Let’s make it easy. When it comes to getting started with a financial plan, think of a Google map.

Gone are the days when we used to spread the AA road atlas over the bonnet to figure out how to get to somewhere new – now there’s an automated voice telling us to turn in 500 metres. It’s so easy.

We’re not there yet with financial mapping, but the new tech can still help us get started. There are three fundamental things with a digital map, right? First there’s the blue dot: where we are now. Then there’s the red pin: where we want to get to. And to connect the two, there’s the squiggly blue line: how you get there.

Think of the blue dot as our present financial situation: our incomings, our outgoings, how much surplus we have in our budgets. (Unless there’s a surplus, we’re not getting anywhere.) It’s our present net worth. We need to know what’s happening now, and take stock of where we’re at, so we can plan a route to our destination of choice.

Which brings us to the red pins in our lives. These are our life’s goals – they’re where we want to get to. Some are closer and more short term; others may seem like they’re on the other side of the planet because they’re so far off in terms of time.

We’ll get there. Or will we? The route we take and how fast we arrive all depend on the money choices we make. There will be many trips to take in our lifetimes and many goals to accomplish. We all need to find those squiggly blue lines.

And those are the three basics of a financial plan: where you are now, where you’d like to be, and how you are going to get there. To take a journey, you need all three.

For example, let’s say we drop a red pin goal of $1,000-a-week income in retirement, in 25 years. Depending on the blue dot of where we are now (how much we’re setting aside for the long run), we can chart whether we’re on track or not. If we’re going via KiwiSaver, we can estimate whether we’ll arrive at the destination on time. Maybe we’ll need to adjust our settings or find additional ways to fund those years after we stop working.

Have you ever noticed, though, that not everyone uses a Google map in the same way, in the same order? Some of us might focus more on the blue dot, keeping track of where we are now. Other times we just look at fascinating destinations or the routes we might take.

I think that people are that way with their financial lives, too. Some of us are blue dot folks. Especially if money’s tight, our mental bandwidth is occupied with stretching each pay and making ends meet. We may be really good at budgeting and money tracking but have not made time to drop some red pins, or explore the different ways to get to some interesting places.

I’m sort of a squiggly blue line guy. I’ve mostly focused on ways to get somewhere (jobs, a career) instead of gauging where I am now or thinking enough about where I would like to end up. I need to keep tabs on my blue dot more and drop some red pins!

Finally there are the visionaries among us, those with a constellation of red pins dropped on their maps. They know where they’d like to be, but perhaps they haven’t put in enough work on their everyday money management or found the most direct routes to get to those dream destinations.

We live our lives – and financial lives – differently, so we need to focus on those components that don’t come naturally. That’s what financial planning (and mapping) is all about.

Which planning type are you? What do you need to see more of: your blue dot, blue lines or red pins? 

Comments (6)

Gravatar for Tom


10:49am | 14 Jul 2016

Great idea Rob! Let me see if we can work that in.

Gravatar for Rob


3:42pm | 13 Jul 2016

Thanks Tom, looks like it is just what I'm after. After going through the first 3 pages the "Must Reads" and not finding anything I didn't bother going any further - looks like I should have.

It would be great if the your article (and the Massey Fin-Ed report) could be linked to Retirement Planner "How much will I need to retire?" page https://www.sorted.org.nz/guides/planning-for-retirement

Thanks Rob

Gravatar for Tom


11:15am | 13 Jul 2016

Thanks Rob, dropping those pins does seem like a game of darts at times! One thing that you may find helpful is to look at this post about what retirees are spending now in order to get an idea: https://www.sorted.org.nz/must-reads/how-much-is-enough/
Cheers, Tom

Gravatar for Rob


3:53pm | 11 Jul 2016

HI, I'm currently trying to plan for retirement, but my biggest problem is not knowing the expected cost of living for a retired person/couple.

For example;
i imagine doctor & health bills go up - but by what on average?
Do energy bill increase as retired people are at home more, need to stay warmer, if so by how much?
Having never been retired, are there other costs or savings that a retired have, that non-retired people need to consider when calculating retirement income on Sorted.org.nz?
Is the current "living wage" a suitable substitute for the minimum retirement income required for a couple?
How do the "three stages of retirement" affect income requirements?

I would prefer to base my retirement planning on so actual figures. Sure, I know "predictions are difficult - especially when they are about the future" - to misquote Yogi Berra. But my confidence in Sorted.org.nz's Retirement Calculator is limited due to the fact I have to "guess" what a suitable retirement income might be.

I may as well be throwing a blue pin at Goolge map and hoping that that is the right place. To follow the map analogy a little further, I don't need my retirement calculations to get me to an exact address, but I do need them to get me to the right suburb, rather than just into the CBD of the city.

While I applaud the work done by the former Retirement Commission & the Sorted.org people, I feel that lack of actual or real retirement cost information hinders what is otherwise some very good work.


Gravatar for Tom


1:59pm | 5 Jul 2016

Thanks for commenting, Deb – unfortunately we've retired our goals worksheet for the moment, but happy to report we'll have a much better one in the coming weeks, in time for Money Week, which is 5-11 September. (https://www.moneyweek.org.nz/) Thanks for your patience!

Gravatar for Deb


8:40am | 5 Jul 2016

Very wordy and the link to using KiwiSaver to buy your first home goes to a page not found. When people click on the link on Facebook you should take them to the actual goals worksheet. People like to get into the action pretty quickly these days