There’s a benefit to retirement and financial planning that is rarely discussed in the financial media, or in the halls of academia. When it is mentioned it’s often little more than a sidebar cursory comment. However, the single most impactful benefit of the financial life planning process is the psychological benefit of financial resolve. People feel more confusion, shame and guilt around money than any other issue in their lives. More than seven in 10 wealthy Canadians list financial issues as their number one source of stress, and it’s for this reason that people benefit so profoundly from financial life planning.
In practice, the planning process at its best is not what most people think; it’s not just about the money and numbers – it’s about “The Vision.” The numbers are important but they’re not the finish line. They are instead more of an obstacle that needs to be periodically navigated to allow you to more easily see the bigger picture.
It often takes people time to realize this. Many approach retirement and financial planning as though they’re going to the dentist, or meeting with their accountant, but a funny thing tends to happen as they go through the process – they begin to focus on, and see, what their tomorrow might look like. And that’s when the beauty of financial life planning begins to hit them.
The Psychological Edge
We all recognize the advantages of having a better grasp on our investment and financial life, but for most there’s a significant gap between intentions and actions. Financial life planning is the vehicle to bridge that gap.
When financial uncertainty is reduced, we’re able to think more clearly about our life in general. Ultimately, it allows us to better focus on what we’re striving for and why. It answers the questions of our finances that are most relevant, and stops us from getting lost in the myopic and emotional train wreck of the financial industry and media.
Seeing your financials displayed with dynamic and stunningly easy visuals creates a lasting impression. There’s a comfort in knowing what you need to do, and being able to see your destination. Removing financial uncertainty reduces the number one source of stress in our lives, and allows us to more freely enjoy today and envision more clearly what will likely be our tomorrow.
The impact of the planning process can be especially meaningful for spouses who in the past may not have been as involved in the financials. When illustrated and presented correctly it allows them, often for the first time, to truly see it and “get it.”
For most people, the planning process gives them a better financial perspective that has a lasting and positive impact. The benefit may not be realized in the moment. It might take days, sometimes even weeks or months. But for most, there will be a moment of clarity, and it will change them for the better.
In the end, financial life planning is almost entirely about the psychological benefits of having your investment and financial life in order, and being able to let go of the stress and insecurities that come with not knowing financially where you are today or where you’ll likely be in the future.
