Approaches to financial independence often involve setting a goal, developing a plan and executing against the plan. One aspect that I think is often missed is that of a reality check. Specifically, will achieving the goal allow one to have the level financial independence desired?
In my experience, reality checks are hard to do without a third party. Self executed reality checks may be overly optimistic, miss flaws, or rationalize potential issues. Here's where a good professional financial advisor can help by taking someone through the analysis of whether a plan is sufficient. In our case, I consulted with our financial advisor four times over two years to analyze and re-analyze our financial readiness for retirement.
Here are some of the reasons that I had confidence in analysis by our financial advisor: Of course, there are never any guarantees. However, having a third party reality check helped us to better understand our financial situation and enabled us to take an opportunity to retire in our forties.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.
This is not financial or retirement advice. Please consult a professional advisor.
Copyright © 2008 Achievement Catalyst, LLC
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1 comment:
Another reason for getting a third party involved might be that you're not too optimistic but too unrealistic and hard on yourself. Sometimes we set our goals too high making them unachievable.
If I were to say I want to be a billionaire before I die then this would be a lofty goal but theoretically an achievable one. But if I turned around and said I wanted to be a billionaire by the time I'm 40 then this would be a lot more challenging since I've got less than 9 years left.
With all of this said you can still give yourself a bit of a reality check every now and then. Most of the time we've got a good idea of where things really stand.
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