CESI Personal Finance Guide – Chapter 1: Strategic Planning

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Chapter 1: Strategic Planning

The Importance of a Financial Blueprint

A blueprint is a plan of action and a key component of every successful endeavor. Whether you are building a house or creating financial security, a good blueprint or strategic plan is essential.

The Power of a Dream Defined

A strategic financial plan is an outline of the steps you must follow to achieve a goal. If you do not have a good plan in place, you could waste time and resources. If you do not chart a course for purchases and financial goals you are planning, your dreams may remain unrealized. Have you ever looked at your year-to-date income on a pay stub and wondered where all the money went? Spending without a plan can silently chip away discretionary cash in a very short amount of time.

I have a friend who made $300 a week for several years. Randy was constantly complaining about how impossible it was to save money. “If I could just make another $200 a week, I would be able to save money and plan for the future,” he often fantasized. Randy decided to earn a certification in his field which enabled him to qualify for a higher paying job. His weekly earnings jumped to $700. What an impressive increase in resources! The investment in the certification program was certainly worthwhile. He had more than doubled his income.

I was curious about how much Randy would be able to save now that he was making more money. When I checked with him about eight months after starting his new job, I was quite dismayed to learn that he had not saved one cent. He admitted that he was so excited about having the extra cash that he just did not focus on saving or planning for the future. Randy had a lot more money than he was accustomed to, but he did not take the time to develop a plan or to create a financial blueprint. Of course, as luck would have it, a month after our meeting, his car needed major repairs.

With no money in savings to cover the unexpected expense, Randy felt like he was making $300 a week again with no way to make ends meet. He vowed he would never be in that position again. Randy immediately began to track his expenses, construct a budget and set financial goals. He set up an automatic draft to transfer 10% of his paycheck to a savings account. He was motivated. Several months later Randy was comfortable with his financial strategy and confident about his ability to prepare for the future.

My friend’s experience exemplifies the importance of financial planning regardless of your income level. Good intentions lack substance when there is no strategy for accomplishment. In addition to providing direction, a financial plan is inspirational. Embarking on a definite course of action toward a goal inspires those who once thought their dreams were not achievable.

How To Create Your Personal Blueprint

Devising a strategic financial plan involves several steps. First, it is necessary to identify what you want to accomplish—your goals. Bring into focus those you believe will enhance the quality of your life. Buying a vehicle, paying off credit cards, going on a cruise, establishing a retirement account, remodeling an existing home, or putting a down payment on a new home are examples of financial goals. Write them down. The act of writing out your goals helps with the discovery process. Review each idea for practicality. Make sure they fit your lifestyle and personality. Don’t look for mass appeal here; each objective should be meaningful to you.

Next, categorize your goals according to expected completion times—short-range, mid-range or long-range. A short-range goal is one that can be completed in less than a year. A mid-range goal may take 1 to 5 years to accomplish. If the anticipated completion date is more than five years away, you are working on a long-range goal. A comprehensive financial plan typically includes all three types of goals. Once the goals have been established, you must determine the amount of money required to reach the finish line.

Perhaps one of your objectives is to take a cruise. After determining your destination and finding out the cost, set a target date to begin your adventure. An accurate review of your income, expenses and lifestyle will help to determine a date that is realistic for you. This is a complete financial assessment. We will review the financial assessment in more detail in the chapter on constructing a budget.

For now, let’s assume that your financial assessment indicates that you can comfortably save about $1000 per year, and that the cruise will cost $1400. This makes the cruise a realistic mid-range goal. It will take approximately 18 months at a savings rate of $78 a month to accrue $1400. Based on this information, you can determine a definite date to set sail.

The next step is to implement a plan to deposit the required amount of money into a “cruise” account each month. By following your savings strategy, your dream will become a reality by the target date. Of course, you’ll need to build in time to book your cruise in advance and to take advantage of any discounts or early registration offers that may be available.

It is helpful to insert checkpoints along the way to assess your progress. You may decide to check your status every three months. If your plan calls for you to deposit $78 into a special savings account each month, then you should have at least $234 saved at the three-month check point. If you have more than the projected amount, it is cause for celebration! You are ahead of the game!

However, if your balance shows that you have not deposited the required $78 each month, you must immediately examine your recent financial decisions to find out why you veered off course. Emotional spending, buying on impulse and habitual purchases are some of the most common reasons for getting off track with your financial plan. A legitimate emergency can impede progress, but more frequently we miss the mark due to lack of restraint.

It is customary for some people to “treat” boredom, stress or a case of the blahs with a trip to the mall. Many are unable to resist the assortment of candy bars and trinkets on display at grocery store check-out lanes. Some of us habitually get a cup of coffee at the corner gas station every day on the way to work.

Evaluate Your Progress

Fine-tune behaviors that are not advancing the plan. If you discover that you are prone to similar, automatic behaviors, that have caused you to come up short, make a firm decision to become a conscious consumer. Curb the inclination to go to the mall when anxious or upset. Perhaps talking to a friend or listening to music would elevate your mood.

Try using the self-serve register at the grocery store. Shoppers are not tempted with extra goodies while waiting in the self-serve line. Or take a few extra minutes to make your coffee at home before leaving for work. Some have found that a small reward, allowing yourself a $20 splurge on something fun if you have adhered to your financial plan for three months is a great incentive.

Be creative. Keep your goals in view. Be willing to make adjustments to enjoy a more rewarding future. Subject your spending habits to close scrutiny and you will find ways to shift your strategy into high gear.

In This Chapter You Learned:

The steps for designing an effective financial plan can be summarized as follows:

  • Identify your short-range, mid-range and long-range goals.
  • Estimate the financial resources you’ll need to reach each goal.
  • Set a target date and determine how much money you will need to save each month in order to reach your goal by that date.
  • Implement your plan.
  • Assess your progress regularly and make adjustments where needed.


Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.

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