Life Planning: A Definition

Background On Life Planning…

All too often, financial planning is purely about the figures. Many of us follow a trajectory where we trade a simple life with few possessions for extreme commutes and long working hours, so that we can achieve the dream of a retirement where we enjoy…yes, you’ve got it: a simple life with few possessions. Rather than looking at your financial affairs as a set of statistics, life planning starts with your values and aims to achieve the objective of helping you live them.

The Obvious Choice?

On the face of it, this seems like an obvious approach. But when you consider the reality of how most of us manage our finances, a different picture emerges. By default we opt for security, and this usually translates into a bigger pension, better portfolio, increased tax efficiency. So concerned are we with the notion of ‘more’ that we hardly ever stop to consider what constitutes ‘enough’.

If you were to take a life planning perspective on your finances, you wouldn’t automatically focus on the blissful Shangri-La of a distant retirement. Rather, you would ask yourself what your life would look like now if time and money were no object. Then you would be properly motivated to put the necessary infrastructure in place to help you make your aspirations a reality.

Self-Help or Professional Advice?

Financial life planning is the idea of George Kinder, an international tax advisor with 30 years’ experience. Kinder has published several books aimed at helping individuals use the approach for themselves and also at helping them connect with suitably qualified advisers.

Since the core emphasis of financial life planning is on uncovering one’s ‘secret sorrow’, that dearly held aspiration which has long gone unfulfilled, it’s easy to see how supportive and enlightened guidance can be of benefit.

A qualified financial life planner can also help us view our hopes and dreams more objectively. When we bury our desires because we think they may never be achievable, we sometimes bury them so deeply that they’re hidden even from ourselves. Yet even in their dormant state they still influence us, working against our conscious endeavours to establish financial security and sapping our energy. The right advisor can unlock our secrets and help us exploit their power.

A Holistic View of Money

At the Kinder institute, the organisation founded by George Kinder to promote the life planning perspective, this holistic approach is seen as the future of financial advice. Rather than enslaving you in the service of endlessly growing your assets, life planning aims to revitalise you and liberate your pent-up enthusiasm.

Consider this: asking big questions can take you to scary places, but if you were to reconnect with your old fantasy of running a beach hotel in Thailand and then found it could actually be brought to fruition, how excited would you feel?

According to the Kinder institute, the key to turning your dreams into reality lies in relieving your anxieties around money. Such anxieties lead us to impose artificial limitations on what’s possible, since fear of not having enough leads to a diminished life shaped by the idea of scarcity.

What Makes a Good Financial Plan?

In more orthodox circles, a good financial plan involves projecting yourself many years into the future in an effort to anticipate your financial needs at retirement.You may already see a couple of difficulties with this approach, unless you are currently close to retirement age, your requirements may well change dramatically in the intervening time.

Of course conditions in the financial market or social climate may also alter radically (think of the recent changes in the UK retirement ages for example). However, you plan for the future mainly because you’re scared of being left high and dry in your old age, but a values-based strategy makes much more sense in the medium and longer term.

For one thing, it doesn’t involve sacrificing your present for the sake of a future that you might not live to see: this is a bleak thought, but there are no guarantees that any one of us will make it to retirement age. But best of all, when you adopt values as your guide you won’t ever have to compromise your integrity.

In a nutshell, financial life planning is like travelling east or west: you never actually reach a place called west, but a compass is always available to help you stay on track. So instead of viewing your retirement as the ultimate objective, your life-planning adviser will help you use your deepest values and wishes as inspiration to work towards the life you’d lead if time and money were no object. As public awareness of the benefits of life planning increases, it’s set to become the norm within and outside the financial advice profession.

If you want advice on your life plan, get in touch with us today on 01993 772 467 or contact us online.

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