Personal Finance Challenge #21: Look To The Future First

I am not sure if he first came up with it, but leadership author and speaker Stephen Covey popularized the phrase, “Begin With the End in Mind”.

It basically means that if you have any leadership goal or objective you want to achieve you start thinking about your end result, then work backward from there creating action steps.

Many times we start out with a goal or objective and start taking action steps that we think will get us there. Unfortunately, some of those first steps may be right, and some may be wrong. And the steps that are wrong can lead us completely away from the goal.

Hopefully, by working backwards from the end result we will take the correct actions that will get us there.

Take getting rid of debt for example. The goal or objective may be bigger and harder for some and smaller and easier for others, but it is still the same goal.

Instead of starting at the beginning and developing plans to pay off a little each month we have to start at the end (being debt-free), and work backwards.

By working backwards we think about what can get in our way between the beginning and the end result.

We can think about what we will do if an emergency happens. What we will do if we suddenly can’t pay the same amount towards our debt. We can decide what priority each debt will be placed at, and which to pay off first.

Starting at the end and working towards the beginning simply allows our minds to think differently about the problem and arrive at a better solution.

Or possibly more solutions in the form of contigency plans.

If the amount of debt you have will require you to work 5-10 years to pay it off then you will have to start thinking 5-10 years out.

A lot can happen in 5-10 years. Where do you think you will be live, and what will your living situation be? Will you have your current job or business? Will you get married, and stay married? How many kids will you have, if any? What other major expenses will you have? What other debts might you take on?

Granted, you can’t really plan for so many unknown variables in the future, but they at least need to be on your mind.

By planning from the end you avoid wishful thinking and unrealistic projections. Planning from the end helps to bring the end goal into focus. And focus is what you will need to stick with your plan over the years.

Don’t let the largeness of the goal overwhelm you though. Remember that watching your progress can be really fun. The bigger goal just needs to be broken down into smaller goals which are easily achievable…

This is our 21th challenge in The Personal Finance Challenge Series…

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  1. […] 17. Study The Greats of Personal Finance 18. Make A Plan 19. Keep It Simple 20. Keep It Fun 21. Look To The Future First 22. Break Big Goals Into Smaller Goals 23. It’s Simple, Not Easy 24. Don’t Believe It […]