How to Destroy Your Financial Plan, Part 3: Lost in the Woods

Some financial plans fail due to slow degradation from neglect, while others fail due to dramatic explosions. However, the third and perhaps most insidious way financial plans fail is when people become "lost in the woods." They begin their journey with good intentions but soon lose the trail, wandering aimlessly. They become unsure of where they are or where they are headed.

Getting Lost in the Financial Woods

Becoming financially lost almost always starts the same way: with a solid, intentionally

created plan. Sometimes this financial plan is created with the help of a professional financial planner. In the beginning, there is excitement, confidence, and hope about the journey ahead. But over time, people tweak their strategy with random bits of advice from online forums, TV gurus, or self-proclaimed experts. Soon, what was once a coherent and clear financial path becomes a Frankenstein strategy, pieced together from conflicting and often misguided ideas.

Other times the financial plan is custom-built as a DIY project that initially turns out really well.

Regardless of how it originates, you set and follow a disciplined approach—investing in diversified mutual funds or ETFs and regularly reviewing your employee benefits options, etc.

But over time flashy financial shows and clickbait online articles become too tempting. You start dabbling in individual stocks, perhaps even some options or derivatives. You grow tired of paying for that extra life insurance you think you don't need. Gradually, your stable, well-built plan becomes scattered and risky, resembling Frankenstein's monster. Now, you are financially lost.

When Knowledge Isn’t Enough: The Wilderness Analogy

People often get lost in the financial wilderness precisely because they are highly intelligent, skilled, and successful in their careers. Unfortunately, they mistake expertise in one field for general competence in all areas, especially personal finance.

Imagine setting out on a wilderness adventure. You meticulously prepare, selecting the best gear, studying maps, and researching extensively. Perhaps you even take an in-person wilderness course. Armed with deep theoretical knowledge, you confidently set off on your own. Initially, your journey is smooth. But suddenly, the trail disappears—perhaps washed out by a flash flood, eroded over time, or obscured by a rock slide. However, you are confident in your preparation so you press on. You have a good map, and you know how to use your compass. However, unexpected obstacles emerge: the climb is steeper than anticipated, dense foliage blocks your path, weather changes abruptly, and the water source marked clearly on your map is nowhere to be found.

As the sun sets, anxiety begins to tickle at the back of your mind. Do you remember how to start a fire or keep bears from eating your food? Did you pack enough food? Is there enough water? Suddenly, you are unsure. You don't know if you are fully prepared. You don't know exactly where you are. Without knowing your current position, you can't know how to reach your destination. You are lost in the woods.

Too many people approach their finances in a similar manner. They gather extensive knowledge from books, courses, and online resources, assuming theoretical preparation is sufficient. But the financial map isn't the territory. What do you do when market conditions drastically change, tax laws shift unexpectedly, or unforeseen life events occur? Like the wilderness adventurer, theoretical knowledge alone often isn't enough when actually tested in the real world.

You don’t need a better map; you need a guide.

Using the Wrong Map or Guide

But what if you have a guide and still find yourself lost? Unfortunately, poor guides are a real thing. Relying on incorrect guidance is another way people become financially lost.

Here is a quick checklist to help avoid this trap:

• Is the service free? You don't have a guide.

• Does it sound too good to be true? You have probably found a charlatan.

• Does the advice seem overly complicated? Probably unnecessary complexity.

• Is the service merely offering instructions without support? You didn't hire a guide; you bought another map.

The Sunk Cost Fallacy: Stop Throwing Good Money After Bad

Once you're lost in the financial woods, the solution isn't stubbornly clinging to flawed plans or revisiting poor advice. This behavior, known as the "sunk cost fallacy". It involves sticking with ineffective strategies simply because you've already invested in them.

Consider an investor who continues pouring money into a failing investment because they've already committed a lot of money. Your financial future shouldn't be hindered or dictated by past mistakes. Trying to salvage a fundamentally flawed plan is like insisting New York will become Los Angeles if you persist long enough. Instead, seek a trustworthy, experienced financial planner who can create a plan tailored to your current circumstances.

Forget previous mistakes—today is a new day and offers a fresh opportunity for course correction.

Find Your Path Again

If you're financially lost, stop and reset. Achieving financial success demands clarity, consistency, and often professional guidance. It means acknowledging when you're off-course and courageously choosing a new direction.

Would you rather remain lost, wandering without a destination, or find the right path with the help of an experienced guide? The choice is yours. Acknowledge your situation, seek expert guidance, and build a clear, new plan aligned with your goals.

Schedule A Call Today!