"It's Easy as P.I.E" - Evaluation

Learn the art of patience. Apply discipline to your thoughts when they become anxious over the outcome of a goal. Impatience breeds anxiety, fear, discouragement and failure. Patience creates confidence, decisiveness, and a rational outlook, which eventually leads to success. -Brian Adams

I. Introduction

So far, I have written about the methodology I use for my personal finance planning. We all know that the saying is "It's as easy as P.I.E." We all know that the P stands for planning. We also know that the I stands for implementation. Although these are two important steps in the process and help get the whole thing started, the step that is used to keep you inline with your original plan is the last, evaluation.

The definition of evaluate (Direct Link to Definition):

e·val·u·ate /ɪˈvælyuˌeɪt/ Pronunciation Key - Show Spelled Pronunciation[i-val-yoo-eyt] Pronunciation Key - Show IPA Pronunciation –verb (used with object), -at·ed, -at·ing.

1. to judge or determine the significance, worth, or quality of; assess: to evaluate the results of an experiment.

As shown in the definition, the evaluation stage of the process is to assess the worth and quality of the plan and implementation.

II. Why Evaluation?

Imagine that you were driving a car down an interstate going around 70 mph. As you are driving down the road, you see signs that say something along the lines of "Construction Area 2 miles ahead, speed limit 55 mph". At this point, you really have two choices, you can either:

1. Disregard the sign and continue driving 70 mph through the construction zone.
2. Reassess your current speed and slow down to 55 - 60 mph

One thing that was failed to be mentioned in the previous example is that there is a cop waiting down the road 2.5 miles with his radar gun out ready to catch a speeder that is going 5 mph over the posted limit. For those who chose option 1, congratulations, you just landed a speeding ticket in a construction zone that typically tacks on a hefty penalty. For those who chose option 2, congratulations, you avoided a expensive and non-necessary speeding ticket.

Although this example is a bit lame, it goes to show you that sometimes in life, we need to look back and reassess our current "plan". As in our example, you may have planned to reach your destination in 30 minutes by going 70 mph the whole way. However, to avoid the possibility of getting a speeding ticket, you may decide that you need to slow down, call ahead and let those at your destination that you will be arriving a bit late.

In addition to our current "plan", we may also need to reassess the way our plan is being implemented. Sometimes a project can be planned out to the tee, however, the implementation of that plan may be flawed and requires a new methodology to put the plan into action so that it is successful. Once again, using our previous example, you may find that you need to get to 55 mph while in the construction zone, however, rather than taking your foot off the gas and letting your car coast to 55 mph, you decide to slam your breaks causing a vehicle behind you to smash into the back of your car. As the saying goes, "there's more than one way to skin a cat", in addition to that, there is more than one way to implement a plan. However, sometimes we do not implement our plans in the most efficient ways.

III. How do I Evaluate?

Evaluation is a key skill learned mostly by experience. Many people in the world can try to share with you their own methodology of how they assess their situation and determine what changes need to be made for more efficiency, however, each person is different. What may work for me, may not work for a group member in a similar situation. With this in mind, I can only explain to you how I perform my "evaluation", however, it is by no means the only way to reassess a situation.

Step 1: Review original goals

• You cannot know where you are going unless you know where you came from. During this step, it is important that I look back at my original plan to get an idea of what I want my outcome to be.

Step 2: Compare current situation with original goals

• At this step, you look at your current situation and see how they are stacking up against your goals. For instance, if you are saving up for a car and your original plan is to be able to buy the car in three years, however, after one year, you already have more than half of what you originally planned to save, you can readjust your original goal to reach it sooner than expected.

Step 3: Adjust current situation in line with original goals

• To contrast, if you find that you are behind on your savings goal, you can make the necessary adjustments to your income (either by obtaining more income or reallocating money from a discretionary spending account) to catch up on your original goal and get back on track to obtain your goal when originally planned.

Step 4: Repeat

• Of course, this is not a one iteration process, evaluation most take place over and over to ensure that you meet your goals at the specified set date.

IV. Summary

As shown in this article, evaluation is a key component to obtaining your goal. It allows you to adjust over time as your situation changes to ensure that you stay on pace to obtain your goal. Now that you understand this principle, obtaining your goal will always be "Easy as P.I.E."

As always, if you have any questions, please submit an email to the group or leave it in the comments below.