Oran Hall | Personal financial planning is like constructing a highway
There are many parallels between constructing a modern highway and a personal financial plan. They aim to achieve a specified goal and yield specific benefits, require a strategy, provide for identifying and overcoming obstacles, require funding, provide a means for measuring progress, and provide a means for evaluating if the goal has been met.
Just as a financial plan serves as a road map for an individual to realise a set of defined goals, a plan has to be created to direct the process of constructing a highway.
Take, for example, Part A of the Southern Coastal Highway Improvement Project, covering the new highway from May Pen to Williamsfield. One goal of the highway is to improve travel between the two towns, with many other spin-offs.
Other goals include to speed up the delivery of goods at a lower cost, increase productivity by facilitating workers getting to work in less time, provide more leisure and family time for people, improve the response time of emergency services and the police, and provide more employment – 603 Jamaicans were employed during the construction phase in addition to those expected to gain employment from new economic activity.
The value of such employment is the scope it provides for workers to provide for their families and assist them to realise their own personal and family goals.
The road construction project required detailed planning and strategising to determine the best approach to use, the cost, the likely challenges, and the time it would take, for example.
Possible roadblocks were also considered. These included the ownership of the land and the process and cost of buying land that had to be acquired as the Government could not arbitrarily build on land it did not own. Another roadblock, or challenge, was the nature of the land and how that would affect the process. Was the land rocky or the soil soft? Were there rivers in the path of the proposed highway? And, of course, clear consideration had to be given to the fact that unforeseen roadblocks could present themselves and stymie the project.
And what about roadblocks that could not be controlled, the weather, for example? In fact, adverse weather conditions did cause delays.
How much would the project cost, and would the Government have sufficient means to fund it? If not, where would the funds come from, at what cost and on what terms? Additionally, who would be responsible for the successful management of the financial affairs of the project, and who would be responsible for the management of the project overall?
Consideration had to be given to how the progress of the project would be measured and when and how progress reports would be given and what would constitute satisfactory conclusion of the project as well as the recourse the Government would have in the event that faults emerged within a stated time period after its conclusion.
At the end of the day, the project, which did not start at the time initially scheduled, ended in time to be officially opened in September 2023 but after the end date was adjusted at least twice. Of significance is that progress reports were issued periodically through the Jamaica Information Service.
The cost of the project was funded by a loan of US$188 million from the Government of the People’s Republic of China, and the project was completed within budget.
You have no doubt taken a hard look at how your financial plan fared in 2023 and have made adjustments for 2024. Perhaps you did not have one for 2023, but do you have one for 2024? Perhaps you are making one.
You can learn from the construction of the highway. Write down your plan and seriously question if it is realistic, perhaps with help from a trusted family member. It is good to start early, plan for more than one year. It took certainly more than one year to plan the highway project. Let your plan be your road map to guide you to your goals.
Anticipate obstacles, some of which you will not likely be able to have control over. For example, you do not have control over government policy, economic and financial conditions and your health, to some extent. How will you deal with delays if they come?
Determine how much it will cost to execute your plan and how you will fund it. If you must borrow, do you have the capacity to service the debt without it being a burden on you? How and when will you evaluate how well your plan is going?
When you drive on the May Pen to Williamsfield leg of the Southern Coastal Highway, or on any portion of Jamaica’s highway network, as you enjoy the sweet ride, do not just be careful, but remember what it took to bring it into being and that you can have a relatively smooth ride in life. It will, however, require good planning and superb execution of your plan.
May your financial plan bear fruit in 2024.
Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.finviser.jm@gmail.com