Money for Life Applied Principle #8 – Implement the Success Cycle. Step 3: Compare.
The Success Cycle is made up of four basic steps: Plan, Track, Compare and Adjust. Step 3 is to compare your actual performance to your plan.
When it comes to personal finances, many people live in an “ignorance is bliss” kind of state. Unfortunately burying your head in the sand is only going to bring more stress and anxiety about your financial state. Once you have your plan and start on your tracking, you need to look back and compare your progress to your original plan.
“A written plan does little good if you don’t take the next step of comparing your actual results against your plan. With physical fitness, a coach will test your performance at regular intervals and compare the new information with past results. This will allow you and your coach to understand the areas in which you have improved and those areas that may require some changes.”
“It is the same with financial fitness. The step of comparing your actual results with your plan is a crucial one. This includes looking at both income and expenses. Planning and tracking do you very little good if you are unwilling to take time to compare your results on at least a monthly basis. As you make this comparison, you will immediately understand how and where to make necessary adjustments.”
Contains excerpts from Applied Principle 8, Money for Life, by Steven B Smith