Do you need a plan?

As I may have mentioned before, if you are in debt or working a job you don’t like, then you are a prisoner.

Maybe you like your job (most of the time) but you’d just like more choices and more flexibility in your life?

Escape is possible.

But you probably need a plan.

What is your runway?

Freedom and happiness are a lot easier to achieve if you are financially independent. Or if you at least have enough runway to change career or work part time or as a consultant or otherwise take back control over your own life.

What do I mean by “runway”? Your runway is the length of time you could go without working. If you have savings of £100,000 and annual spending of £20,000, you have a 5 year runway.

You get more runway (more financial security) either by getting more or spending less. There is only so much you can cut from your spending. But there is no limit to how much you can earn. So, once you’ve cut out the waste and “plugged the leaks” in your spending bucket, it’s far more powerful to focus on earning more.

Having a plan helps reduce anxiety

Low level anxiety seems to be the curse of the modern age.

This may be a feature (not a bug) of The System. The System wants us anxious and compliant. The System is set up to encourage weakness and consumption.

Dopamine-seeking behaviours (low level addictions to The News, social media, sugar, alcohol, shopping etc etc) disrupt our bio-chemistry, screw up our feelings of satisfaction and negatively skew our perspective on the world.

If we want sustainable happiness (or rather life satisfaction), the sort that comes from better results and less financial anxiety, then we need to turn off auto-pilot and seize the wheel for ourselves. That means having some sort of plan.

Write it down

Do you need a written financial plan or is it enough just to know what you’re going to do?

Well, it’s up to you but Socrates compared the human mind to an aviary where there are all sorts of birds (thoughts) flapping around, screeching and generally making a racket.

By writing things down, you allow the birds (thoughts) to settle and you calm down the background noise of the aviary (the mind).  This helps bring the conscious and the sub-conscious minds closer into alignment with each other.

Writing it down brings order to chaos. It’s a powerful process by which you organise your thoughts.

What if you are busy?

Let’s assume that you are busy. Let’s assume you are the sort of person that doesn’t like unnecessary paperwork.

A financial plan does not need to be long. This should not be a bureaucratic exercise. It can just be one side of A4 paper or a spreadsheet.

The most scarce resource for busy professionals (especially those with children / families) is HEADSPACE. So we are going to want to keep things simple and we are not going to over-engineer this.

Your plan is personal to you and your circumstances. It doesn’t have to be complicated but it does have to be yours.

A number of my coaching clients want to send me a draft of their one-page plan to discuss and I am always happy to help them with this.

Everyone is different, but I often do financial coaching sessions with clients / couples to get their plan up and running that look something like this:

  • Session 1 : zoom call to get background and discuss current situation (1 hour)
  • Homework: clients go away and draft their one page plan and send to me
  • Session 2 : (T + 1 month) – follow up zoom call to discuss draft plan (30 – 60 mins) 
  • Session 3 : (T + 3-6 months) – check in on progress (~30 mins)

The elements of a one page plan

So what should be in The Plan?

There are 4 pillars of financial independence. These are:

  1. Earn more
  2. Spend less
  3. Invest the difference wisely
  4. Know how much is enough

So you probably need a plan that addresses all four of these pillars.

A one page plan should include your goals and your process for achieving those goals.

Firstly it should include some goals. What does success look like to you? Where will you be living? What will your freedom fund allow you to do when the plan has worked successfully?

A clear vision taps into your deepest motivation and helps adherence. So the plan should also include your “why”.

And secondly, it should contain your process. What tangible actions will you take over the next 3, 6 and 12 months to take you closer to your vision?

Your process matters. It may be more important than your goals.

Outcomes are the results of process. Good processes repeated over time lead to good outcomes more often than lazy processes do.

Focussing solely on outcomes forces us to make choices that are banal, short term or selfish. It takes our focus away from the journey and encourages us to give up too early

Seth Godin, The Practice

You should write down a clear set of career actions, saving and investing behaviours that are specific and measurable. For example:

  • When will you start looking for your next job?
  • When will your next promotion / house move / career change be?
  • How much will you save each month?
  • What will be your split between pension saving and ISA saving?
  • What will you do with lump sums / bonuses / windfalls?
  • What will be your target asset allocation (mix of assets)?
  • Over what time frame will you get that surplus cash working for you?

All simple stuff? Maybe. Simple but not easy.

Shit happens

Your should not just assume 100% adherence.

Things don’t always go according to plan. So your plan could include corrective actions that will be taken in the event of unexpected events, pandemics, job loss and other shitshows.

Let us recall the wise words of Mike Tyson:

Everyone has a plan until they get punched in the mouth.

Mike Tyson

Writing your plan down is a form of pre-commitment

During a bear market, everything looks bleak. The News is scary. Formerly sensible people will start to predict the end of the world. Fear is contagious. Panic leads to capitulation.

You must never allow yourself to become a forced seller of risk assets during the bear phase:

Writing down your plan increases your chances of staying on The Path when things get tough.

Why do people treat themselves worse than their employer?

I am continually amazed by the contrast between:

i) what professional people will do for their employer; versus
ii) what they do for themselves (and their own personal finances).

What if you put as much effort into your own finances as you put into your job??

Consider the insane amount of work that busy professionals (e.g. lawyers, doctors, accountants, bankers, engineers and techies) put into work emails, board papers, models and presentations. Think about how much time, effort and energy gets put into corporate plans…

And yet when those smart professionals go home, they often ignore their own finances. They never get around to writing down their own plan.

It’s crazy to treat yourself as less important than your employer / boss. Why would you do that?

Do you have a plan?

The Escape Manual contains more detail on this and an example of a one page financial plan that you could start from and tailor to your own circumstances

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So if in future you are wondering why my blogpost production has slowed down or even stopped, the answer is that it hasn’t, it’s moved onto my email list (it’s free and you can sign up below 👇).

I write a new article each week that goes out by email (most won’t appear here on the blog) so the best way to get new content is to sign up to my email list:

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  1. denim · · Reply

    Hi TEA I’ve followed and enjoyed your blog for many years I’ve tried to enter your email list many times but keep getting the following msg;
    “Whoops! There was an error and we couldn’t process your subscription. Please reload the page and try again”.
    whats wrong
    cheers denim

  2. […] Do you need a plan? – The Escape Artist […]

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