to give you the information you need to make good decisions along the way. It’s not important to be right all the time, just to be right more than you’re wrong and to make informed decisions rather than impulsive guesses.

A financial plan is not financial planning. It’s not important to receive a plan but more so to go through the planning process, identify actions you should take to get yourself going in the direction you want to go, and then follow through on those actions. Think about the words of Lao Tzu, take the first step, and then enjoy the journey of the rest of your life.