We like to play on the idea that “we put life into your financial planning.” But is it a real play on words? Not really and yet we are asked this question almost everyday. We knew that when we adopted the concept. There is a distinct, and very important, difference. Financial life planning differs from traditional financial planning primarily because the focus is more about who you are and who you want to be than it is about money.
Unlike people engaged in the traditional planning process, people engaged in the financial life planning process don’t look ahead to figure out how to maintain their current lifestyles in retirement. Instead, they look at how to change their current lifestyle to achieve the lifestyle of their dreams.
Read on to discover how you can use this approach to financial life planning.
Ideal Lifestyle
Many people credit the baby’s boomers for this trend towards current lifestyle goals. Boomers were liberal children who grew up and were absorbed by corporate Canada but never lost their ideals. Just as the boomers redefined their retirement as a time to be more active than their predecessors were, some want to go a step further and redefine themselves.
For these people, the concept of money is intertwined with the concepts of spirituality, creativity, family, service, and other emotional aspects of personal satisfaction. Happiness is measured in more than just money. It’s not about who has the most in life that wins; it’s about who gets the most out of life that wins. This is an idea we can relate to. Quality of life is what counts not your quantity of money.
For many, it’s more of a lifestyle change than anything resembling the retirement-planning process most of us are familiar with from RRSP seminars at work or meetings with a traditional financial advisor. The advisor who wants to be a painter, the law clerk who wants to be a poet, and the office manager who longs for a cabin in the woods are all increasingly turning to financial life professionals for help in making those dreams come true.
I know what some people are saying. Of course, the money plays a big role too.
Money and Sacrifice
There’s just no escaping the money or the lack thereof. The client services rep at a big box store who wants a philanthropic millionaire is probably out of luck. However, the lawyer who wants to trade in her suit to open cupcake shop might be able to do it in cash. The others have to make choices, so they work with a financial life planner in order to determine how to develop the financial life plan that will allow them to realize their personal goals.
Rather than trying to earn more money or build a bigger nest egg, a significant number of people need to make do with less to achieve their goals. Giving up the big house, trading in the expensive car and skipping the big vacations can help decrease expenses and enable people to trade in their day jobs for lower paying, but personally-fulfilling, professions and past-times.
If living in a small apartment frees up enough cash to increase time spent on the golf course, some people are willing to make the trade. In order to exchange the stress of corporate management for the quiet bliss of grooming pets, some people are willing to take a significant cut in pay. When you don’t like what you’re doing and know how you’d rather spend your time, life planning can help you make the transition.
It’s Your Life
If your goal is simply to retire, still be able to pay the bills and maybe a take a few trips each year, that’s one thing. If your goal is to trade in your spot in in an office cubical for a spot behind the counter at your own bakery, that’s another thing entirely.
Instead of asking yourself, “How much do I need to save,” ask yourself, “How am I willing to change my lifestyle in order to achieve my goal?”
From there, it’s more about the mechanics of orchestrating a transition than it is about saving a certain amount of money or earning a certain rate of return on your investments. Just as each person has his or her own definition of happiness, the decision to pursue a lifestyle change is highly personal. It can involve giant upheaval, but it can also result in great satisfaction.
Prior to taking the leap, you should carefully examine your motivation and your financial resources. Then all you have to do is come up with the financial life plan that will get you there working with a financial life planner. Life is best when it is about balance. Retirement should be about rightsizing. Getting the planning mix right at the earliest point in your life is paramount and is key to Keeping Life Current.