You probably know more than a few people with a New Year’s resolution to save money or lose weight. There’s a reason these items make appearances on a person’s resolution list year after year. It’s hard, or at the very least, uncomfortable. Takes discipline and commitment to make the changes in behavior required to be successful. What makes it even harder is the fact it’s also so fundamentally simple, or at least the math of behind it is simple. Anyone can tell you how to save money or lose weight. To save money, spend less than you make. To lose weight, consume less than you burn. Easy right?
A resolution related post from last year, The Financial Planning Process: Plan, Learn, Tweak, Repeat popped into my mind. Rather than listing out tips for success we have all heard before, I thought the financial planning approach from that post would be a much better recipe for success. It is not black or white, on or off, triumph or defeat. It’s a process, requiring you to plan, learn, tweak and repeat.
- PLAN – It all starts here. Determine where you are now and where you want to be, and when you want to be there. Evaluate your current situation. Consider your options to get from point A to point B. Put the plan in place and start down the path.
- Save Money – We know saving requires spending less or earning more. You start with a plan to save a set amount per month, say $500, by simply cutting back on expenses.
- Lose Weight – We know losing weight requires burning more calories than you consume. You start with a plan to increase your calories burned by running, with a goal of losing at 1.5 pounds per month.
- LEARN – After having your plan in place, it’s time to learn from your journey. What areas of your plan have been successful? What areas have been failures? Reflect on how your plan has your plan been working so far.
- Save Money – You learn that you are heading in the right direction, by saving $350, but have not reached savings of $500. Think about the reasons why you have been able to save $350, and the reasons why you have not reached $500.
- Lose Weight – You learn that you enjoy running, and have been successfully getting out the door and getting your run in, but you found you haven’t lost any weight. Think about why the scale hasn’t budged, despite pounding the pavement.
- TWEAK – Tweak your plan. Make changes to your plan based on what have learned. Modify the weaknesses and play up the strengths.
- Save Money – You decide to continue down the path of reducing expenses to reach your savings goal. You tweak your plan by setting up a $500 auto-savings amount, knowing you can successfully reduce your expenses and making this change will help force you to trim a little more.
- Lose Weight – You decided running is a great start to reaching your weight loss goal, but you have found yourself eating more. You tweak your plan by starting to track your calories using app on your phone to help stay in your target range.
- LEARN – Learning is essential to allow you to modify your plan in order to advance toward your goals, so this is an important step between the other steps of the process.
- Save Money – You have successfully saved $500 for the last few months. This plan is working and you are going to continue on this path.
- Lose Weight – You have kept up with tracking calories have actually lost an average of three pounds a month for the last few months. But now that you have found success, you have find your motivation to run has dwindled.
- REPEAT – Your plan has evolved to allow you to be more and more successful. Parts of your plan might become outdated or unnecessary and need to be modified or replaced with a new plan.
- Save Money – Let’s say that extra savings was going towards an emergency fund, which you have built. Modify your plan by applying that $500 towards your debt.
- Lose Weight – If you no longer need to lose weight, make a new plan based on what you learned. You learned you enjoy running, so try a new plan to run a marathon.
It’s a process. Plan, learn, tweak, learn again and repeat. With this view towards achieving your goals, you are far less likely to throw in the towel after one misstep. You are no longer setting yourself up for failure; you are setting yourself up for success by allowing your plans to change and evolve to work with you.