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May 21st doomsday prophecy or how not to make a financial plan!

From The Economic Spy

If you made any financial planning moves based on the May 21st doomsday prophecy of Harold Camping you learned a valuable lesson on how not to make decisions concerning personal finances!

The May 21st doomsday prophecy came and went and as most sane people knew, the world did not come to an end and./or catastrophic events like earthquakes and tsunamis did not occur.

financial plan

Some things to consider when drawing up a financial plan!

When  creating or executing on your financial plan this non-apocalypse provides an excellent metaphor for what to do and what not to do.

Financial planning should not be based on tips, rumors or on the recommendations of anyone whose opinions and past track record you don’t trust and believe in.

When the retired subway worker in New York spent his $140,000 life’s savings on billboard ads for busses and trains speaking to the end of the world, this was a very poor financial plan! Why?

In the first place no one can predict the end of time (you hear that Mayan Calendar) and Harold Camping has been wrong about it before which should come as no great surprise.

Therefore to create a financial plan based on this information should have been a non-starter.

So what are some steps that you should take when formulating your financial plan for the future?

  1. First, much like the process of drawing up a will, formulating or even thinking about your financial plan should not be pushed off to some later date;
  2. When creating a financial plan, do it in the context of where you reasonably would like to see yourself and not on unattainable goals;
  3. Looking back on number 2, look at your personal savings rate and try and formulate a number that you would like to get to in the future;
  4. Looking back on number 3, a financial plan should not be based on unrealistic or too good to be true investment vehicles;
  5. Remember to work contingencies into your financial plan for the loss of a job or potential health issues down the road;
  6. Learn about all of the retirement vehicles that are available;
  7. If possible find a highly recommended financial planning consultant;
  8. Don’t Procrastinate!
When it comes to creating a financial plan for the future, the process needs to start with you.