There is a lot of truth in what Bala had to say, I had to accept. But planning is essential for achieving any goal. A plan lays down the path to be followed, activities to be performed along the way, with clear metrics to measure progress, milestones to achieve along the way and eventual achievement of the goal within the desired time, cost and other parameters. Planning is done by businesses too - companies plan for the year ahead, they set targets for sales, profits, etc., to be achieved by the end of the year. There are long-range plans too, like where the company has to reach in the next 3-5 years. Even countries have plans. They estimate the tax and other income that could accrue, their expenditure under various heads, the projects that need to be started, allocations for them and so on. Even our country has five-year plans. In all the above cases, there are lots of estimates. Projects have estimates of time for an activity, manpower requirement, money, etc. However, as the project progresses, there can be deviations from estimates, which have to be taken in stride and complete the project. The more the time required for a project, the greater the chance of deviations from the assumptions. That does not mean one should not plan. With a plan, one can minimize errors and on proper monitoring, course corrections can be done and the project can be brought to fruition. That is exactly the same with one's finances and goals. A plan is indeed essential to achieve one's goals. Like in the case of the project, one has to estimate what will be required to achieve the goal. Just like in the case of a project, things can be different from what was planned. Sometimes a person may be forced to retire early. Over time, some goals could even drop off, new goals can get added or even an existing goal can morph into something else. Just like in the case of the project, the solution is periodic monitoring and review. The plan is not cast in stone. Today, most move from one assignment to another, with significant differences in income. No plan could envisage this and include its effects. I reminded Bala that even he had gone off to London for two years, which no one could have predicted earlier. The cash flows during that period made his bottom line bloom. In some cases, there can be negative surprises as well. The solution in all these cases is simple - take stock of the situation and then reorient the plan to achieve the goals in the changed situation. A financial plan needs to be ideally reviewed, once in a year. This will ensure that changes are incorporated and the plan is still relevant. Bala was by now nodding in agreement. Source : Suresh Sadagopan, Founder, Ladder7 Financial Advisories