February 26, 2020


“Someone’s sitting in the shade today since someone planted a tree a long time ago. ” (Warren Buffet)

As a financial life planner, my underlying assumption is that planning is a “good” issue. Planning is widely acknowledged to become a pre-requisite for business success. Nevertheless , Benjamin Franklin’s advice that “by failing to prepare, you are preparing to fail” frequently falls on deaf ears in the personal environment.

This is usually, in my opinion, because people feel they have none the time nor the skills for personal monetary planning; nor do they want to spend money on hiring a professional financial planner. And a few people I have met have this kind of confidence in their ability to make and retain significant fortunes that private financial planning is deemed unnecessary, even spineless.

So this article is about why financial life planning is important. I will share with you some of the current approaches to planning, show you how to plan in practice and highlight the outcomes.

To plan, or not to plan?

I am passionate about planning because it leads to success. We recall my first sales job in financial services, cold calling to produce appointments to sell insurance. I had an excellent manager who made me program my target market, pitch, call strategy, everything. The first call I produced was spot on, leading to an appointment in minutes. I knew it was going to work, my manager knew, our colleagues knew. And it did.

So just why should we plan our lives plus money? In my view, for 4 reasons:

1 . To develop a practical framework for running household budget

2 . To achieve profound goals as quickly as possible

3. To ensure long term financial security

4. To deal with life’s setbacks

Lets look at each of these in turn.

1 . Monetary framework

Many people today lack a financial framework or system. When it comes to costs, the core of financial preparing, we often enter a fantasy globe. Even if families can give a fairly accurate set of current financial claims (assets, liabilities, income, expenditure plus estate), they are rarely able to project what those statements will look like ten years, or even five years into the long term.

Financial planners will usually tell you that will clients come to them for these reasons:

‘We are not fully in control of our finances’
‘I don’t understand money; all Personally i think around money is fear and anxiety’
‘We don’t know where we have been now or where we will be in the future’
‘We seem unable to live the lifestyle we aspire to’
Whenever families do achieve clarity this usually provides great relief, even if the picture does not look good. They a minimum of know where they stand and can take suitable action.

2 . Goals

Unfortunately, we all live in an era where wealth is frequently generated for its own sake, rather than as the means to live a satisfied life. Money is used to make more money – it becomes a proxy for the ego, and financial decisions are often made to protect or massage our egos, not to support the accomplishment of our deepest life goals.

Living and money are deeply intertwined. Identification of clear life targets is essential to provide direction, and enables sound financial decisions to be made. So when asked to comment on a great investment someone is considering, I always create another question: “Will investing in the product enable you to achieve your goals more quickly and efficiently? ” Very often the solution is that it won’t.

3. Long-term protection

The impact of increasing durability on family finances is profoundly important. The keys to addressing this are the Three Drivers associated with Financial Freedom: savings, compound interest and asset allocation. While saving suggests a reduction in spending, and potentially the hijacking of those important and instant life goals, financial life preparing can help to resolve these difficult issues between the short and long term.

4. Dealing with the unexpected

Life may have kicked you in the teeth in the past and it will do so again in the future. Take it, and plan for it. Living can throw a huge range of fastballs at us, from the irritating however not too serious car break down to the death of a close family member. Put in place contingency plans centred around a Security Fund and insurance. Nobody likes insurance (though I have yet to meet a widow who lamented her husband was over insured).


What you are really going to attain from well-formulated goals and an organized, considered life and financial plan to achieve those goals can be obviously expressed in one word – independence.

Freedom is a central theme of my work, so what exactly could it be? True freedom comes from defining plus setting boundaries and living a life dedicated to achieving your targets within those boundaries. Greater independence comes from personal growth, the means by which we can expand our limitations.

Lianne’s story illustrates this flawlessly. A mother of two on a modest salary, Lianne had gone by way of a difficult divorce and when she 1st came to me for help, she was consoling herself with a compulsive spending habit.

However , her objectives were to love, support and teach her children and to be a great mother to them to compensate for the break down of the marriage. I worked with her to plan her boundaries. All of us established her life goals, tackled her spending and developed an annual spending plan.

One Monday morning she called me to talk about her weekend. She had taken girls to London to see a concert and had done so without any feelings of guilt or anxiety over money. It absolutely was in her plan. She had achieved her goal of bringing happiness and fun to her kids. Within her boundaries she experienced achieved real freedom, to be generally there in the moment with her children, simply to be.

It’s the process that matters

Plans rarely survive contact with fact, to misquote Moltke. Reality for many of us can cause a change of direction. However , the process of planning is as a lot a benefit as the plan itself, usually more so.

There are a number of planning processes around, often developed by professional physiques such as the Financial Planning Association or the Kinder Institute in the US or the Start of Financial Planning in the UK. My very own process is a six-stage process regarding called FUTURE:

Foundation: a full supply and analysis of your life, including assumptions and an analysis of your risk profile
Utopia: establishing what you want to have, to do, to be
Transformation: identifying plus dealing with the obstructions on the road to utopia
Utilisation of resources: establishing the best option for your existing resources
Roadmap: producing the plan to get you from where you are today to where you want to be
Execution: implementing and living the plan
Having developed a strategy it is important that you continue to monitor plus renew the plan each year. Planning is definitely dynamic, a habit, not just a couple of sheets of paper to be drawn up then relegated to the bottom draw and forgotten.

The fruits of the process

All of us in the financial community trust our own processes, because we know they provide results, results that are more than just a written plan.

Initially you will develop a personal inventory of your life. This will incorporate a detailed set of accurate financial statements comprising a schedule of property, liabilities, income and expenditure, along with data about yourself and the environments you inhabit.

Self-understanding builds with this base and by the time you are well into the process you should be able to articulate your deepest and most profound objectives. In doing so, you will find yourself energised, focused and far sighted.

Lastly, you will learn about money. If you are working with a coach or adviser you will find a raft of financial principles and products explained to you. If you are by yourself on this journey you will need to educate yourself, plus there are plenty of resources out there to help.

What is the alternative to planning? Well, you can wing it; with a good deal of chutzpah, a hefty dose of confidence, a wing and a prayer as well as a bit of carpe diem you might properly achieve great things, and get a real thrill and sense of accomplishment when you do. However , I do believe in the significance of living in the moment. The present is where we are able to really ‘be’. Crucially, financial existence planning will actually help you to achieve this state by removing regrets within the past and fears of the future
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