By FPA member Lisa A.K. Kirchenbauer, CFP®, RLP®
Last Updated: February 1, 2010
"If we could first know where we are and whither we are tending, we could better judge what to do and how to do it." Abraham Lincoln
Often financial planning is embarked upon without considering where we would really like to take our life, and is focused on where we think we "should" go. Recently, there has been more conversation about the mixing of life planning and financial planning to create a more effective plan. Some people continue to believe that there is no reason to mix emotional issues with finances, but in my experience, not to combine the two can lead to less-successful financial plans and perhaps less fulfilled lives. Financial life planning, in its simplest terms, is about understanding what is truly important to you in your life, and then building a financial plan around that. Everyone's plan is unique. Many of us want a more meaningful life and a job, but also face the realities of planning for our child's college education and our own retirement. After the great recession of 2008-09, you may be wondering if you will need to work forever. Financial life planning can help address that concern in a productive way. By honing in on the life you really want and directing your spending and saving to those goals, much more may be possible than you thought.
Imagine if you had the opportunity to make a significant career change that would allow you to do more rewarding work, and be excited about working longer…as opposed to perhaps staying at a job that is not fulfilling and left you anxious to retire as soon as possible? These kinds of decisions will be important as Baby Boomers, who have tended to be great spenders but not great savers, contemplate their future. Perhaps you are a working mother or father who really wants more time with your children. What if you could design a creative plan that would allow you to have that time now, and perhaps pick up your work hours and savings later? These scenarios may seem like a dream, but for financial life planning clients they can be a reality. Keep in mind that financial life planning is not life coaching. It is backed by traditional financial planning analysis, done from a different perspective…yours, not the planner's. Are you wondering how you could begin to create the life you would like to have? Consider these thoughtful questions from the Kinder Institute of Life Planning:
- Imagine that you are financially secure, that you have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything? Don't hold back.
- This time you visit your doctor who tells you that you have only 5-10 years left to live. The good part is that you won't ever feel sick. The bad news is that you will have no notice of the moment of your death. What will you do in the time you have remaining to live? Will you change your life and how will you do it?
- This time your doctor shocks you with the news that you have only one day left to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What did I miss? Who did I not get to be? What did I not get to do?
What came out of this for you? Often it's a focus on relationships, creative pursuits, spirituality, or a special place rather than money or material needs. How does your current life, spending and saving line up to support this? Often, there is a disconnect. Let's be clear, the path to creating this life takes some work, there will be obstacles to overcome, and it will require some discipline to make it happen. You will most likely need some help getting there. A financial planner with experience in doing life planning may be a good guide to help with both the life planning and financial planning analysis and issues. What can come out of it is a more thoughtful approach to spending and saving, a more viable financial plan that you will be excited about implementing, and a much more fulfilling life.
"Your Money or Your Life" by Joe Dominguez & Vicki Robin
"Money & The Meaning of Life" by Jacob Needleman
"Seven Stages of Money Maturity" by George Kinder
"The Number" by Lee Eisenberg
FPA member Lisa A.K. Kirchenbauer, CFP®, RLP®, is the president of Omega Wealth Management.