Planning for the Year Ahead
By Ryan Goldsman, CFP®, PAIP®
After the proverbial New Year’s Eve hangover wears off, many Canadians begin the year by rolling out of bed and finishing the leftovers from the days before. For the lucky few who made it out of bed early enough to start their year off on the right foot, there’s something called The Resolution Run that takes place across Canada the morning of January 1st. Having enjoyed it once in the past, it’s not how I want to begin this year.
Instead of running 5 kilometres and feeling like I’m going to drop from exhaustion, I’ve decided to start the year by planning well in advance. After all, if anyone wants to reach their goals, then planning is involved. If not, then it’s a dream, and not a goal.
With 365 days ahead of us, the year kicked off before I knew it. As I do with any concrete goal that I want to accomplish, I write it down. This year was no different, but over the past few months, I had started to better understand the decision-making process.
For those who want to make a change, financial or otherwise, there’s a number of steps that we go through before we get to make our first attempt. Put another way, if you want to play a professional sport, you don’t start by taking the game winning shot. Instead, the preparation starts a long time before you reach the finals.
To make a change and have it stick, there are two key elements to consider. The first includes the steps to making the change, and the second includes the impediments that may stand in the way of developing new habits.
These steps include: precontemplation, contemplation, preparation (or planning) for change, action, maintenance, and termination (or relapse).
The first step, precontemplation, begins before a person even begins to consider change. At this stage, the “status quo” is acceptable. Should things change, or there’s the potential for improvement, then the contemplation stage begins. In the financial industry, it’s very normal for Canadians to ask themselves “should I reconsider my relationship with my investment advisor” following a bear market.
In some cases, the change process is abandoned at this stage for any variety of reasons, but not always. During the third step, the preparation for change, it’s normal to begin investigating viable alternatives and making alternative plans. Once this is done, then it’s on to the action stage, during which the change is undertaken. In many cases, this is done in one instance, but it can sometimes take several steps over a longer period of time.
Once the change is made, then a new habit must be formed. As a result, one may experience a relapse into one's old patterns, so actively maintaining the new behaviour is critical. Where one fails to adopt the new habit, then it can be said that the undertaking of change has been terminated.
Where many face the greatest challenge is when there are many impediments between the status quo and the desired result. In many cases, the change is much more difficult to accomplish when there’s not a strong motivation for it, and when the tasks required are either complex or are numerous.
As an example, completing one’s own tax return may be complicated for some, but it’s a very normal thing to do for many others. As a result, although it may be possible to enact change (by learning to complete one’s own tax return), the time and mental energy required to do so is often not worth the effort.
For others who do undertake a change, then it’s important to have a number of checkpoints along the way.
Where financial matters are concerned, this year (like all others) begins with a budget and expectations regarding what should be accomplished throughout the year. From there, I’m already at the second step – contemplation. What do I want to improve on this year?