Five steps to financial performance

Five simple processes should govern everything we do financially.  If we don’t do them, our lives tend to become disorganised and stressful.  If we do them, then things tend to get better.

1. FORECAST – Build a picture of future income and expenditure, given your expected resources, abilities and situation.  Stick to what you expect, not what you hope.  Don’t hide, don’t bend the picture, don’t dress up.

2. MONITOR – Record what actually happens in each period in exactly the same format.  Show forecast and actual against each other, and explain to yourself why there is a difference.

3. LIST ACTIONS – Identify the shortfalls you don’t like, and list the actions that correct them.

4. MONITOR ACTIONS – Monitor whether or not you do those actions.

5. REVISE FORECAST – Now make a new forecast. 

It’s the same self-monitoring and corrective process as learning to walk or ride a bicycle.  In fact, it’s the same process as all self-development: predict, monitor, correct, repeat.

I have helped several clients with their finances and their wellbeing, and the ones who make the most progress take on board, in one form or another, this five-step sequence.