Some Christians feel uneasy about engaging in long-term financial planning. They think of verses such as James 4:13-14:

Come now, you who say, "Today or tomorrow we will go to such and such a city, and spend a year there and engage in business and make a profit." Yet you do not know what your life will be like tomorrow. You are just a vapor that appears for a little while and then vanishes away.

To be sure, Scripture doesn't take lightly an arrogant and overly self-reliant attitude towards our planning and provision. But while we certainly must remember that God alone is our ultimate provider, there is plenty of biblical support for taking responsible steps to plan ahead for our financial future.

As is often the case, it's a delicate balance. Too much of a focus on long-term wealth goals can lead to a neglect of immediate priorities, such as giving. On the other hand, too little attention to planning also can lead to problems. Some of those problems are obvious, like not having enough money to live in our elderly years.

But others aren't so obvious, such as suffering larger losses than necessary due to continuing to invest in a riskier blend of investments than your future financial needs truly require.

So while we must maintain a humble attitude in creating and executing a financial plan, it's our contention at Sound Mind Investing that for most people a written, long-term investing plan is a necessity. Without one, most people are like a ship without a rudder, unable to maintain a direction as they're blown about by the current emotions of the market. That is hardly a formula for long-term success.

If a long-term investing plan is so important, how do you create one? Here is a list of six key elements that make up a long-term plan.

1. Understand the big picture.At SMI, we refer to this as being an "inside-out" investor. Most investors' decisions are motivated primarily by outside considerations — current events, magazine articles, broker recommendations, and so on. That's the wrong approach. Instead, focus on your own financial needs and build an investment strategy designed to meet those needs. Sounds simple, but few people actually operate this way.

2. Budget.(Oh, man! This is supposed to be the investing column!) Any financial plan — no matter how modest or ambitious — will only be as effective as its owner's ability to successfully manage his or her income and expenses. In other words, you can plan perfectly and yet it won't do a bit of good if you don't execute the plan.

For most people, executing the plan requires a budget to help monitor and control spending in real-time. There are many good resources on budgeting available (SMI has a four-part series on budgeting — part one is here). So quit resisting the need to budget and start making progress towards your financial future.

3. Know what you need. A key element of financial planning is determining what your future needs are. Without that knowledge, you'll have a hard time making appropriate decisions at the next steps. If you don't have a solid target in mind to shoot for, you're really just guessing when it comes to what asset allocation and investment decisions are best for you.

So how do you figure out how much you need? One place to start is chapter 21 in the Sound Mind Investing Handbook.

Granted, it's difficult to get a firm sense of exactly what the numbers are going to look like until you get within 10 years or so of your estimated retirement date. But that is exactly when the investment decisions become the most difficult! Investors at that stage are caught between wanting to grow their portfolios to meet future needs, and needing to protect the assets they've already accumulated.

Good planning can spare you the agony of crossing your "finish line" only to fall back behind it by not properly adjusting your risk level downward.

4. Allocate appropriately.As we wrote in Your Most Important Investing Decision, your asset allocation will determine the performance of your portfolio more than any other single factor.

5. Make good investment decisions.Easier said than done, right? Nobody is ever going to make all the "right" investment decisions. But there are definite steps you can take that will improve your odds of success.

At SMI, we're big believers in using mechanical strategies to eliminate emotional decision-making. Most people's emotions tell them exactly the wrong thing when it comes to investing (e.g., that sick feeling you get when the market drops is not a good reason to sell!). Our Fund Upgrading strategy has demonstrated an ability to generate attractive long-term profits and is the primary investing approach we suggest to readers.

6. Monitor and adjust.This can be a tricky step, but it doesn't need to be. First, you need to periodically re-visit the first five steps on this list. Your budget won't likely be the same at age 30 as at 55, and neither will your asset allocation. Life happens — an illness, job change, unexpected blessings that cry and need their diapers changed — these and a thousand other factors may cause you to adjust your plan as you go. That's okay. Just don't abandon the old plan without putting a new plan in place.

On the investment side, things are a little more rigid — you don't make changes to your plan just because the market is down 25% and you're feeling queasy. But if you come across new information or a new strategy that makes you honestly (and unemotionally) feel that a change is warranted in your plan, there's flexibility to build it into your plan. Circling back to point #1 though, you need to make sure any changes are inside-out, not outside-in.

These six steps aren't the only way to approach creating a long-term investing plan, nor are they comprehensive in terms of taxes, estate planning, insurance, and so forth. But they do provide an effective road map for most people to gauge their fundamental investing needs and get started.

Inertia, not a lack of perfection, is the primary obstacle for most people as they travel down the road to financial freedom. There's plenty of time to fine-tune things further once you're underway.

Published since 1990, Sound Mind Investing is America's best-selling financial newsletter written from a biblical perspective. Visit the Sound Mind Investing website .

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