In last week’s post, I explored some of the challenges in setting financial goals. The goals are the core of a financial plan, and with those in place, a plan can be built and implemented. As with goal setting, though, there are a number of potential mental stumbling blocks that can arise when we begin putting a financial plan into action.

One of the first mental stumbling blocks is simply completing the tasks that are required to implement a plan. When we complete a plan, we generate a detailed to-do list of all the tasks a client needs to complete to implement the plan recommendations. While most clients work their way through the list pretty quickly, some have trouble getting started or completing the tasks. If you find yourself in that situation, set specific dates by which tasks will be completed and find someone to hold you accountable.

From time-to-time, we’ve had clients ask us to check in with them after a time to make sure they’ve completed everything, as they know that will give them the impetus to meet their commitments and clear their hurdle of mental stumbling blocks. Finally, some clients elect to work with us on retainer, as they know that the combination of regular meetings, our ability to carry out some tasks and stay on top of what needs to be done will ensure the plan is implemented.

When it comes to mental stumbling blocks, another challenge, at least for some clients, is changing their habits. Some habits are simple to change and – like increasing 401k savings – are similar to the nudges described by Richard Thaler and Cass Sunstein in their book Nudge. Other changes can require more effort, and the most obvious one is implementing a budget and trying to live within that budget. My wife and I began working within a budget a bit over 2 years ago, and it has been a very positive experience as I described in several blog posts. In our case, we only had to make slight changes to our habits so it was easy, but that’s not always the case and in his book The Power of Habit, author Charles Duhigg offers some suggestions as to how you can change more deeply entrenched habits.

One of the final mental stumbling blocks that arise in both plan implementation and investing is how we think about and react to risks. Financial advisors tend to look at risk statistically, examining actuarial tables when it comes to life insurance or looking at the maximum likely loss when it comes to investments. However, our cognitive approach to risk is anything but dryly statistical. We relate to narratives far better than we relate to simple statistics and a host of other factors come into play when we assess risk, from how we feel when we’re making the assessment to how we classify the risk along various factors.

The gap between our assessment and the objective measure of the risk we face can lead us to greater risk exposure or greater expense than need be the case. Addressing this requires weighting the objective data heavily in your assessment about how to address risks, whether that involves changing insurance coverage, deciding on a portfolio allocation or some other issue that intrinsically involves risk.

One key to implementing a plan is managing investments, and that area has received more attention than any other in personal finance. In next week’s post, I’ll explore some of the cognitive blind-spots psychologists and economists have identified when it comes to investing.

Minerva Planning Group is a fee-only financial advisory firm based just outside Atlanta in Decatur. You can contact them here.