The Importance of Tracking and Adjusting Your 2021 Financial Plan

December 22, 2020
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If you’ve been following the Illumination Wealth Blog this month, you will have seen a series of articles focused on annual financial goal setting and action planning to achieve those short-term (and long-term) goals. Here are the previous three articles in case you missed them:

Goal Tracking

In this final article of the series, I would like to cover the all-important topic of goal tracking. You have your goals defined. You have the proper motivation. You have a solid action plan in place. Now, it’s a matter of keeping your plan on track in order to successfully reach those goals.

Goal tracking is perhaps the most important action step of them all, and unfortunately is often the most overlooked part of the process. If you aren’t tracking your results and recognizing when you reach each important milestone, then it is really easy to lose your sense of direction. At least on a monthly basis—if not weekly—you must review your financial plan for the year and know exactly where you are at with each action step. If things aren’t getting done, then you’ll know you have more work ahead of you to get back on track.

Deadlines and Milestones

In the previous article, we talked about the value of setting deadlines for each key milestone and, ideally, for each specific step in the action plan. Tracking your progress allows you to see precisely where you are within the plan. Have those steps been achieved? Were they completed before the deadlines you set? How much further until you reach your next significant milestone?

If you are behind schedule, that’s okay as long as you are not too far behind. Consistently tracking your progress will help make sure you never get too far off track or too far behind on your action steps. Over the course of an entire year, there is plenty of time to make up for lost momentum. Just don’t let things slip too far out of focus or you will have a harder time righting the ship.

We also talked previously about building celebrations and rewards into your financial plan and then properly celebrating each milestone you reach. This is an important part of the tracking process, and of course it will keep you much more motivated along the way.

Adjusting Your Financial Plan

Beyond just tracking your progress and recognizing your results, you may also need to readjust your course. A sailing ship’s captain will tell you that’s what it is all about. The wind adjusts your course as you aren’t traveling in a perfect straight line from point A to point B. As captain, you must navigate these variables and continually adjust your course to enable you to reach your desired destination.

Financial planning is a lot like this. It’s easy to get off-course and you have to keep steering yourself in the right direction. You have to make continual adjustments throughout the process. Very few plans work out exactly as outlined on day one. There are unexpected surprises that happen and priorities can also change. You may realize a quarter of the way through the year that one financial goal isn’t as important as you thought it was, while another may now be the most prominent. This will force you to reimagine your goals and redefine your plan to accomplish them.

Maybe your work situation changes or something happens in your life (you get married, divorced, have a child/grandchild, move to a new home, etc.) that wasn’t part of your original plan for the year. That’s okay. Life happens. Now, how are you going to adjust your goals and priorities? How will your action plan change to factor in these new variables?

Stay Focused on Success

In financial planning, the moment you rest on your laurels for too long is the moment you find yourself where you don’t really want to be. Set specific financial goals and milestones. Stay focused and motivated by your goals. Create an effective action plan. Track and celebrate your progress. Adjust your plan as needed.

If you can follow these tips, you are going to have a fantastic 2021!

Happy New Year from Illumination Wealth. If you want to build a better financial plan, contact us today and let us guide you in the right direction.