I recently summited Mount Shasta in California, a 14,200-foot volcano. It is a gorgeous mountain and summiting was very rewarding.
There are many things that are vital to success at an endeavor such as this, but several of the most important, I believe, are preparation, proper tools/equipment and experience.
Preparing for a climb of this magnitude requires the discipline to put in many days and hours of training, particularly climbing smaller mountains with a heavy backpack over varying terrain and many hours in the gym. Proper and high-quality tools and equipment are vital — proper clothing, shelter, food and climbing tools can mean the difference between success and failure (or worse). And experience vastly increases the chances of success. This experience can come from one’s own years of summiting or through hiring an experienced guide.
The elements of success in summiting a high altitude peak are not that different from establishing a roadmap (plan) for financial success — preparation, the right tools and experience are all critical elements to success in financial planning.
“Success” in financial planning and/or setting one’s financial future can differ from person to person; however, I would generally define it as satisfaction or “peace of mind” that one has sufficient resources to live the rest of their lives in reasonable comfort without financial anxiety, and one can focus their time on activities and endeavors they truly love in an independent fashion and without worry about money.
So how does one achieve this through financial planning? Preparation, high quality tools and experience.
When we think about “preparation” for creating and implementing a successful financial plan, it involves determining life priorities and goals, understanding one’s current financial status, assessing changes that may be needed to achieve financial goals, and assessing uncertainties or risks to achieving those goals. This involves a lot of thought, perhaps introspection, but also a sound understanding of one’s budget and financial resources.
Proper “tools” are essential in implementing a successful plan. Today, most planners can employ sophisticated financial planning software that can model just about any scenario one can think of. Good planning software (and of course the assumptions/data that are used with the software), like good climbing gear, make a huge difference in chances for success.
Finally, retaining a good adviser with experience in dealing with many different clients and situations, can make a material difference in understanding the plan, interpreting the plan, and understanding plan pitfalls and steps that can be taken to strengthen the plan to maximize the probability of its success. It’s not at all unlike how an experienced climbing guide can determine the best “steps” or route for a successful mountain summit experience.
Bob Toomey is vice president and director of research at S. R. Schill & Associates on Mercer Island, with CFP and CFA designations and a background of more than 30 years in the financial industry.