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A Lesson in Financial Planning from Disney’s Up

Submitted by strandslucia on Fri, 06/12/2009 - 12:57
Money Management //

Last weekend I went and saw the new Disney movie Up. (a fantastic movie if you’ve haven’t see it yet!). As someone who works in the personal finance space, I couldn’t help but draw some financial lessons learned from the movie’s beginning plot.

The story begins with a young boy named Carl who idolizes Charles Muntz, an explorer always looking for his next adventure. Carl meets a spirited girl named Ellie who shares his passion for adventure. The two become best friends and together dream of one day visiting the lost land of Paradise Falls just like their idol, Charles Muntz had done.

Eventually Carl and Ellie marry and begin a life together. During their marriage they try to save money so they can achieve this dream of going to Paradise Falls, but each time they begin to save, something unexpected happens (a flat tire, a leak in the roof, etc.) They end up having to tap into their savings and never being able to afford their trip. Its not until they reach an elderly age that Carl can afford the tickets and by that time Ellie became sick and could not go.

While this Disney movie is a fictional story, the situation these characters experienced is all too common in real life. We often dream about things like going on our fantasy vacation, paying off student loans or buying a brand new car, yet unexpected expenses and mishaps in life always seem to get in the way.

So what can we do to better prepare ourselves financially so that we have an “emergency fund” but can still save for a vacation? Create a financial plan!

moneyStrands Language Setting

The key in drafting a financial plan is to identify your financial goals, prioritize them and to keep things simple so it’s more likely you stick to your plan. As displayed in the movie, there will always be emergencies and special excuses to spend money that would have otherwise gone towards your goal, but a good financial plan should address most of life’s common financial surprises.

STEP 1: Identifying a Financial goal

Write down all the things you want to do with your money. If you want to pay off your home loan, or take a trip to Las Vegas, or if you want to pay your kid’s college tuition fees, put it down on a sheet of paper. There is no use in having goals just bouncing around in your mind. Write them down, so you can easily track them.

Your goals can be short term or long term or both.

  • Short-term goals should take no more than one year to achieve. For example, you may want to pay off the $2,000 balance on your credit card, or cut your household spending by $100 a month.
  • Medium-term goals should be achievable within one to five years. A typical example would be planning to save $20,000 over five years to make a down payment on a house or buy a new car.
  • Long-term goals will take more than five years to reach. These include saving for your retirement or for a child’s education.

STEP 2: Prioritizing goals

Typically there will be more goals than there are resources available for reaching them. So you must prioritize the goals you have. Most financial planners agree that it is almost impossible to work toward more than two or three goals at once. If you have already identified what you think is important, reaching your goals in order of importance will be fairly easy to do. Identify the goals in the order you want to reach them.

STEP 3: Develop your plan

Once your goals are identified and prioritized you need to plan towards achieving them. For a goal to be effective, it has to be SMART — i.e., Specific, Measurable, Actionable, Realistic, and Timely. (more info on setting SMART goals)

Remember these tips.

  • Focus on the goals that matter the most. To accomplish primary goals, you will often need to put desirable but less important ones on the back burner.
  • Be ready for conflicts: Even worthy goals often conflict with one another. When faced with such a conflict, you should ask yourself questions like: Will one of the conflicting goals benefit more people than the other? Which goal will cause the greater harm if it is deferred?
  • Have an emergency fund: Life is full of shocks and surprises. Manage an emergency fund so that you can meet unexpected challenges.
  • Be flexible and be ready for change: What you were 5 years before may be different from what you are now. You may be financially more stable/less stable. Be ready to incorporate those changes in your financial goals too.
  • Monitor your plan and goals constantly.

moneyStrands can help you follow through on your financial plan. Our budgeting feature will help you stay on track with your goals and now allows you to track your past budget performance so you can have a better point of reference for future improvements.

Remember, with self-motivation, commitment and discipline, you can achieve your financial goals and take control of where your money goes. A goal, like an idea, only has value when you act upon it.

And who knows, you could be taking your fantasy vacation next year!

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