The financial life planning process can appear completely overwhelming at first glance. There are so many different moving parts in life and it can be difficult to incorporate our goals and values into a genuine financial action plan that meets us where we are along the journey.
Traditional approaches used by many financial advisors only scratch the surface of identifying meaningful and purposeful goals. George Kinder, often referred to as the pioneer of financial life planning, highlighted three essential questions in his books and training sessions designed to put our core life values at the heart of the entire financial planning process.
If you are struggling to create (or follow) your financial plan and need some help prioritizing your goals, take some time to consider these important questions:
1. Imagine 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? Now is the time to let yourself go and try to not hold back on your dreams. The goal here is to describe an authentic life that is completely yours and not hindered by financial barriers or other obstacles.
Think hard about how you live your life with financial security today and tomorrow. This artificial dream world of contentment is essentially asking how you would live your life if money wasn’t an issue. The first question helps get us thinking about all of life’s possibilities.
2. Now imagine that you visit your doctor, who tells you that you have only 5-10 years to live. You won’t ever feel sick, but you will have no notice of the moment of your death. What will you do in the time you have remaining? Will you change your life and how will you do it? (Please note that this question does not assume unlimited financial resources.)
Things get real with this one. Facing our own mortality isn’t a comfort zone topic for most of us. But your response here will likely start focusing on your core values. This is where those bucket list items enter the discussion and we usually focus on friends, family, and relationships that mean the most to us. This question sets the stage for our own self-exploration of life priorities.
3. Finally, imagine that your doctor shocks you with the news that you only have 24 hours to live. Notice what thoughts or feelings arise as you confront your very real mortality. Ask yourself:
What did you miss? Who did you not get to be? What did you not get to do? Who did you wish you spent more time with? Do you have any regrets?
By now you will likely have uncovered or confirmed the things that motivate you. This third set of questions may be challenging if you have recently experienced the loss of someone close to you. This hypothetical scenario is more about living than it is death. Based on your answers here, you may re-focus your priorities. Most importantly, you should use this as a guide when creating a living financial plan that is unique to your life.
When you follow the progression of these questions, you see the difference between possibilities, priorities, and regrets. I personally asked myself these same questions when I transitioned into the financial planning profession. I’ve used them during financial coaching sessions over the years and find them to be a helpful tool to create more purposeful financial plans.
Financial life planning encourages smart financial decision making. Taking a more integrated approach to managing wealth and money adds meaning to the entire process. Otherwise, the pursuit of “financial freedom,” whatever that term may mean to you, could end up being a fruitless endeavor.