Take Your Finances from Good to Great with a Transition Plan
The saying goes “the best defense is a good offense.”
And while I agree having sound skills and strategy both offensively and defensively are critical to be a winning team, the difference between being good and exceptional often isn’t about positional skill at all. As a youth sports coach, what can be fascinating to realize is that winning often doesn’t mean you had the best team. Scores sometimes don’t tell the story as far as who played the better game on either side of the field.
No, exceptional teams have something that isn’t as often heralded: an excellent transition plan.
Having a transition plan means you outwit your opponent in unsettled situations. Most often, a good transition play is the result of thinking one step ahead of the current situation. You don’t have to be stellar at any game aspect, or an All-American player, to get a jump on or create opportunities where one didn’t exist jump moments before.
In an otherwise equally weighted game, a team that executes a smart transition from one side of the field to the other tends to come out on top. They create opportunities to get a step on their opponent and make their own advantages by quickly moving from defense to offense. Likewise, a team that works together to prevent the ball from making it to their defense takes away their opponents’ scoring chances.
The takeaway from this in our financial lives is that having a strategy in place to ‘jump on’ opportunities that may happen in the future, while focusing on the present, is a trait that can be a difference maker between a good lifestyle and an excellent one.
In a game like lacrosse, it’s thinking one step ahead. Your team is on defense and focused on playing with solid fundamentals to stop the attackers.
Now picture the other team dropping the ball, and your defensive player securing it. Clearly, the goal is to advance to your offensive side of the field. But, not all teams have thought a step ahead before we reach that point. The team that has will have an advantage, and a head start on meeting their goal.
In finances, the same is true. Having defensive and offensive game plans, with what might happen in mind.
You may know your current employment situation isn’t where you will be in the long-term. Do you comfortably do your job, collect and spend your income, and otherwise just live in the present? Or, are you making plans for what’s next; building an emergency reserve in case it is needed, or looking to attend courses and gain the experience you need in your ideal field?
You may be planning for a family addition in the next several years. Are you thinking and reading about what the logistics and costs of a change in your family will be?
You may be starting to wonder if you will be able to afford retirement based on all of your future income streams and savings. Have you met with an adviser and discussed your strategy? Have you considered the threats to your plan, how much you need to replace your income?
In sports, thinking one step ahead makes all the difference. Barry Sanders was known to comment that he often saw himself past the most immediate opponent who stood is his way, and focused on how he could beat the next. In finances, arming yourself with information, and creating a plan for what comes next with your adviser can help to make all the difference in living the life you dream of, rather than the one you are content with.
The preceding blog was originally published by the Financial Planning Association®(FPA®). To view the original blog please visit the FPA Web site.