Financial Planning vs. Life Planning: What Is The Difference?

What are your first thoughts when you consider financial planning? For many, it’s a barely stifled groan, and an internal war with the politics of austerity on one side and the mortgage on the other.

However, a new type of financial planning is coming to the fore, and it’s one that adds your hopes and dreams into a traditionally sterile equation. If you have an unfulfilled desire or are sick of living from paycheque to paycheque, read on.

What’s it All About?

To understand life planning, it’s best to look at the baby boomer generation. While this generation may have sold out to corporate life, they’re also the people who never let go of their spiritual and emotional ideals, let alone their desire to push the envelope.

In this light, it’s not surprising that a quiet retirement with occasional bus trips for tea and scones isn’t really for them. Moreover, the financial crisis of 2008 and the unequal recovery has left younger generations questioning why they’re on the money-go-round in the first place.

It’s About Integration

The key difference between financial planning and life planning rests on individual and institutional perspectives around money. Financial planning has traditionally taken a clinical approach, removing people from the equation, and reducing lives to an array of numbers on a spreadsheet.

Life planning takes the opposite tack, putting people at the centre and finding ways to make the numbers fit.

It’s About Your Future Lifestyle

This is vital when understanding life planning. If you think of any discussions with your current financial planner, it’s likely they’re about how you’re going to hold on to the money and assets you have.

Life planning jettisons this concept in favour of the lifestyle you imagine for your future, and works with you to address money as a means to an end, rather than the end itself.

It’s About Your Emotions

If you ask some people what they want, their initial answer could be to involve money, prestige, a large house, and a big car. Where some traditional financial planning methods work on the ethos that he who dies with the most toys wins, life planning discusses whether accruing a mass of toys is going to make you happy.

For some people it may be these things, but for others it may be a desire to paint, travel to India, or accomplish a bucket list that isn’t being acknowledged. By exploring psychology, personal beliefs, and environmental influencers, you can get to the heart of your financial belief system and make concrete steps to making money work in a personally meaningful way.

It’s About Redefining Sacrifice

Chances are you’re sacrificing money all the time, but there are reasons why you’re doing it the way you are. Where financial planning talks about sacrificing money to keep the bank satisfied and your retirement bearable, life planning talks about sacrificing perceived wants for heartfelt ones.

This might mean taking fewer hours on less pay, foregoing the annual trip to Spain, or resisting the urge to splash out on designer clothes. However, in doing this you could reposition that money so you can spend more time on the golf course, spend quality time with your children, or open your dream business.

It’s About Taking Action

Life planning, like all financial planning, requires a course of action. The difference is that financial planning requires you put money away for a future that may see you regretting the past, whereas life planning requires you to take real world steps towards achieving the life you truly want.

Admittedly, lifestyle planning can be a huge upheaval, and you won’t find you’re alone if you struggle in some ways to move beyond your current paradigm.

However, if you’re brave enough to take the necessary steps, the rewards could be better than you ever imagined. It’s your life, your money, and your dreams. What you do with them is up to you.

For more information about the financial planning and life planning services we offer at Expert Wealth Management, get in touch today.

Call 01993 772467 or contact us online.

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