Knowing where you're headed: Your personal Clarity Plan

What do you want from your business?

What do you want from your investments?

What do you want from your job or profession?

If you are in business, to answer these questions, you may sit down and draft a business plan, or an investment plan, or a career plan, as the case may be. This would be a sensible approach, but it also skips a vital step in the process required to effectively plan for your future: the construction of your personal Clarity Plan.

A Clarity Plan sets out where you are now and where you want to be at a future point in time, e.g. 5 years from now, in key areas of your life.

This is your “Why” in numbers.

You are composing a Profit and Loss and a Balance Sheet for your life – for whichever metrics you judge as important. The starting point is what you have now – what time commitments, what income, what expenses, what assets, what debts… One way of looking at this picture is that it is a summation of all the decisions you have made to date in your life. Some fundamental metrics are:

How many hours per week do you work and where?
How much time per week do you have with your family?
How much time per week do you have for yourself for sports or hobbies?
How much time per week do you invest in getting or keeping fit?
How many hours of sleep do you get per night?
How many weeks of holidays do you take per year?
What are your monthly income and expenses?
What are your current assets and debts?
If you have a business, what is the estimated market value?

Now, if you have a partner, you need to get together with them, and list your goals for the future.

Don’t worry about the “How” at this point – just list your shared goals. For example:

How may hours per week would you really like to be working in 5 years?
If you want to spend more time with the family per week – how much time?
If you want to spend more time on personal hobbies per week – how much time?
What level of income do you want in 5 years’ time? What do you want your expenses to look like?
What assets and what liabilities do you want to have?
How will any additional net income translate into increased assets or reduced debts?

It is vital to document all your assumptions that were used in working out your forecast net income and net assets e.g. rates of return and tax rates. Otherwise you will not be able to effectively revise/update the plan in future years.

Be specific so you have clear goals and can measure your progress against them. Record your numbers in your plan. Think about how your life would change if you reached these goals.

These results are what your business/profession/job needs to do for you over the next 5 years.

Once you are happy with your targets, you can start to work on “How” they can be achieved. Look at where you are now and where you want to be for each key area and come up with 5 strategies to achieve each, being as specific as possible.

Firstly, let’s consider your time. Your most precious asset. If your goal is to reduce your working hours by 10 hours per week, list the strategies you can employ to achieve this goal.

For example:

Increase days working from home from 2 to 3 days per week (saving you 2 hours of commuting time per week)
Delegate XX tasks to XX to free up 2 hours per week
Develop and fully document the system for XX to save XX hours per week, etc.

If your goal is to increase income by $XX per month, what are 5 specific strategies to achieve this? If your goal is to increase your assets or reduce your debts in 5 years by $XX, what are 5 specific strategies to achieve that?

Be as specific as possible and always include measurable items in each strategy.

So there you have it, your personal Clarity Plan. In 12 months’ time, you can measure where you are and review your progress. Are your assumptions still valid? Are there any changes to your goals that you wish to make? Record your new actuals (hours worked per week, hours spent with the family, hours of sleep, monthly income, etc.) so you can compare these to your starting points and measure your progress towards your goals.

Over 5 years, you will have 5 sets of data showing your journey to achieving your goals, with insights on which strategies worked in each area and which did not.

Once you have your personal Clarity Plan in place, if you are in business, the next step is to consider how your business is helping you achieve your personal goals – i.e. preparing your Business Plan. We’ll look at that in the next post in this series…

Feel free to contact me if you have any questions on how the above might apply in your situation.

IMPORTANT NOTICE

This blog post contains general information only and has been provided by Allworths without reference to your objectives, financial situation or needs. Allworths cannot guarantee the accuracy, completeness or timeliness of the information contained here. By making this information available to you, we are not providing professional advice or recommendations. Before acting on any of the information contained here, you should seek professional advice.