CINCINNATI BUSINESS COURIER
December 17 – 23, 1984
INVESTMENTS
Charles Vaughan
PLAN TO FAIL! Of course not. No sane person would intentionally plan to wind up broke at retirement. But, according to the U.S. Department of Commerce, 95 out of 100 Americans are almost totally dependent on Social Security and company retirement plans at retirement. Only 5 percent of those retiring are financially independent, that is in the fiscal sense, successful. If the other 95 percent had not had the opportunity to achieve, we could consider this a national tragedy. The fact is that the vast majority earned enough to make provisions, but, for whatever reason, did not do it. In most instances, they simply FAILED TO PLAN.
When we look at any of the magnificent new buildings going up in the downtown area, we have to marvel at the complexity of such a huge construction project. However, when a building is completed, we are not surprised to see that it has turned out as it was designed. The reason is that we expect a skillful developer to take the concept of the structure and translate it into minutely detailed plans. Materials will be ordered, work scheduled and financing arranged according to plan, and progress will be gauged frequently versus that plan. Success is not an accident; it is a process.
Few people, even those who are successful business managers, truly apply the same proven principles to their personal finances as they do to their business. The results speak for themselves. Instead of a golden era of sunny beaches, verdant golf links and leisurely travel, retirement for many represents a time of dependency, worry and declining living standard. Most American families have the financial capacity to handle the major events in their lives if only they would apply the same sound strategies they use in making other decisions.
For example, if you decide you want to go to Miami Beach you automatically start a mental planning process. You most likely would not jump on your bicycle and start pedaling whichever way it is pointed. No, you would check a map to see where it is with reference to where you are now. Then you would consider how much time and how much capital you have to get there. Then you would review the various options: walking, cycling, driving, flying, etc. Next you would match them with your time, financial and personal comfort considerations. At that point, you would make a decision. Once the decision is made, you would map out your route, schedule your trip, arrange transportation and secure financing. If your itinerary is complex, you may engage a professional consultant. From past experience you know that detours and emergency situations are always a possibility so you would try to allow for them in your plans. Once underway, you, the pilot or the bus driver would make frequent progress checks to see if you are on course and schedule.
Having gone through this process many times, you are not shocked when you arrive at Miami Beach. In fact, you usually check your watch to see if you are on time. The financial planning process is no different.
A Proven Formula for Success:
• Decide where you want to get – SET GOAL.
• Look at where you are now – REVIEW CURRENT FINANCIAL RESOURCES.
• Examine alternative courses -STUDY INVESTMENT ALTERNATIVES
• Match resources and alternatives – DECIDE ON A COURSE.
• Select mode, route and schedule – MAKE YOUR FINANCIAL PLAN.
• Engage professional help (if needed)-GET PROFESSIONAL HELP.
• Be prepared for detours and panic situations -HAVE CONTINGENCY PLANS.
• Arrange to check progress frequently – SCHEDULE PERIODIC REVIEWS.
Reaching our financial destinations is no different than reaching Miami Beach. If we plan it right, only a catastrophe will keep us from being successful and reaching our goal. Failing to plan will, in the majority of cases, assure our failure. If you don’t know where you’re going, you probably won’t get there!