Strategic thinking is important in long-term financial planning. It enables you to achieve your goals in the most efficient and beneficial ways. A person with a strategic mindset will develop a broad plan which considers many strengths, weaknesses, opportunities, and threats to achieving a long-term goal.
Becoming a strategic thinker is a skill that is relatively simple to learn, but very difficult to master. I will outline three steps to becoming a strategic thinker in this post. To become a strategic thinker:
Define your goal
The first step to being strategic is clearly defining what you're trying to achieve. To raise the probability of achieving your goal, it should be as specific and measurable as possible. Once your goal is in mind, you can start refining it using methods such as the "Five Ws", ask yourself, who, what, when, where, and why.
Example: I want to retire at the age of 50 in the United States so that I can enjoy more time with my family.
Develop a plan
Next, ask yourself what steps you can take to achieve this goal. What things need to occur for each portion of your goal to be true? At this point, your objective should start to feel tangible. This is where your goals evolve from being just an idea in your mind, into being a defined set of steps for you to work towards completing.
Example:
To retire, I need to have enough money to live off of without having to rely on a job.
To retire by age 50, I need to save and invest X amount of dollars for X Years, with an average annual return of X%.
To live in the United States, I should make sure the amount I generate each year exceeds the poverty line.
To enjoy time with my family, I must ensure that I have a good relationship with my family.
Stack the odds in your favor
Now that you know what needs to happen, it's time to put as many of the odds in your favor as possible. Example:
To generate enough money, I need to increase my income and savings rate.
To retire by age 50, I am going to increase the amount of money that I put towards my investments.
To live in the United States, I will consider moving to a city with a lower cost of living.
To enjoy my family, I will actively build our relationship positively.
Strategic thinking is rooted in defining both long-term goals and the plans to achieve them. A wealthy lifestyle is a goal that can be strategically achieved.
Bonus tip: To kick your strategic thinking into high gear, there is another step to implement during the planning phase. Consider alternate conditions for both your long and shorter-term objectives to be true. The path to wealth is not linear, there are always more options for achieving your goals. This is how I help my clients. Want more insight into strategic thinking with your personal finances? Book a consultation at www.cfpisolutions.com or let's discuss this in the chat.
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