Revising and Reworking a Failed Financial Plan

In 2003, shortly after getting married, I had an ambitious goal of saving for a 20% down payment on a house by the end of 2007. Over the next year, I did make some savings progress, but I kept falling behind my milestones. Eventually, fed up with myself, I gave up and more or less just spent the money freely. I thought of myself as a complete failure.

When I made that choice, I was exposing my own idiocy in several different ways.

First, I was demonstrating a complete lack of commitment to a goal. Rather than making small sacrifices to fulfill a big long-term dream, I let the dream fall by the wayside in the name of instant gratification.

Second, I didn’t step back, revise, and rework the plan. When I realized I wasn’t making the goals I had set, I didn’t sit down and re-evaluate things. Instead, I acted like an idiot again and just spent the money with reckless abandon.

Third, I allowed that failure to define myself more broadly as a failure at money management. I just believed I didn’t have what it took to be successful at saving. I let myself believe I was a broader failure just because I couldn’t handle that goal.

Setting a big, audacious goal for yourself is inspiring. It makes you feel good about yourself and pushes you to accomplish things beyond what you believed to be possible for yourself.

I’m going to be debt free in three years.

I’m going to have six months’ of emergency fund in the bank by the end of this year.

I’m going to have seed money for my business idea an a year.

We conceive of these great goals, we plan for them, we sacrifice for them.

And then they fail.

Something changes along the way. An unexpected event occurs. We make a few bad spending choices. We overlooked some key element that completely alters the picture.

And we’re left with that empty feeling of failure. We didn’t make that goal. Instead, we just messed it up, like countless other things in our lives (yes, everyone messes up – a lot).

I could sit here and list my own goal failures all day long – as if the one starting this article wasn’t bad enough – but one thing this failure has taught me is that failing at a goal doesn’t mean you’re a failure or even that the goal or the plan was a failure. It just means you need to go back to the planning stage for a bit. Here’s how.

First, never define yourself as a failure because you failed to accomplish a goal. The inability to accomplish a goal is, yes, in part due to your mistakes, but there are usually countless other factors involved as well. A breakdown in a plan merely means that you need to step back, look at what went wrong, and re-work the plan.

Second, look for the root cause of what went wrong. There’s usually an obvious answer, but that’s not the one you want. I suggest using the “five whys” game when figuring this out. State why it seems that the plan failed, then ask yourself why. When you answer that, ask yourself why again. Repeat it until you get down to a root cause that can’t be broken down again. Often, it takes five or so “whys” to get there.

Third, address that root cause. It might be something you can take care of immediately. It might be something that you’ll have to slowly modify over time. Whatever it is, figure out a plan for addressing that specific root cause and focus on changing that.

For me, the real root cause of many of my financial troubles was a lack of persnal control. I would constantly sacrifice the long term for the short term, because I loved the rush of instant gratification. So, the first step for me towards completing a lot of my bigger goals was to simply break that addiction to instant gratification. I mostly did this by utilizing the other changes in my life (having a baby, mostly) and finding ways to get that gratification rush without spending money (like snagging a hot book on reserve at the library, for example).

You may find that your bigger goal has to be delayed a bit while you deal with the more immediate problem. Maybe you need to work on your own behavior, or maybe you found you need a bigger emergency fund. Get the smaller goal finished first – the bigger goal can wait.

Fourth, ask yourself if the big goal was something you really wanted in the first place. You may find that, after fixing the root problem, your perspective has changed. The long term goal you had in the past doesn’t reflect the new understanding of yourself that you now have. If that’s the case, great. It’s a powerful sign that you’re growing as a person. Don’t be afraid to abandon a goal that no longer matches what you want or the person that you are.

Finally, try again. Start over on your modified goal or give some thought to a new goal. A failure doesn’t mean that you should give up on your big dreams. Instead, it’s just more insurance that you’ll make great progress towards your goals.