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As an IT project manager I'm responsible for organizing and managing technology projects of all shapes and sizes. By definition, there's an end to every project, otherwise, it can't be a project. That means you define a scope of work and once the scope is completed the project is closed. You then move onto the next highest priority project.
Projects can be fun and challenging but sometimes it's not easy to keep a project from running out of control. There are human behavioral challenges, uncooperative customers, environmental and organizational factors such as budget constraints, lay offs, and much more to manage.
Projects are everywhere. There are home projects, work projects, hobby projects, school projects and so on. You've probably referred to projects in your personal life many times. Painting a room can be defined as a project as well as rearranging the furniture. We all know laundry can be a project. Scratch that -laundry is never ending!
Let's take personal finance as an example. Paying off debt is probably a project. How about creating a budget? Or, learning how to invest? What about accomplishing Dave Ramsey's Baby Step 1 or any step for that matter? These are all projects because they can have a beginning and an end.
The interesting thing about projects is that many of the same techniques used to run a million dollar project can still be applied to smaller personal projects. Most personal projects don't quite have enough discipline or rigor to be successful. It's also easy to take on too many projects at once, losing site of the most important projects that add the most value to your financial life.
So, how do you become a successful personal finance project manager? Let's explore some disciplines of project management.
Create the Objective
Before you initiate a personal finance project make sure to state a clear objective. As an example, the objective of your project could be to save $10,000 by the end of the year.
It's always best to type or write the objective so that you can be reminded of it often. In fact, you could start with typing out the objectives of your top 3 projects and decide which one you think will bring you the most value the soonest. Based on your objective, define the scope of work…
Define the Scope
What scope of work will be included in your project and what should be excluded? Your scope for a savings project may include activities such as opening a savings account, setting up automatic deposits, identifying ways to generate more income for savings, meeting with a financial coach, changing your budget to reflect extra savings, etc. This is also a good place to list activities that should be considered out of scope that might distract you from accomplishing your objective.
Build a Plan
Every project must have a plan and dates to hold you accountable to getting things done. Break your scope down into measurable tasks of no more than a week in duration each. Open a savings account might include reading some online savings accounts reviews, narrowing the list to two savings accounts, opening the account and making an initial deposit.
Manage the Cost
Some projects cost money. A personal finance project is likely to cost you some time, but I don't think it will be a big financial investment unless you're hiring someone to help you or you’re purchasing a product. If you do have cost, make sure you have a good estimate for the budget. You obviously don't want to embark on a project and spend money you don’t have.
Every project has some amount of risk and it's your job as the project manager to identify this risk and find ways to mitigate it, or keep it from turning into an issue. To make this easy, take a few minutes and list out all the possible failures or issues that might occur.
One risk to your savings project could be an unexpected expense that occurs during the project. How could you prevent that from occurring? Are there any financial storms on the horizon? If so, how could you prepare for them? This is risk mitigation and your actions to mitigate now could avoid the risk or make it much less severe for your project.
Unfortunately, sometimes risks turn into issues, or issues pop up without ever being a risk to begin with. As project manager, it's your job to find ways to resolve the issues. Work with your spouse, a financial coach or friend to overcome issues. The key is to pull together the right help, if you can't solve the problem yourself, and resolve it quickly. Remember, every problem has a solution!
Perhaps you're on track with executing your savings project only to get laid off from work. That's a real issue that will impact the money you can save if not resolved. At that point, your project may need to go on – hold to create a plan to resolve the issue and find employment. Identify this issue as the top priority and write out your plan to overcome it.
Sometimes change occurs and for good reason. You have to manage it appropriately and reset expectations which can mean changing the original plan. In my world, this means getting agreement from the customer on what the change is and what the impacts are on the timing and budget.
In a personal finance project, this might just mean adjusting your plan. However, you have much more control on managing change to your own project. Once you settle on the scope of work, try not to deviate or add change until you've accomplished your objective.
Typically the more thoughtful and organized you are in managing your projects, the greater the chance you'll have in achieving your objective. While it's important to have some discipline and consider all these areas of project management, it doesn't mean you have to go overboard either. You might define your project in a one page Word document and address all these areas before deciding to get started. Here's to success on your next personal finance project!
This is a guest from Jason Price – husband, dad, soccer fan and blogger on the journey to true financial freedom. You can catch Jason blogging about personal finance at OneMoneyDesign.com
Photo Credit: OctopusHat