While work is its own reward, there comes a point when the tangible rewards of work begin to change your life. As income increases and life becomes more complex, the two tend to feed into each other in ways that can decrease satisfaction.
Traditional financial planning does nothing to address this problem. It focuses on the instruments of investing, not the reasons why you invest.
A better approach is a process that starts with creating a vision for the life you want, now and in the years to come. Financial planning, no matter how good the investments, tax strategy, or any other element is, will only succeed if you stick to the plan. Beginning with your goals can motivate you and incentivize you to build out your vision.
Financial Life Planning is Financial Planning – Just Done Right
Financial planning focuses on your money. How much you have, how much it can grow, and how long it will last. It’s essentially about trade-offs. This much risk for this much potential return. What to live without, either now or when you’re retired. The result is a long, tedious process that chains you to outcomes you can’t really control. It’s the opposite of motivational.
Most of us don’t daydream about our retirement plans or nifty tax strategies. Those aren’t goals, they are just things the industry has taught people to focus on because they are profitable problems to solve. But they don’t make people happy.
Financial life planning is entirely different. The goal is real personal freedom. The financial life planning process begins with elements drawn from the field of psychology. The purpose is to help people identify their deepest goals – the ones that don’t have anything to do with money. It’s only after a goal-focused plan is brought to life that traditional financial planning techniques and instruments are added. The end result is that you create a vision for the life you want to live, and that vision motivates you to do the work you need to do to make your financial plan a success.
A Five-Step Process to Understanding Yourself and Your Money
The Financial Life Planning process has five steps. It’s called EVOKE®, which besides being the perfect name for what the process does – it brings to your conscious mind the dream and goals you have inside you – is also an acronym for the steps.
Exploration – The first step is an in-depth discussion about you. If you have a partner, it’s about each of you. It’s not about money; it’s about how you feel about what you do, where you’re going, what you desire. The outcome of the exploration step is that you will be authentically listened to and heard.
Vision – The vision meeting employs a 3-question structure that frees you from the constraints we all live under and progressively allows you to discover what is most important to you. It’s a thought exercise that helps you identify and plan for a life with no regrets. This is the foundation and the source of freedom.
Obstacles – A great life plan understands that there will be challenges and roadblocks. This meeting addresses them head-on so and works out solving strategies. This not only keeps your plan moving forward – it keeps you moving forward. It’s all too human to let small blocks through us off-track. Staying motivated is about realizing that you can overcome them and keep working towards your goals.
Knowledge – This is the step where your financial life plan is joined to your resources. We bring whatever financial strategies, instruments, expertise and investments are necessary for your specific plan together in a structure that lays out a clear plan with specific goals and milestones.
Execution – At this meeting we agree on the steps we’ll take and how we’ll begin to put them into action. As your goals change and evolve, we’ll bring new strategies to bear and or we’ll pivot on existing plans. It’s an ongoing process that ensures you are consistently making decisions that work for your best life.
It’s Not for Everyone
You may have noticed that only two of the above five steps are about traditional financial planning. The other three are all about getting to a vision of life that makes you excited. This takes time, energy and effort, but it’s worth it. You’ll go through five in-depth meetings before you have a plan that breaks down the details of how all the pieces of financial planning will work together for you. For some people, the process is not appealing.
The Bottom Line
Financial Life Planning takes time, focus, and effort. But it’s worth it. Creating freedom is about you; financial strategies are just a way to keep you on track. You only get one shot at living your best life, so you better make the most of it.