Plotting a path toward your financial future can seem fairly straightforward: you set your goals, build a portfolio, and wait for your investments to grow. However, making progress with your plan, as with making progress in most parts of life, is hardly a linear process.
You should start your financial planning journey with an end goal (or goals) in mind and an idea of how you’re going to achieve it. Then you’ll work backward to fill in the gaps and create a guidepath for that journey.
Expect the Unexpected
On paper, the path from where you are to where you want to be will look and feel like a straight line. But in reality, over time and with life changes like a new job or a cross-country move, the path is going to lose its crisp clarity.
Some portions of the path will experience high highs, like when the market is booming or you get an amazing promotion and raise at work. And some of the portions will take a seeming nosedive as you experience losses like unemployment or the death of a spouse. At these times, it will look like your portfolio has moved away from where you think it needs to be to achieve your financial goals.
It can be hard to avoid the euphoria that comes with experiencing the high points or the fear that comes with the low ones. But it’s during these times that you need to remember that your overall financial journey shouldn’t be measured by where you are during a single portion of that journey.
Trust Your Navigation
Think of how you travel when you take a road trip. Sometimes, your GPS updates in transit and takes you around bodies of water, road construction, or traffic accidents as driving conditions change. While this new route or detour may not have been planned, trusting the guidance still gets you where you want to go.
In reality, a straight line between where you are today and where you hope to be in the future likely doesn’t even exist. Change will be constant. Some of it, like how much you save, how much you spend, and how you react to different situations, will be in your control. Many things will happen that will be beyond your control and you’re going to possibly need to make adjustments to get to where you’re going.
Even if the path doesn’t stray far from what you expect, you’re inevitably going to have to stop for gas (or a charge!) at some point – you just don’t know where or when.
Find a Trustworthy Guide
When navigating your financial journey, your financial advisor can act as your personal GPS, steering you around unavoidable hurdles, like laws and regulations that impact your investments the same way that natural bodies of water dictate where roadways travel. Your advisor should be able to read the road ahead well enough to know when to steer you clear of the traffic accidents or road construction that unexpectedly pop up to block your way.
Instead of insisting on the mythical straight path, embrace the ups and downs as you travel your financial journey. Focus more on the destination and less on your current position on the path. Before you know it, you might be closer to your goals than you ever thought possible.