Implementing Your Plan

Once you have gone through the important steps of identifying what you have now, setting goals and planning how to reach your goals, it's time to translate your efforts into action. And as important as each of these initial steps is in developing your plan, none of them is as vital as that of carrying the plan forward and making it work.

A financial plan on paper (or squirreled away somewhere in your PC) can be a thing of beauty in terms of how it meticulously identifies your current assets, captures your vision of the future and plans how to make your financial dreams come true, but if it is not implemented it will eventually just be a dry collection of "what-might-have-beens." The importance of not waiting is illustrated by the following:

Example John Gee, a 28-year-old, has gone through all the steps suggested in this planning section. Based on his investigations, John is seriously considering making a yearly investment of $2,000 in an IRA-qualified mutual fund that invests primarily in small, growth companies stocks. He learns that, although he won't be able to get a tax deduction for his contributions because he's over the applicable income limitations, the income that accrues in the account will not be taxed until he begins to withdraw it at retirement. Based on the life-time track record of a particular growth company mutual fund, John asks the broker to project what a $2,000 IRA contribution would grow to at his retirement (at age 65), assuming an annual yield of 12 percent. Assuming John will begin his annual $2,000 contributions this year on his 29th birthday, the broker's projections show the following: Projected IRA Savings Growth Age Projected Account Balance on Birthday 30 $    4,240 35 $   16,230 40 $   41,309 45 $   85,507 50 $ 163,397 55 $ 300,679 60 $ 542,604 64 $ 863,357 65 $ 968,659 Looking at the above example, John will have something approaching $1 million ($968,959) at retirement by contributing $2,000 each year beginning at age 29. However, if he waits just one year to begin his investment plan, and still retires at 65, he will have only $863,357, which is $105,602 less! One year's delay equals more than $100,000 less at retirement.

You may look at the example and raise several objections:

• "I'm not 28 any more, so I don't have nearly as long as John to save for my goals."
• "I don't want to tie up my money by putting it in a retirement plan -- I may have an urgent need for it in my business."
• "I'm not comfortable investing so much money in an aggressive investment like a growth company mutual fund, so projecting for 12 percent yearly growth is out of the question."

Even if some or all of these objections apply to you, these objections can only reduce the numbers, they can't change this basic fact: No matter what kind of savings plan you choose, your chances of success increase the sooner you put it into effect.

We found it convenient here to use a savings plan (which can give a dollars-and-cents answer) to illustrate this point, but our "don't procrastinate" message would also apply to other parts of a wealth-building plan, such as budgeting for income and expenses. If you have invested the time and energy in creating a plan that meets your needs, nothing will be gained by waiting.

Examine each element of your plan such as investing, retirement goals, risk management, estate issues and tax planning and take action to make these plans a reality.

But, before you implement your plan, please read our discussion of monitoring the plan, which will alert you to the continuing need to periodically re-evaluate your personal financial plan.

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